LANSING — The Michigan Unemployment Insurance Agency has resumed sending bills for overpaid unemployment benefits after a court settlement in May 2025, UIA Director Palmer told the Michigan House Oversight Committee on state and local public assistance programs.

Palmer said the agency is now pursuing collections for balances established before, during and after the collections pause tied to the Saunders class-action litigation. "We are taking a considered approach in following our legal obligations as we return to overpayment collections," Palmer told the committee.

Why it matters: the pause in collections and the subsequent resumption have affected thousands of Michiganders and employers and have reduced the UI trust fund, the agency said. Palmer told the committee that pandemic-era claim volumes were large (about 3.5 million claimants and 5 million claims) and that the agency paid roughly $41.3 billion in benefits during that period. By contrast, he said, this year the agency has handled roughly 300,000 initial claims and paid about $740 million in benefits.

What an overpayment is: Palmer described overpayments as a standard feature of a system designed to balance speedy payments with program integrity. Overpayments can result from missing proof of employment or income, claimants returning to work while continuing to certify for benefits, employer protests that change the separation facts, or failure to meet weekly work-search requirements. He said the federal Department of Labor requires states to collect recoveries and noted a USDOL performance target that states collect about 68% of established overpayments; Michigan’s current recovery rate is roughly 55%, a shortfall the agency attributes in part to the multi-year pause in collections.

Scope and timing: Palmer said the Saunders settlement dissolved a preliminary injunction on May 13, 2025 and triggered resumption of collections. Agency communications to claimants began in early September: notices with final balances were made available electronically on Sept. 13, bills mailed Sept. 15, and first payments were due Sept. 29. Palmer told lawmakers the bills went only to people who had previously received determination letters that started their appeal rights.

Waivers and limits: The UIA told the committee waivers are a narrow exception under the Michigan Employment Security Act and federal rules. The agency described three statutory waiver categories: claimant wage-reporting errors (where wage data was provided without intent to defraud), financial-hardship waivers that evaluate household resources, and administrative or clerical errors by the agency. Palmer said some pandemic-era issues — for example, differences in whether applicants reported gross versus net income — were addressed by waivers when the federal rules required net reporting.

Claimant support and appeals: To help people navigate notices, the UIA said it expanded in-person, phone and virtual appointments, extended contact-center hours to 7 p.m., launched online coaching sessions and an updated FAQ, and is redesigning plain-language forms and short explanatory videos. The agency said it still accepts handwritten appeals but is encouraging use of an electronic appeals form while preserving alternative submission paths for accessibility. Palmer said late protests may be considered by the agency’s appellate authorities if claimants can show good cause.

Volume and processing: Palmer reported the agency has received about 18,000 waiver requests and has processed roughly 1,000 to date; staff overtime and weekend shifts have been authorized to process the backlog. He said UIA staff are reviewing accounts, applying waivers where appropriate and updating the FAQ with recurring case issues.

Employer impact: When UIA collects an overpayment tied to an employer’s account, Palmer said employers receive a credit that can be applied to past or future liability. Committee members asked for follow-up on examples they have received where employees marked "quit" nonetheless received benefits; Palmer said staff would review those specific cases.

Payment plans and interest: The agency said bills include payment-plan terms and the bill indicates the minimum monthly payment; hardship waivers are available through MiWAM or by mail. Palmer said the collections pause halted interest accrual and the agency is not charging interest during the pause. Specific payment-plan minimums and interest policy were described as matters the agency could confirm with staff.

Federal conformity and legislative questions: Several lawmakers asked whether the Legislature could waive balances statewide. Palmer warned that expanding waiver authority beyond state and federal limits could risk federal conformity and potentially jeopardize federal UI tax dollars and program alignment.

Next steps: Committee members pressed for more case-level follow-up, additional data on average amounts owed per individual, and details on how pandemic-era programs such as PUA were administered. Palmer said the agency would provide additional information and welcomed the committee’s continued oversight. "I would be delighted to come back to this committee and talk about that process when we finish that," he said.

The committee did not take a formal vote on policy changes during the hearing; members closed by urging continued attention to constituent concerns and adjourning the session.