Michigan Residents Face $2.7 Billion Unemployment Overpayment Repayment

News Summary

Approximately 350,000 residents of Michigan are required to repay up to $2.7 billion in overpaid unemployment benefits received during the COVID-19 pandemic. Collections will officially resume on September 12, 2025, following a pause due to a class-action lawsuit. Affected individuals may apply for a financial hardship waiver. The resumption of collections comes after the settlement of legal issues, with workers being advised of their outstanding balances through their Michigan Web Account Manager. This situation highlights the challenges of navigating unemployment benefits during a crisis.

Detroit, Michigan – Approximately 350,000 residents of Michigan who received overpaid unemployment benefits during the COVID-19 pandemic are required to repay a total of up to $2.7 billion. The Michigan Unemployment Insurance Agency (UIA) confirmed that collections on these overpayments will officially resume on September 12, 2025, following a pause due to a court order related to a class-action lawsuit against the agency.

The overpayments date back to claims filed as early as March 2020, during which many individuals found themselves unemployed due to the pandemic. The court order that paused collections allowed affected workers some respite while addressing the legal concerns raised in the lawsuit. However, this pause will be lifted, and the first repayments from the affected workers are due by September 29, 2025.

For those who may face financial difficulties, the UIA offers a financial hardship waiver application that could potentially waive the debt. Jason Palmer, the director of Michigan’s UIA, acknowledged that the collection process could impose a financial burden on households but emphasized the agency’s obligation to collect these funds as part of its legal responsibilities.

Notices about the overpayments have been sent to affected workers ahead of the resumption of collections. Starting September 9, 2025, workers will receive reminders via their Michigan Web Account Manager (MiWAM) accounts detailing their outstanding balances. Following the official lifting of the pause on September 12, 2025, follow-up collection notices, known as Form 1088, will be dispatched. These notices will include information about amounts owed and how to apply for a waiver if financial hardship is experienced.

A significant number of the claims leading to these overpayments were filed during the peak of the COVID-19 pandemic in 2020 and 2021, a time marked by fluctuating state and federal eligibility rules. Factors contributing to the overpayments included incorrect wage reporting, errors in reporting work status, and failure to meet eligibility criteria. Although some individuals were detected in fraud investigations, only a small fraction were charged with unemployment fraud; most overpayments classified under “little ‘F’ fraud” resulted from inadvertent misrepresentations rather than intentional deceit.

The class-action lawsuit initiated a settlement that was approved by a state judge in May 2025, stipulating a cessation of collection activities until its terms were fulfilled. Now that the settlement has been addressed, the UIA is moving forward with collections while trying to mitigate the impact on workers. It is essential for those affected to be aware of the implications of the resumed collections and the options available to them.

Workers seeking additional resources or answers to frequently asked questions about their overpayments can find this information on the UIA’s official website at Michigan.gov/UIA. This situation serves as a reminder of the complexities of navigating unemployment benefits during a crisis and the ongoing responsibilities that accompany them.

Deeper Dive: News & Info About This Topic

• Detroit Free Press: Michigan Overpaid COVID Unemployment Benefits
• Wikipedia: Unemployment Insurance in the United States
• CBS News: Michigan to Resume Collection Efforts
• Google Search: Michigan Unemployment Overpayments
• WZZM 13: Collections on Overpayments During Pandemic
• Encyclopedia Britannica: Unemployment
• MLive: 350,000 Michigan Workers Must Repay $2.7B
• Google News: COVID Unemployment Benefits Michigan