Legislative Analysis
Phone: (517) 373-8080
WAIVER OF REPAYMENT OF CERTAIN IMPROPERLY
http://www.house.mi.gov/hfa
PAID UNEMPLOYMENT BENEFITS
Analysis available at
House Bill 5265 (H-3) as reported from committee http://www.legislature.mi.gov
Sponsor: Rep. John N. Damoose
Committee: Oversight
Complete to 1-12-22
BRIEF SUMMARY: House Bill 5265 would amend the Michigan Employment Security Act to
require waiver of repayment to the Unemployment Insurance Agency (UIA) of an improperly
paid benefit if certain conditions apply.
FISCAL IMPACT: House Bill 5265 would have an indeterminate fiscal impact on the Department of
Labor and Economic Opportunity (LEO), which houses the UIA. By adding beneficiaries of
the federal unemployment benefit programs meeting other criteria to the definition of “contrary
to equity and good conscience,” the bill would prevent the UIA from pursuing and obtaining
repayment of remitted benefits and interest in those cases. The number of cases that this change
would theoretically impact would likely number in the hundreds of thousands. The practical
impact of this change is difficult to quantify, as existing UIA policy with respect to concerns
regarding the federal benefit would be codified by this bill.
THE APPARENT PROBLEM:
In an attempt to help the vast numbers of workers whose employment was disrupted by the
impact on many businesses of the COVID-19 pandemic and measures taken to slow the spread
of infections, the federal government provided money to the states to provide Pandemic
Unemployment Assistance (PUA) under the Coronavirus Aid, Relief, and Economic Security
(CARES) Act. PUA provided benefits for individuals who had exhausted regular
unemployment benefits, in addition to including persons usually ineligible for benefits, such
as, among others, those with an insufficient work history and those who are self-employed.
Reportedly, about 3.5 million Michigan residents have applied for unemployment benefits
since the pandemic began, with about 1.9 million receiving PUA benefits.
After the federal government conducted a review of PUA benefits being provided by the states,
Michigan was notified that four of the criteria being used by the UIA to determine eligibility
were no longer deemed valid and that the ruling was retroactive to the beginning of the federal
programs. As a result, in late June of 2021, almost 700,000 benefit recipients who had chosen
one of those four reasons began to receive letters from the UIA stating that those reasons were
no longer considered a legitimate reason for benefit eligibility, that they would have to recertify
their eligibility from a new list of reasons, and that, if they were still ruled ineligible, they could
owe the state for the money they had received.
The UIA has since rectified the situation and is no longer seeking repayment, but some feel
that greater protection could be afforded to affected residents if the policy were codified into
law.
House Fiscal Agency Page 1 of 3
THE CONTENT OF THE BILL:
House Bill 5265 would amend section 62 of the Michigan Employment Security Act, which
addresses the actions to be taken when the UIA determines that a person has obtained benefits
he or she is not entitled to or when the agency or an appellate authority reverses a prior
qualification for benefits.
The act currently allows the UIA to recover the amount of the benefits that the individual was
not eligible to receive, plus interest. However, except in the case of an intentional false
statement, misrepresentation, or concealment of material information, the UIA is required to
waive recovery of an improperly paid benefit, as well as any interest, if repayment would be
contrary to equity and good conscience.
Contrary to equity and good conscience now means any of three scenarios, including one in
which the improper payments resulted from an administrative or clerical error by the UIA. The
bill would replace improper payments in this provision with improperly paid benefit.
The bill also would add a fourth scenario to the definition of contrary to equity and good
conscience, providing that repayment must be waived if all of the following apply to the
improperly paid benefit:
• The improperly paid benefit was made after February 7, 2020, but before September 5,
2021.
• The improperly paid benefit was made under one of the following federal laws:
o The Coronavirus Aid, Relief, and Economic Security Act, Public Law 116-136.
o The Continued Assistance for Unemployed Workers Act of 2020 (Division N,
Title II, Subtitle A of the Consolidated Appropriations Act, 2021), Public Law
116-260.
o The American Rescue Plan Act of 2021, Public Law 117-2.
• The individual received the improperly paid benefit solely because he or she met
one or more of the four additional, unsupported reasons described in Compliance
Finding 7 of the U.S. Department of Labor, Employment and Training Administration,
Region 5, Enhanced Desk Monitoring Review of Unemployment Insurance State
Administration Grant UI-34722-20-55-A-26, dated February 10, 2021.
MCL 421.62
ARGUMENTS:
For:
The bill addresses a situation in which people applying for unemployment benefits funded by
federal programs to provide relief for those whose employment was negatively affected by the
pandemic were initially approved for benefits and then were later told that they had been
mistakenly qualified and that the benefits would have to be repaid. About 700,000 people
received letters stating that they had to recertify their eligibility under other criteria and that
they may have to repay thousands of dollars that had likely already been spent on food, rent,
and other essentials. The UIA later adopted a policy providing that, absent fraud, recipients of
PUA benefits that were improperly paid would not have to repay the benefits they received.
Proponents of the bill argue that amending the statute to create a specific exception waiving
House Fiscal Agency HB 5265 (H-3) as reported Page 2 of 3
 repayment for these beneficiaries would more clearly indicate that any improperly paid PUA
benefits are not considered a result of a clerical or administrative error committed by the UIA
and would provide protection from any attempts by the UIA to try to recoup money that had
been improperly paid. To many, the mistake was made by a state agency, and therefore it
should be the state, and not individual benefit recipients, who should be held responsible. The
bill would not apply to cases in which people fraudulently collected benefits.
POSITIONS:
A representative of the National Federation of Independent Businesses of Michigan testified
in support of the bill. (9-15-21)
The following organizations indicated support for the bill:
• Michigan Chamber of Commerce (9-15-21)
• Michigan Manufacturers Association (9-30-21)
Legislative Analyst: Susan Stutzky
Fiscal Analyst: Marcus Coffin
■ This analysis was prepared by nonpartisan House Fiscal Agency staff for use by House members in their
deliberations and does not constitute an official statement of legislative intent.
House Fiscal Agency HB 5265 (H-3) as reported Page 3 of 3


Statutes affected:
House Introduced Bill: 421.62
As Passed by the House: 421.62