The Michigan Unemployment Insurance Agency resumed collecting on established overpayments after the Saunders class-action settlement, Director Palmer told the House Oversight Committee on State and Local Public Assistance Programs, saying the agency is balancing legal obligations with efforts to limit harm to claimants.

"On 05/13/2025, the Saunders lawsuit was settled and the UIA then had a legal responsibility to begin collections again," Director Palmer said, explaining the agency is now collecting on balances established before, during and after the collections pause. He told lawmakers the agency continued issuing determinations and preserving appeal rights while an injunction prevented billing and acceptance of payments.

The move matters because it affects claimants, employers and the state unemployment trust. Palmer said the pause in collections has reduced Michigan's recoveries well below U.S. Department of Labor expectations and urged the committee to understand both the legal duty to collect under the Michigan Employment Security Act and the federal conformity requirements that accompany federal UI funds.

Palmer gave several measures of scale to illustrate the workload the agency handled during the pandemic: roughly 3.5 million claimants and 5 million claims, about 9.2 million pieces of mail and $41.3 billion in benefits paid. By comparison, he said, the agency has seen about 300,000 initial claims and roughly $740 million paid so far this year.

Palmer said overpayments are a normal feature of unemployment insurance, arising for example when claimants do not provide required proof of employment or income, when claimants return to work but continue certifying, when employer protests show a separation for cause, or when claimants fail to meet required weekly work-search activities. He said states must collect a substantial portion of overpayments under DOL metrics: "I have a metric that I have to hit, which is 68% of the time when we overpay, we need to collect that money back."

Palmer said Michigan's historical performance has varied and currently is "somewhere around 55%" collection, a shortfall he attributes in part to the 2022 collections injunction.

Timeline, notices and supports

Palmer told the committee the agency's communications and operational steps since the Saunders settlement include a May 13 press release announcing the judge's resolution of the injunction, stakeholder outreach, updated FAQs, online coaching sessions for claimants, expanded in-person and virtual appointments, longer contact-center hours (staffed until 7 p.m.), and plain-language redesigns of agency correspondence.

He gave a recent operational timeline: public communications and FAQ updates began Sept. 8; notices with final balances and employer credits were sent electronically Sept. 13; mailed bills and employer credits were sent Sept. 15; the first payments were due Sept. 29.

Waivers and policy limits

Palmer described three statutory waiver categories under the Michigan Employment Security Act that allow exceptions to the duty to collect: claimant wage-error (where a claimant provided wage data without intent to misrepresent and the employer provided no or inaccurate wage information), financial-hardship waivers (assessed by household resources), and agency administrative/clerical error waivers. He emphasized federal law limits and said pandemic-era federal waiver authority had been used to resolve certain conformity issues (for example, where claimants were paid on a gross-income basis but federal guidance required net).

"Waivers are a limited exception to the duty to collect," Palmer said. "Federal law also tells us what we can and cannot waive."

Palmer said claimants may apply for waivers through their MiWAM account or by mail or fax for certain exception types, and that the agency is applying waivers when appropriate and building one-off case findings into its FAQ and knowledge base.

Volume, processing and appeals

Palmer told lawmakers the UIA had received about 18,000 waiver requests and staff had processed roughly 1,000 so far; he said he had authorized overtime and staffing shifts to accelerate reviews. On appeals, the agency continues to accept handwritten appeals but is encouraging claimants to use an electronic appeals form or a targeted filing path so appeals can be prioritized and not lost amid general correspondence.

Representative Brock asked whether collections distinguish federal from state benefits; Palmer said collections do not separate by source and estimated roughly 15%–20% of the pot is state UI while about 80% is federal UI. Brock also confirmed employers receive credits when collections occur.

Representative Sernigloo asked whether the advocacy program will be expanded; Palmer said the UIA is promoting and expanding its contractor-based advocacy program but that it takes time to train advocates. When asked whether the Legislature could simply waive all overpayments, Palmer warned that broad waivers could conflict with federal law and risk federal UI tax dollars.

Amounts and procedures

Palmer told the committee the agency is pursuing approximately $2.7 billion in identified overpayments. He repeated the agency's emphasis that all individuals who are receiving current bills previously received determinations and had a 30-day protest period when the determinations issued; some people may have forgotten the earlier letters. The agency is offering payment plans, hardship waivers and administrative-error waivers; payment-plan specifics and certain minimum-payment figures were discussed and the director offered to confirm exact numeric parameters with staff.

Operational impacts

Palmer said UIA has extended contact hours, added overtime (including weekend work), and shifted staff to manage the workload while maintaining normal claims-processing metrics. He said communications work includes short instructional videos and redesigned plain-language forms developed with stakeholder input.

Committee action

The committee adopted the minutes from its Sept. 18, 2025 meeting without objection before the hearing began.

What the committee asked to follow up on

Lawmakers requested follow-up detail on: (1) the state/federal composition of the overpayment pot and the precise fraction of state vs. federal funds; (2) whether specific employer-override cases cited by members represent systematic problems or isolated adjudication errors; (3) exact payment-plan minimums and whether payment plans accrue interest; (4) the average amount owed per claimant; and (5) additional expansion of advocacy resources and timeline for cleanup waivers once a new system is in place.

The director offered to return with more detailed reports and said the UIA would incorporate constituent case information passed to agency staff into its FAQ and casework review.

Ending

Committee members closed by reiterating the political and policy stakes of the issue, thanking the director for his cooperation, and adjourning the hearing.