Unemployed workers falsely accused of fraud need more than just repayment

Imagine receiving a letter in the mail telling you that you committed Unemployment Insurance (UI) fraud several years ago and owed the government thousands of dollars in benefit repayments and penalties.

Beginning in 2013, workers who became unemployed began filing claims using Michigan’s new online unemployment system called the Michigan Integrated Data Automated System, or MiDAS. These workers did not expect to receive notices in the mail, in some cases long after they had found work and stopped receiving UI benefits, wrongly accusing them of fraud. The letters demanded thousands of dollars in repayment of their benefits plus large penalties, but did not provide information as to why the claimants were determined to have committed fraud.

MI should institute real unemployment reformWhile some workers were able to respond to their first notification right away by going to their local unemployment agency and resolving the problem, many did not receive that notification because they had moved and the letter was sent to the old address. Others received their initial notification through their online UI accounts that they had stopped checking because they already found work and stopped receiving benefits. By the time these workers received a subsequent notification, they had passed the 30-day period in which they could contest or appeal the fraud determinations.

An internal investigation by the Unemployment Insurance Agency reviewed the fraud determinations that took place over a 22-month period, and found that 93 percent of workers (nearly 21,000) said to have committed fraud were accused wrongly. An additional 20,000 determinations are currently being reviewed.

All of this has created tremendous hardship for workers who were playing by the rules. Many began paying what the government said they owed, while others had their wages garnished. Some workers have had to file for bankruptcy.

The Unemployment Insurance Agency is taking steps to clear the fraud charges and pay workers their money back, and to make changes in how fraud is determined in order to prevent this in the future. However, for many workers and their families, much damage has already been done. Houses have been foreclosed on, bankruptcies have been filed, lives have been disrupted.

The State of Michigan needs to make reparations for these hardships and help these families become whole. Just as replacing all the lead pipes in Flint doesn’t make up for the harm already done to those poisoned, returning only the money taken from workers (even with interest) isn’t enough to make up for the harm done to those falsely accused. Michigan should also consider what workers spent or lost on litigation, bankruptcy discharges and foreclosure, and explore ways to enable those bankruptcy and foreclosure cases to be reopened.

Michigan should also institute real reform to the way the agency determines and responds to UI fraud. Some suggested reforms include:

  • Bring fraud penalties in line with those of other states. Currently, most states have a fraud penalty of 15-25% of the amount received fraudulently, but in Michigan, claimants often are charged as high as 400%!
  • Lower wage garnishment to 20%.
  • Improve fraud determination notifications by requiring issuance through certified mail, clearly stated reasons for the determination, a 60-day response window, and a second notice when the agency has not received a response.

This unnecessary travesty takes place in the context of Michigan’s willfully making it more difficult for workers to collect UI while they seek jobs and shortening the time allowed for benefits in situations in which a worker is having difficulty finding work. How to correct and make restitution for the damage done and make UI more responsive in the future is a conversation that needs to take place now rather than later. The Michigan League for Public Policy plans to be part of that conversation.

— Peter Ruark

The League’s top blogs of 2016

The League’s staff blog is one of my favorite communications tools. It is always current, as we aim to post at least one new blog a week, sometimes more. It is personal, as many of us share about our personal lives and experiences in connection with what we do at the League. The blog provides a variety of perspectives, as they are written by everyone from our CEO and board members to our interns and even former staff. And our blog strives to make public policy issues interesting and accessible.

A blog is only as effective as its reach, and what I love the most about our staff blog is that people actually read it and share it with others. So, as 2016 comes to a close, I wanted to take a look back at our most popular blogs of the year. Each of these blogs was shared over 100 times, showing that these issues struck a chord with our supporters. If you’ve already read these, I encourage you to take a look at them again. And if these are new to you, I hope you’ll give them a read.

  1. When are we going to really value education?: Michigan Kids Count Director Alicia Guevara Warren talks about Michigan’s disinvestment in education and how the state spends dramatically more on corrections than education.
  2. Why we fight: I wrote about the aftermath of the 2016 election and why policy advocates need to dust ourselves off and keep fighting the good fight.
  3. Angry about Flint? Be part of the solution: Policy analyst Peter Ruark writes about his volunteer work in Flint and the need for people to get involved on the ground and in the Capitol to help residents.
  4. Changing minds by touching hearts: League Vice President Karen Holcomb-Merrill blogs about the lives and hearts our work touches.
  5. Top ten voting tips: League CEO Gilda Jacobs writes about the importance of voting and dispels some prevalent myths around the process.
  6. Quit spreading misinformation: Michigan is NOT a high tax state: Legislative Director Rachel Richards seeks to set the record straight on Michigan’s tax climate.
  7. Bundle of joy: Gilda Jacobs discusses the birth of her new granddaughter and why we need a better Michigan and a better world for all kids.
  8. Michigan, 20 years after “welfare reform”: Peter Ruark blogs about the impact still being felt in Michigan today from the federal welfare reform of the 1990s.
  9. 14,000 unemployed workers will soon lose food assistance: Peter Ruark writes about a policy change that will take away vital food assistance for struggling workers.

—Alex Rossman

Minimum wage gets step-up but tipped workers still underpaid

MI minimum wageMinimum wage workers earned more this past week than they did in 2015, due to Michigan’s minimum wage increasing from $8.15 to $8.50 on January 1 of this year.

The increase is the third step in a legislated five-step increase that began in 2014. In 2018, minimum wage will increase to its final step, to $9.25. For years beyond 2018, the legislation requires that the minimum wage have an annual increase that is indexed to inflation. (more…)

Two generation policies offer support for parents and kids

On Monday, October 26th, the Michigan League for Public Policy held our annual meeting and public policy forum, “Secure Parents and Successful Kids.” We were joined by more than 250 people from around the state and a host of national and state experts and innovators in the fields of education, economic security and child well-being to discuss a two-generation approach to tackling poverty. (more…)

Michigan’s one-two punch against the unemployed

Eight of the nine states that cut the number of weeks that unemployed workers could receive Unemployment Insurance benefits, including Michigan, saw larger-than-average drops in the number of people collecting benefits after the cuts, according to a new report from the Economic Policy Institute. Despite high unemployment at the time, Michigan was the first state to legislate such a cut, from 26 weeks to 20. (more…)

Many kids stuck in poverty without solutions

Contact: Judy Putnam or Jane Zehnder-Merrell, 517.487.5436

Kids Count in Mich. ranks 82 counties on child well-being

LANSING, Mich. – Too many kids in Michigan remain mired in poverty at a time when policymakers have reduced help for struggling families, according to the Kids Count in Michigan Data Book 2015 released today.

Three measures of economic conditions worsened over the trend period with nearly one in every four children living in an impoverished household, a 35 percent increase in child poverty over six years. The trend period measured from 2006 to 2012 or 2013, depending on the availability of data.

(more…)

High poverty, unemployment harm economic growth

Often touted as the “Comeback State,” Michigan’s economic recovery has not included everyone as reflected in the state’s high poverty and unemployment rates. Leaving people behind will only hinder Michigan’s potential economic growth, which has already showed signs of slowing.

A recent report ranking states based on multiple indicators of economic security and opportunity reveals the state’s major lack of investment in its people. On almost every factor from poverty to education to affordable housing, Michigan is ranked worst or second-worst among the Midwest states. (more…)

11% of Mich. vets in households receiving food aid

More than one in every 10 Michigan veterans lives in a household that receives food assistance, a new policy brief estimates.

The report from the Center on Budget and Policy Priorities, released today in time for Veterans Day, is a reminder that thousands of struggling veterans use food assistance (formerly food stamps) to put food on the table.

(more…)

Census numbers tell of stagnancy and slow recovery

Today is the big day that comes each year: the release of American Community Survey figures on income and poverty.

Ready for some numbers?

Michigan’s household median income in 2013 ($48,273) was a bit higher than in 2012, but is nearly $1,000 lower than in 2009. The income bracket that grew the largest from 2009 to 2013 was the share of Michigan households who make under $10,000 a year. The only other income bracket with a significant share increase was households making more than $200,000 a year. These numbers taken together suggest that the slow economic recovery in Michigan is primarily benefiting those at higher incomes. (more…)

Shooting ourselves in the foot

Michigan and the seven other states that cut unemployment benefits in the wake of the Great Recession caused financial hardship for unemployed workers and failed to boost the overall economic outlooks of the states, a new report from the Economic Policy Institute concludes.

Problems with the unemployment system actually stemmed from underfunding the state trust funds in good times, rather than paying out benefits too generously, the report concludes. And cutting benefits not only shortchanged jobless workers and their families, it undermined the countercyclical role of the unemployment system that is designed to kick in when times are tough. (more…)

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