A new bill moving through the Michigan Legislature would block the state from demanding that hundreds of thousands of residents repay unemployment benefits they received during the chaos of the COVID-19 pandemic, unless they lied to get the money.
Senate Bill 700, introduced by Sen. Darrin Camilleri, D Trenton, aims to wipe out massive overpayment debts and stop the Michigan Unemployment Insurance Agency from collecting benefits that were issued more than three years ago. The move comes as the UIA resumes collection efforts on nearly 350,000 residents who were told in September they owe money back for benefits paid between February 2020 and September 2021.
Camilleri said it is simply unfair to demand repayment years later from people who relied on the aid to survive statewide shutdowns, record layoffs, and the economic shock of the pandemic. He stressed that fraudsters will not be protected, but working families who filed honestly should not be punished for government errors. “Years removed from the chaos of the pandemic, it is unfair for hardworking Michiganders to foot the bill for actions that were no fault of their own,” he said, adding, “If you took advantage of the system during a time of crisis, you will rightly be required to repay those sums.”
The backstory runs deep. In 2022, after people began receiving repayment notices, a class action lawsuit, Saunders v. UIA, halted all collections. The pause remained in place for nearly three years until the lawsuit was settled, and the agency restarted collections on September 29. The UIA says it is required under state and federal law to recover improperly paid benefits, and that overpayments can occur for reasons ranging from incomplete paperwork to later determined ineligibility.
UIA Director Jason Palmer defended the collections, saying, “Anytime we overpay, we have a duty to collect.” But lawmakers on both sides of the aisle say the system has left everyday workers confused, stressed, and facing huge bills, some reaching tens of thousands of dollars, without ever intending to do anything wrong.
Under SB 700, any overpayment made between February 7, 2020 and September 5, 2021 would automatically be considered a UIA administrative or clerical error. That means the state must waive the debt under current law. The bill also permanently bars the UIA from collecting any improperly paid benefit more than three years after it went out.
A similar bill, SB 625, was introduced last month by Sen. Lana Theis, R Brighton, showing rare bipartisan interest in solving the problem. But the UIA opposes Camilleri’s measure, arguing that federal rules require states to recover at least 68 percent of overpayments, while Michigan, because of the lawsuit freeze, has only collected about 5 percent.
Of the $2.7 billion dollars in overpayments, about 20 percent are state dollars and 80 percent are federal pandemic benefits.
The political divide over who should bear the burden has become sharp. Labor organizations, including the Michigan Nurses Association, Michigan AFL CIO, Michigan State Conference, Michigan Labor District Council, and Michigan League for Public Policy, strongly support the bill. Business groups, including the Michigan Chamber, Michigan Small Business Association, Detroit Regional Chamber, Michigan Manufacturers Association, and the National Federation of Independent Business, oppose it, arguing the state must enforce accountability.
During a committee hearing, Sen. Thomas Albert, R Lowell, said lawmakers need clear separation between honest applicants and those who committed fraud. “We have to have that balance between people who had no ill intent and those who did,” he said.
The Senate Committee on Labor advanced the bill on a 4-0 bipartisan vote, sending it to the Committee of the Whole. If approved, it heads to the full Senate, then the Republican controlled House, before it reaches Gov. Gretchen Whitmer’s desk.
For now, collection letters continue going out, and hundreds of thousands of Michigan residents remain stuck in the middle, waiting to see whether lawmakers will erase the debt or whether the state will keep demanding money back from a crisis long past.
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