What the law says: This issue is covered by Section 62(a) of the Michigan Employment Security Act. The law says that if an unemployed worker for unemployment benefits receives a benefit payment to which he or she is not entitled, the unemployed worker must repay to the Agency the improperly paid amount.

The restitution, or repayment, may be paid to the Agency in cash, or it can be deducted from future benefit payments, but not more than 20% of any benefit payment can be used to pay back restitution. If the improper payment involved fraud, though, then up to 100% of future benefit checks may be taken in order to collect the restitution. The restitution can also be collected by intercepting the unemployed worker’s state income tax refund.

However, the UIA cannot collect restitution more than three years after the improper payment unless fraud was involved in the improper payment, or the UIA files a lawsuit within the three years, or the UIA issues a determination to the unemployed worker within the three years notifying the unemployed worker about the restitution.

The law gives the UIA authority to forgive restitution under certain circumstances, where to collect restitution would be contrary to equity and good conscience and the improper payment was not the fault of the unemployed worker.

What Agency Guidelines say: The UIA can forgive repayment of restitution when the incorrect payment was due to the UIA’s clerical error in calculating the benefit payment; or when the error occurred because the employer failed to provide the UIA with requested information or provided incorrect information; or when the unemployed worker has a low household income and repaying the amount would cause the unemployed worker extreme financial hardship.

Examples: The unemployed worker gets confused and reports earnings to the UIA for the wrong week. As a result, the unemployed worker is paid benefits for a week when he or she actually had earnings, and reports earnings for a week when the unemployed worker had no earnings and would have been entitled to benefits. Restitution must be set up for the week of the incorrect payment, and up to 20% of future benefit checks will be used to pay off the restitution, unless the claimant voluntarily pays the full amount of the restitution in one payment.

In another example, the UIA requests information from the employer about an worker’s wages, and the employer does not provide the information before benefit payments begin. The worker is paid unemployment benefits of $200.00 per week, based on the worker’s statement of wages to UIA . Later, the employer provides the correct wage information. In this case, the worker will not be required to repay the overpayments (unless the worker committed fraud), and the employer’s account with UIA will be charged for the overpayments.

If the UIA decides that a worker who quit a job should not be disqualified for benefits, and then a later redetermination or decision says that the worker should have been disqualified and that benefits should not have been paid, the worker will generally have to repay the benefits to UIA.

Proof at the Hearing: The UIA would have to prove that benefits were overpaid. The unemployed worker could deny the payments were overpayments, or could disagree with the Agency’s refusal to forgive repayment (that is, could prove that the UIA abused its discretion when it denied forgiveness of collection of restitution).

For Further Help: The Unemployment Insurance Agency (UIA) Advocacy Program can provide assistance to employers and unemployed workers in preparing for Administrative Law Judge and Board of Review hearings on this issue. Call 1-800- 638-3994.

The information on this sheet is intended to provide a general understanding of the subject matter. It does not have the force of law or regulation.