News Update: Promised Waivers fall short.  According to recent reporting, the waiver program was much smaller than promised.  Although waivers for 55,000 more claimants is a good step forward, it fell short of the 382,000 promised and as of May 12, 2022 there is still no explanation about when or if more will be coming.

On April 8, 2022 the Unemployment Insurance Agency announced a new promise to halt “new” collections activity and waive overpayments. The new press release is lacking in details and reports that during a pause until May 7, 2022 “UIA will not issue new wage garnishments or intercept State of Michigan tax refunds. The pause does not stop collections activities such as existing wage garnishments, intercepting federal tax returns, deducting a percentage from current unemployment benefit payments, or recovering overpayments for other states.”

Previously, a February 7, 2022 press announcement, the Governor and Unemployment Agency Director Julia Dale announced that the State’s Unemployment Agency intends to act quickly to halt collections and issue overpayment waivers. The announcement came in the wake of allegations of  unconstitutional “overpayment” collection notices sent out to thousands of Michigan residents.  Here is what we know so far:

FREQUENTLY ASKED QUESTIONS

What changed (and what didn’t)?

The U.S. Department of Labor has been clear since May of 2021 that states like Michigan have broad powers to waive so-called “overpayments” on Pandemic Unemployment Benefits created by the CARES Act.   The federal waiver standard allows a state to waive benefit overpayments if:

• Repayment would cause financial hardship; or
• The claimant relied on the payment or notice of payment and gave up a valuable right or changed positions for the worse; or
• Recovery would be unconscionable under the circumstances.

The May 2021 guidance from the Department of Labor also created two specific circumstances when states may use the standard to issue “blanket waivers” and waive overpayments automatically, when:

• The state paid the individual a minimum PUA Weekly Benefit Amount (WBA) based on Disaster Unemployment Assistance (DUA) guidance that was higher than the state’s minimum PUA WBA, which resulted in an overpayment
• The individual was eligible for payment under an unemployment benefit program, but through no fault of the individual, they were instead incorrectly paid under either the PUA or PEUC program at a higher WBA

In a letter sent to the Michigan Governor in December 2021, advocates for UI claimants urged the administration to adopt this standard, as many other states such as Illinois and Wisconsin already have.  Michigan has yet to adopt this standard, but it now seems poised to do so.

What’s New in UIPL 20-21 Change One (Feb. 7, 2022):

If states adopt the federal waiver standard, the new Department of Labor guidance would allow “blanket waivers” to be issued automatically to hundreds of thousands of Michigan residents who fall in specific categories. The DOL’s Employment and Training Administration updated its waiver guidance to approve five new scenarios under which states who have adopted the federal provisions for consideration of a waiver may use blanket waivers to wipe out overpayments:

• An individual responded “no” to being able and available for work and the state issued payment for Pandemic Unemployment Assistance or Pandemic Emergency Unemployment Compensation without adjudicating the eligibility issue.
• An individual was eligible for payment and the state issued payment at a higher Weekly Benefit Amount under the Pandemic Unemployment Assistance or Pandemic Emergency Unemployment Compensation program.
• The individual responded “no” to being unemployed, partially unemployed, or unable or unavailable to work due to the approved coronavirus-related reasons, and the state paid Pandemic Unemployment Assistance. When asked to self-certify, the individual did not respond or confirmed that none of the approved coronavirus-related reasons applied and the state issued payment, resulting in overpayment for the week.
• The individual submitted required proof of earnings used to calculate Pandemic Unemployment Assistance Weekly Benefit Amount and the state incorrectly processed the calculation, resulting in a higher WBA under the PUA program.
• The individual submitted proof of self-employment earnings to establish eligibility for Mixed Earners Unemployment Compensation Program and the state incorrectly processed the information, resulting in overpayment.

The Department of Labor has also created a process for states to propose additional categories for blanket waiver treatment.

Although Michigan has yet to adopt the federal waiver standard, the UIA seems poised to do so in light of the new guidance.   The UIA has said it is reviewing how the categories would apply to claims in Michigan and is determining “how quickly the waivers could be issued.”

Will this fix my UI overpayment?

Assuming Michigan UIA takes advantage of the broad blanket waiver allowances, waivers could fix many overpayment issues for Michigan residents who were incorrectly paid benefits through no fault of their own.  Advocates continue to have discussions with the Agency leadership, and we are closely tracking when and how waivers will be issued to benefit the broadest possible class of Michigan residents who have suffered through this pandemic.

What action has the Agency announced?

The UIA has said it is reviewing how the categories would apply to claims in Michigan and determining how quickly the waivers could be issued.  So far, there has not been any specific plan announced on whether or how the federal standard will be adopted and, if so, how the blanket waivers will be applied.  A new press release is lacking in details and reports the Agency intends to pause collections through May 7: “During the pause, UIA will not issue new wage garnishments or intercept State of Michigan tax refunds. The pause does not stop collections activities such as existing wage garnishments, intercepting federal tax returns, deducting a percentage from current unemployment benefit payments, or recovering overpayments for other states.”  Although the press release was release went to media outlets, claimants facing collections notices did not receive any notice.

What if I am still owed benefits?

Unfortunately, even if the Agency acts quickly to waive overpayments, this does nothing for the thousands of Michiganders who are owed benefits and have had them cut off.   Some Michiganders had benefits cut short based on erroneous determinations about whether they lost work due to COVID, whether they were able and available for work, or whether they “voluntarily quit” their jobs for health and safety reasons.  Many more have never been told why they weren’t paid the benefits owed, and they still just wait nearly two years later. For those people, a waiver still is not the same as a determination that they are eligible and entitled to receive unpaid benefits.

What if I Received an Overpayment based on Regular UI Benefits?

Unfortunately, the new guidance from the DOL applies only to CARES Act funded benefits (PUA, FPUC, MEUC, PEUC).  Regular unemployment benefits paid during the pandemic are unaffected by this announcement.  People who were paid on regular UI will still be eligible for waivers under the narrower state standards, and any applications will have to be individually determined by the Agency.  A legislative fix would be required to provide equal waiver rights for claimants who received regular UI benefits.

How can I find out more?

We continue to monitor and advocate as the situation unfolds.  Hopefully, the Agency will issue guidance soon. It is still unknown on how waivers will be applied and how many or which people it will impact.  Readers can follow our Facebook page for developments on the UIA waiver program and the UIA class-action lawsuit.  Due to the intense volume, we are not able to answer individual questions or provide individual representation on UI matters.