Garnishments paused as Michigan reviews COVID unemployment payments
David Panian, The Daily Telegram
4 min read
Michigan's unemployment agency has paused new wage garnishments and tax refund intercepts as it completes a review of accounts related to several thousand unemployment claimants being told they had to repay benefits.
The Unemployment Insurance Agency's decision applies to approximately 398,000 cases where workers collected federal unemployment benefits during the COVID-19 pandemic. The pause is until at least May 7 while the UIA completes its review of claimant accounts that may qualify for overpayment waivers, a news release from the Michigan Department of Labor and Economic Opportunity said.
The U.S. Department of Labor granted the temporary pause in February after Gov. Gretchen Whitmer sought the legal authority from the Labor Department and Congress to pause state collections until cases could be reviewed or issued waivers so that eligible Michiganders are not negatively affected for following the established rules when they applied for benefits, the release said.
“This pause on collections is one of several steps that will provide relief for many Michigan workers,” UIA Director Julia Dale said in the release. “There will be more good news in the weeks to come for those waiting to hear about overpayment waivers. This is part of my commitment to restore public confidence in the UIA’s ability to efficiently and effectively serve Michigan’s workers and our business community.”
The collections pause involves cases where workers were told they must pay back benefits they received. About 385,000 of the total cases include overpayments under the Pandemic Unemployment Assistance (PUA) program.
The pause applies to overpayments of federal benefits received before Sept. 4, when the pandemic unemployment benefits programs under the Coronavirus Aid, Relief, and Economic Security (CARES) Act and its extensions ended, the release said. Besides the PUA, the CARES Act programs included federal Pandemic Unemployment Compensation, Pandemic Emergency Unemployment Compensation, Mixed Earnings Unemployment Compensation and federal reimbursement for the first week of benefits.
Michigan's state auditor general found last fall that the Whitmer administration made key errors that prolonged confusion and anxiety for many Michigan workers as they sought assistance from the state unemployment office during the pandemic. Shortcomings in the UIA caused $3.9 billion in overpayments during the processing of 5.4 million unemployment claims amid the COVID-19 pandemic, the audit said.
The PUA was launched in March 2020 to expand benefits to workers who typically wouldn't be eligible for unemployment benefits, such as contract workers and freelancers. In July, the UIA sent letters to PUA benefits recipients and said they'd have to requalify using a new set of criteria.
During the pause, the UIA will not issue new wage garnishments or intercept state of Michigan tax refunds, the release said. 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. Collections of overpayments made before the onset of the pandemic in March 2020 will not be paused.
The pause will allow the UIA to complete its review of claims, based on Labor Department guidance, regarding overpayment waivers for those who received federal pandemic assistance, the release said. A decision on who qualifies for an overpayment waiver is pending while the UIA tests its system processes over the next weeks to identify potential recipients. Claimants will be notified by letter and through their Michigan Web Account Manager (MIWAM) accounts if they are granted an overpayment waiver.
If UIA determines that a worker’s overpayment qualifies for a waiver, any money collected so far on the overpayment will be refunded or applied against other outstanding debts. If a waiver does not apply, the pause will be lifted and collections will resume.
Waivers will not be applied to claims where UIA determines fraud is involved.
Dale, who took over the agency last fall, acknowledged the audit's findings when the audit report was released, saying the agency was working to implement its suggestions, but she maintained that the agency should still be proud of the work it has done.
"The work the UIA did this time supported millions of Michiganders by providing a temporary lifeline to pay for food, housing, prescriptions and other critical needs. So far, more than $39 billion has been paid out to nearly 3.5 million Michigan residents," Dale said in an email when the report was released. “But we should also be sure to learn from this experience so that we can do a better job of stopping fraud and paying legitimate claims in a timely fashion.”
The audit said despite the fact that the agency said there was confusion over how to interpret the PUA qualification requirements, the agency didn't seek clarification from the U.S. Department of Labor, it couldn't explain its rationale for using the eligibility criteria that had no relationship with federal guidance and couldn't explain why it didn't correct its criteria when the Department of Labor first communicated the issues to the agency in June 2020.
Lawmakers last month deposited $100 million to help shore up the unemployment benefits fund and allotted $29 million to improve customer service and hire employees to combat fraud.
