Ask The Lawyer By: Daniel A. Gwinn, Esq. Am I going to have to pay everything back?

Image by Tayeb MEZAHDIA from Pixabay 


QUESTION: I read this week that hundreds of thousands of people who are receiving unemployment benefits might have to repay everything they received. I’ve been getting unemployment benefits since May 2020. Am I going to have to pay everything back? There’s no way I can do that; I’ve received about $30,000 in benefits over the last 14 months, and I’ve used it to cover my family’s basic expenses.

ANSWER:     If your benefits are paid through the Pandemic Unemployment Assistance (PUA) program — start worrying.

Pandemic Unemployment Assistance, a federal program, provides unemployment benefits to people who are not eligible to receive other forms of unemployment compensation – like self-employed workers, contract workers, part-time workers, or individuals who haven’t “sufficient work history.” If you were laid off from a full-time job you’d held for a while, you are probably not getting PUA benefits.

This week the Unemployment Insurance Agency (UIA) announced that it had “misinterpreted” guidance from the federal Department of Labor, and had been providing PUA benefits to individuals who are not qualified under federal guidelines. The UIA mailed letters in late June asking affected individuals to “requalify” by submitting answers to a series of questions. People who do not respond to the UIA’s questions within 20 days will most likely be presumed to be ineligible. Even those who do respond within the 20-day deadline could find themselves disqualified. And, based on the Agency’s past practice, the disqualification will be retroactive: Unemployed workers may be required to pay back all benefits they have received.

The following four “qualifying reasons” are no longer acceptable:

  • Your work hours have been reduced as a direct result of COVID-19.
  • You are seeking part-time employment and affected by COVID-19.
  • You have insufficient work history to qualify for regular unemployment compensation and are affected by COVID-19.
  • You are unemployed or working less than regular hours as a result of COVID-19 and were denied benefits on another claim.

Yet, looking at recent Department of Labor (DOL) guidance, the UIA’s determination that these reasons are no longer acceptable seems off-base. The DOL describes the PUA as a “benefit of last resort,” available to “those who are self-employed, seeking part-time employment, do not have sufficient wage history, or otherwise would not qualify for [benefits under another program]” and who are “unemployed, partially unemployed, or unable or unavailable to work due to a specific COVID-19 related reason…”

The Agency did not indicate what “guidance” it had received that warranted revisiting over half a million claims. But asking jobless workers to repay benefits they were told they were eligible to receive seems a very inequitable way to address the UIA’s error.

But, sadly, justice has not been the Agency’s strong suit recently. In 2013, the Agency implemented an automated system to help it root out fraud. Unfortunately, the system – MIDAS – had an error rate as high as 90 percent. That translated into some 40,000 Michiganders not only losing benefits they were entitled to receive, but being asked to repay those benefits, plus a whopping penalty of four times the amount owed because of their alleged “misrepresentation.” (The penalty has seen been reduced to 1.5 times the amount owed.)

            The MIDAS system, which has reportedly been in use to help the Agency cope with the deluge of cases that overwhelmed it in April 2020, is only part of the Agency’s problems. Another major issue is the fact that correspondence to unemployed claimants and recipients is often incomprehensible. Former UIA director Steve Gray, who resigned from the Agency in March, acknowledged the problem. “A lot of it is legally accurate, but unintelligible,” Gray said. Letters and notices are so hard to decipher, that they even stumped a panel of judges on the Court of Appeals. Add to this the fact that the Agency’s on-line questionnaires often lock workers into yes/no responses that may not be accurate.

If your eligibility for benefits has been called into question, you may need to contact a lawyer to help file a protest or appeal.

In the meantime, the UIA’s current decision has been widely questioned. The legislature intends to call UIA officials in front of the House Oversight Committee in the fall, but that may be too late for may out-of-work Michiganders.

Stay tuned.

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By: Daniel A. Gwinn, Esq.
Attorney and Counselor at Law
900 Wilshire Drive, Suite 104
Troy, MI 48084
(248) 970-0310
(248) 970-0311 facsimile
[email protected]