News Summary

Michigan will distribute about $34 million to 23,000 unemployment claimants following a class-action lawsuit settlement. The settlement addresses concerns from workers wrongly told to repay benefits. A total settlement of $55 million is aimed at alleviating the financial burden caused by administrative errors during the pandemic. The UIA is set to resume collection efforts after providing clear guidance and waivers for financial hardship. This action is pivotal in rectifying past mistakes in the state’s unemployment processing system.

Lansing, Michigan – The state of Michigan will distribute approximately $34 million to about 23,000 unemployment insurance claimants following the approval of a class-action lawsuit settlement. This settlement, authorized by Judge Brock Swartzle of the Michigan Court of Claims on May 13, aims to address grievances from workers who were wrongly told they needed to repay benefits originally deemed overpayments.

The total settlement amount reached $55 million, which also includes funds earmarked for late claims and attorney fees. As part of the agreement, a reserve fund of $1.1 million has been established to cover late claims, administrative costs, and legal expenses.

The affected claimants are primarily those who filed timely claims for unemployment benefits during the pandemic but were later informed they were ineligible under shifting federal guidelines. This led to the Michigan Unemployment Insurance Agency (UIA) initiating collection efforts against these individuals. A preliminary injunction was in effect since December 2022, preventing the UIA from collecting these payments until the recent settlement approval.

In the wake of the settlement’s approval, the UIA will resume collection efforts. Although the agency will begin collecting funds purportedly owed, it has committed to providing clear guidance to claimants about the process. To alleviate the financial burden on those affected, the UIA has assured that it will only pursue collections after all protest or appeal avenues have been exhausted. Claimants will also have the opportunity to request waivers based on financial hardship or administrative errors.

The lawsuit, known as Saunders v. Michigan Unemployment Insurance Agency, was filed in January 2022, emphasizing violations of due process rights amid the pandemic-related surge in unemployment claims. During this period, approximately 1.83 million workers received unemployment benefits, but many faced unexpected ineligibility due to rapidly changing federal guidelines. This situation led to significant confusion and frustration among claimants.

The Michigan UIA’s efforts to collect overpayments from claimants drew widespread criticism, prompting the class-action lawsuit that ultimately led to this settlement. This case highlighted the state’s administrative errors in the processing of unemployment claims, resulting in undue financial stress for many residents during a time of crisis.

To enhance the support offered to claimants, the UIA has developed new features designed to assist individuals in navigating the unemployment filing process more effectively. Additionally, the settlement aims to reform the UIA’s claim processing procedures to prevent similar issues in the future.

As part of this settlement, claimants must take action by submitting claims by a specified deadline to remain eligible for the settlement payment, which is expected to average around $1,400 per claimant. This provides a crucial financial lifeline for many workers impacted during the economic uncertainties of the pandemic.

The original timeline for the final hearing related to this settlement approval was scheduled for April 24, 2025, but the recent developments have expedited the process, allowing quicker resolution for claimants awaiting critical unemployment support. The settlement represents a significant step toward rectifying earlier mistakes made in the UIA’s administration of unemployment benefits, with hopes that it will foster a more efficient and just system for future claimants.