UIA Temporarily Pausing New Wage Garnishments, State Tax Refund Intercepts

The Michigan Unemployment Insurance Agency (UIA) is pausing new wage garnishments and intercepts of State of Michigan tax refunds in about 398,000 cases where workers collected federal unemployment benefits during the COVID-19 pandemic until May 7.

This comes while UIA completes their review of claimant accounts that may qualify for overpayment waivers.

The U.S. Department of Labor (USDOL) granted the pause after Governor Whitmer intervened, looking for legal authority from USDOL and Congress to hold state collections until cases could be reviewed and/or issued waivers so eligible Michiganders are not negatively affected for following the established rules when they applied for benefits.

The collections pause involves cases in which workers were told they must pay back benefits they received. About 385,000 of the total cases include overpayments under the Pandemic Unemployment Assistance (PUA) program.

“This pause on collections is one of several steps that will provide relief for many Michigan workers,” UIA Director Julia Dale said. “There will be more good news in the weeks to come for those waiting to hear about overpayment waivers. This is part of my commitment to restore public confidence in the UIA’s ability to efficiently and effectively serve Michigan’s workers and our business community.”

The pause applies to overpayments of federal benefits received before Sept. 4 when pandemic unemployment benefits programs under the Coronavirus Aid, Relief and Economic Security (CARES) Act and its extensions ended.

Along with the PUA, the CARES Act programs included Federal Pandemic Unemployment Compensation (FPUC), Pandemic Emergency Unemployment Compensation (PEUC), Mixed Earnings Unemployment Compensation (MEUC) and federal reimbursement for the first week of benefits.

The pause does not stop collections activities, including existing wage garnishments, intercepting federal tax returns, deducting a percentage from current unemployment benefit payments or recovering overpayments for other states. Collections of overpayments made before the onset of the pandemic in March 2020 will not be paused.

As the pause allows the UIA to complete their review of claims, a decision on who qualifies for an overpayment waiver is pending while UIA tests their system processes over the next weeks to identify potential recipients. Claimants will be notified by letter and through their MIWAM accounts if they are granted an overpayment waiver.

If the UIA determines that a worker’s overpayment qualifies for a waiver, any money collected so far on the overpayment will be refunded or applied against other outstanding debts. If a waiver does not apply, the pause will be lifted and collections will resume.

Waivers will not be applied to claims where the UIA determines fraud is involved.