Did you file for unemployment during the COVID-19 pandemic, and now you’re being told that you have to pay back your benefits? It has to be maddening! First you had to battle the bureaucracy to get the financial help you so desperately needed; now after all that, you are supposed to pay it back. Fighting these directives is not easy, but several volunteer lawyers have banded together to provide this roadmap to help you navigate your situation.
Like all roadmaps, it’s not meant to guarantee safe passage, and you may very well encounter unexpected hazards along your way. This is general legal guidance only. If a lawyer provided this to you, it is not meant to substitute for specific legal advice, and may or may not apply to your specific situation. Nor does this handout create an attorney client-relationship without a specific, signed representation agreement. (If you do feel you need individualized legal representation, we have provided some resources at the end of this guide.)
With that, let’s get started.
COVID Unemployment Benefits
In recognition that “Economic insecurity due to unemployment is a serious menace to the health, morals, and welfare of the people of this state,” the Michigan Employment Security Act was first passed in 1936 “for the benefit of persons unemployed through no fault of their own.” In general, that applies to workers who are laid off, terminated for reasons other than misconduct, or who resign for good cause attributable to their employer.
The federal CARES Act of 2020 expanded eligibility for certain classes of workers who suffered income instability during the pandemic. This included not only workers who lost their jobs involuntarily, but those who had to leave their jobs for personal or family health reasons, or because they were needed for child care at home when the schools closed. Eligibility was also extended to the self-employed such as in the “gig” economy, and those who were underemployed and saw their income reduced because of the economic crisis.
The reasons for expanded eligibility were generally summarized as follows:i
- the person was diagnosed with COVID or experienced symptoms;
- a member of the person’s household was diagnosed with COVID;
- a person is providing care for a family or household member with COVID;
- a child in the household was unable to attend a school or child care and the person had primary or shared child care responsibilities;
- a person couldn’t go to work because of quarantine or shelter-in-place order;
- a person couldn’t take a new job because of a public health emergency;
- someone in the household died of COVID, making the applicant the breadwinner;
- the person had to quit a job for COVID-related health concerns;
- a place of employment closed because of COVID;
- an independent contractor became unable to work in full or in part because of the public health emergency.
In addition, Governor Gretchen Whitmer issued various executive orders (since rescinded) that created additional categories, such as having to leave a job due to exposure with someone who had a confirmed diagnosis of COVID.ii
There were different types of supplemental federal unemployment relief available. The main types were:
FPUC (Federal Pandemic Unemployment Compensation) was available to supplement benefits for those already eligible under state law (in other words, money in addition to state unemployment benefits, $600 per week during 2020).iii
PEUC (Pandemic Emergency Unemployment Compensation) was for those who have exhausted all rights to regular unemployment compensation, and were able and available for work, and actively seeking it.iv
PUA (Pandemic Unemployment Assistance) was available for everyone else, not otherwise eligible for regular unemployment benefits or extended benefits, including the self-employed, those seeking part-time work, and those without sufficient work history – including those ineligible for PEUC. It provided a $600 weekly benefit amount.v
The CARES Act Provided Penalties for Fraud Along with Opportunities to Avoid Repayment
While the CARES Act provided federal money to the states in order to fund these new classes of unemployment, there was directive to punish those suspected of fraud, including identity theft. An individual commits fraud for making “a false statement or representation of a material fact,” or for quitting work without good cause, in order to obtain benefits; and as a result, received benefits “to which such individual was not entitled.” The Act further requires that overpayments were to be repaid to the state, and that future eligibility would be affected, along with potential criminal penalties. vi
However, the CARES act also ensured that a person would not have to repay benefits without the opportunity for a hearing, and that overpayment may be waived “if the payment was without fault on the part of the individual and such repayment would be contrary to equity and good conscience.”
The State of Michigan is Aggressively Pursuing Suspected Fraud and Repayment
We, attorneys, are seeing an explosion of repayment orders. Offices are overwhelmed with requests for help and resources are scarce.
It is not clear why this is happening. One clue may be in another provision of the CARES Act, what can be called the “warm body” exception. It was a mandate to bypass normal civil service hiring protocols in order to fill the vast and immediate hiring needs to meet the demands on the system. You will recall how difficult it was (and is) to get into the unemployment system, get assistance, and answers to the many questions that came up. The “warm body” exception resulted in hastily trained workers interpreting complicated legislation, and an overwhelmed system not adequately supervised by state administrators.vii
Those same state workers are now sending overpayment notices. Trying to understand and make sense of these notices, which are often conflicting and confusing, is one thing; avoiding repayment is the ultimate goal.
How to Avoid Repayment
THERE ARE NO GUARANTEES. Many people, even with the law seemingly on their side and/or with an attorney, have been denied in their quest for relief. Our roadmap is designed to give you the best possible chance to avoid repayment.
There are generally five reasons you may avoid repayment:
- You told the truth when you reported and followed the law
- You followed what an unemployment worker told you to do
- Repayment would be “contrary to equity and good conscience”
- You qualify for a financial waiver
- You were a victim of identity theft
Unfortunately, Michigan’s Unemployment Insurance Agency (“UIA”) doesn’t make it easy to appeal these.
To maximize your chances of success, there are two things you must do.
FIRST – it is critically important that you fully explain your defense to the accusations. If you believe you were eligible, explain why. If you were told to do something in particular by a UIA worker, provide details (e.g. a worker named “Jim” told me in an online chat around April 15, 2020, to do “x”). If you have a particularly compelling reason to avoid repayment, this is the time to explain the circumstances, how the pandemic affected you and your family, health-wise, financially, or in any other way. And if your budget simply doesn’t permit it, you can download a form for that purpose.
SECOND – a good defense is not enough. You must also respond to all requests for information and meet appeal deadlines. If the online system gives you an opportunity to input information in response to a demand for repayment, do so, using the guidelines above.
Importantly, if you receive a document called a “DETERMINATION” or “REDETERMINATION,” you will have 30 days to file an appeal. Instructions for doing so will be on the back pages of the document, or you can use a form provided for that purpose.viii
If you were the victim of identity theft, we have been advised that it is safe to disregard the penalty letters you may be receiving. Those are system-generated letters and will not be acted upon until a full review of the case has been completed. Unfortunately, due to the backlog of fraudulent cases, it will take some time before each case is reviewed. Upon resolution, victims will receive a null and void determination letter at their current address provided in the report they submitted.
Here are some particular circumstances where we’ve found people are being ruled retroactively ineligible and ordered to repay their benefits:
- Workers who had to stay home in quarantine or isolation are being told they were not “able and available for work.”
- Workers who were supposed to be paid leave time by their employers, but weren’t, and had to file unemployment.
- Workers who were reclassified because of laws passed after the fact, or reclassification by their employer.
- Part-time workers being ruled ineligible.
In all these circumstances, you need to file a protest and explain the circumstances.
Unemployment Insurance Agency Resources
Some of the more common issues that they can help with include:
- I filed under the wrong Social Security Number
- My claim is inactive
- I am unable to certify for all weeks needed
- I need to file a claim, but one is already filed in my name
- I do not have a link in MiWAM to file a claim
Sometimes you just need an advocate:
1. Ask for help from your Michigan state senator. Find your state senator here. If you are in District 18 (Ann Arbor/eastern Washtenaw County), your state senator is Jeff Irwin. He and his staff – in particular Legislative Aide Annie Somerville – have been instrumental in helping hundreds of Michiganders, if not more, with unemployment compensation issues. Ask for help from Sen. Irwin here.
2. Contact the University of Michigan Unemployment Law Clinic, here. Although they have limited resources, they have taken on many cases.
3. Contact your county’s Legal Aid program, here. All Legal Aid and Legal Services programs may have the ability to help, but may very well have limited resources.
4. Seek a private attorney. Some attorneys may be able to handle these cases on a negotiated sliding fee scale or even pro bono. Occasionally, if a person has a potential claim against their employer related to their job loss, an attorney may bundle the unemployment issue along with the employment claim – or at least advise you if there is any reason to suspect a job termination was illegal.
Any services or fee arrangement will be up to the attorney on an individual basis. On the State Bar of Michigan’s website, there are a wealth of resources for COVID-related assistance, including how to find a private attorney by geographical location and/or areas of practice, here.
Additional Information About Eligibility
Working Less Than Full Time
One of the more common problems has to do with people reporting less-than-full-time earnings. Here is some guidance as to how earnings affect a claimant’s weekly benefit amount. In general, sometimes “unemployment compensation” is a misnomer, because in certain circumstances you can work part-time and continue receiving unemployment benefits. We call that “underemployment benefits.” However, the amount you earn in your part-time work will affect your weekly benefit amount (WBA).
If you are working with reduced hours (underemployed), you are required to report your gross earnings for each week you work when you certify for benefits. Earnings include any wages 6 from employment or payment for personal services. You can check your MiWAM account page for the reduced payment amount.
Other types of payments that you are required to report include the value of room and board related to employment (for example, a property manager living on-site that does not pay rent or utilities), vacation or holiday pay; bonus pay, severance pay and pension payments.
When special payments are reported, the Unemployment Insurance Agency determines if these payments will reduce a claimant’s benefit payment, and if so, the amount of the reduction. For special payments, you will receive a determination (Form UIA 1302) with details about the reduced payment. In general, if gross earnings or special payments for the week exceed 1.5 times your weekly benefit amount (excessive earnings), you will not be eligible for benefits for that week, including the $600 Pandemic Unemployment Compensation (PUC) payment.
To calculate your earnings for the week, multiply your hourly rate of pay by the number of hours you worked during the week (Sunday through Saturday).
A COVID-19 stimulus bill signed into law by President Biden continues federal unemployment insurance programs which were set to expire on March 13, 2021.
Individuals with claims of any type should continue to certify as usual. Most claimants will not experience a gap in benefits as long as they remain eligible and continue to certify.
Unemployment provisions under the federal American Rescue Plan are extended from March 13 – Sept. 4, 2021:
- Pandemic Unemployment Assistance (PUA), which provides coverage to the self-employed, gig workers, and others in non-traditional employment.
- Pandemic Emergency Unemployment Compensation Program (PEUC), which provides additional weeks of benefits to those who exhaust their regular state benefits.
- Pandemic Unemployment Compensation (PUC), which provides all unemployment recipients with an additional $300 per week.
- Mixed Earners Unemployment Compensation (MEUC), which provides an additional $100 per week to claimants on some benefits programs who have self-employment income of at least $5,000.
The relief package also includes the extension of 100% federal financing for the use of the Work Share program.
Expanded PUA eligibility available
In late February, the U.S. Dept. of Labor issued guidance expanding PUA eligibility to include three COVID-19 related reasons under which an individual may self-certify. The additional reasons address circumstances when an individual is directly affected by COVID-19 including:
- Individuals who refuse to return to work that is unsafe or to accept an offer of new work that is unsafe (meaning it is not in compliance with local, state, or national health and safety standards directly related toCOVID-19).
- Certain individuals who provide services to educational institutions or educational service agencies and are fully or partially unemployed as a direct result of COVID-19.
- Individuals experiencing a reduction of hours or a temporary or permanent layoff as a direct result of COVID-19.
The additional eligibility provisions apply retroactively to the beginning of the PUA program for those who filed before Dec. 27, 2020. For those who filed after Dec. 27, it is retroactive to Dec. 6, 2020.
Claimants who were previously denied PUA benefits will be notified with details on the new provisions and how to reapply for PUA benefits. Other state assistance programs are available for Michiganders who need assistance with making ends meet. Through the Michigan Department of Health and Human Services MI Bridges program, claimants can apply for healthcare coverage, food and cash assistance and more.
Yes, there is a lot of information in this handout – but like any roadmap, you don’t have to read every part of it – only the routes that take you where you need to go. We hope that in some way this information has helped you to earn benefits when you need them, keep the benefits you have earned, advocate your way through the system, and have a toolkit of resources to help you along your way. Good luck!
i DOL letter 16-20, 4/5/2020.
ii Executive Order 10, 3/16/2020; EO 57, 04/22/2020.
iii DOL letter 15-20, 4/4/2020.
iv DOL letter 17-20, 4/10/2020.
v DOL letter 16-20, Id.
vi DOL letters, Id.; also see 20 C.F.R. 625.14.
vii DOL letter 14-20, 4/2/2020: “States are provided with limited emergency flexibility regarding the suspension of the requirement to use personnel standards on a merit basis through December 31, 2020.”
viii The basic steps a case follows are:
- Determination – Protestable
- Redetermination – Appealable
- Hearing with an Administrative Law Judge through the Michigan Office of Administrative Hearings and Rules (MOAHR). This office is independent of UIA. Once a hearing is scheduled, involved parties are mailed a notice to inform them when and where the hearing will be held. Currently, almost all hearings are by phone.
- Unemployment Insurance Appeals Commission – UIAC does not conduct hearings, their decisions are based on the record.
- If the claimant still wanted to appeal further, they would then transition to Circuit Court. An appeal must be timely to go to the next step.