A state House oversight panel is gearing up to question the state’s unemployment system chief Thursday over the state’s bungling of extending benefits to hundreds of thousands of freelance- and independent contractors who lost work during the pandemic and were newly eligible for expanded federal unemployment aid.
House Oversight Committee Chairman Steve Johnson, R-Wayland, said in an interview with Corp! Magazine last week he intends to ask Liza Estlund Olson, acting director of the Unemployment Insurance Agency, why the agency took so long to resolve the problem, whether there will be or were personnel changes and what other ways state officials intend to ensure problems don’t recur.
The UIA came under scrutiny after a mismatch in eligibility requirements for benefits between the state and federal government spurred Michigan administrators to take the unusual step of asking roughly 600,000 independent contractors or gig workers to retroactively reapply for unemployment benefits they’d already received.
Many were informed they would have to repay thousands of dollars, according to an August letter Lisa Ruby, staff attorney for the Michigan Poverty Law Program, submitted to the House Oversight Committee.
“This is a major area of concern for a number of our constituents,” House Oversight Committee chairman Johnson said. “They didn’t do anything wrong. And now they’re getting letters saying tens of thousands of dollars that they were paid, now the state wants back … they don’t have that money laying around.”
According to a Feb. 10 letter from the U.S. Department of Labor to Estlund Olson obtained by Corp! Magazine, UIA administrators were informed Jan. 6 that the federal government didn’t accept several eligibility questions for giving out expanded federal unemployment aid, called Pandemic Unemployment Assistance, to freelance workers.
But the state paid the money anyway. Officials didn’t notify people of the mishap until June, nearly six months later.
The mistake caused panic and confusion, as many were asked to repay in some cases tens of thousands of dollars according to Ruby and other attorneys who submitted testimony to the House Oversight Committee in August.
The snafu spurred Gov. Gretchen Whitmer to announce in late July that her administration would issue waivers to people who filed for unemployment in good faith but were later asked to recertify or repay money.
“No one who followed the rules and received benefits through no fault of their own should have to pay back money to the federal government,” Whitmer said in a July 30 statement.
When asked about how the issue happened and what changes the agency is making, UIA spokesman Nick Assendelft sent along previous July news releases.
“We’re doing everything we can to help working families navigate this issue,” acting director Estlund Olson said in a July statement. “Claimants who were notified that they must requalify for PUA should quickly submit their updated information so that we can redetermine their eligibility and continue to provide benefits to workers whose jobs were affected by COVID-19.”
Johnson said he’s still looking for answers about how the mistake was made and why it took so long to rectify, however.
“It was kind of kept behind closed doors,” Johnson said. “Then this letter goes out to 700,000 Michiganders … that was brought to our attention by a third-party individual who gave us a copy of that. Otherwise we would have never known.”
Johnson said apart from questioning the state unemployment system’s acting director, he also intends to take a look at House Bill 5265, sponsored by Rep. John Damoose, R-Harbor Springs, which would prohibit the UIA from seeking restitution for money the state paid by mistake.
Damoose didn’t return a call from Corp! Magazine.
Rep. Mary Cavanagh, D-Redford, one of two Democrats among 13 cosponsors on the bill, said during a telephone interview that she thinks the legislation is “the best approach as far as backing up the governor’s assurance” that people caught up in the error wouldn’t have to repay money to the state.
“These people didn’t deserve to have to repay anything that they in good faith applied to,” Cavanagh said.
The freshman Democratic lawmaker said she spoke with an 18-year-old constituent who was asked to repay $15,000 she received through Pandemic Unemployment Assistance.
Stories like that abound.
Jennifer Charnizon, an attorney with Legal Services of South Central Michigan, in another August letter to the Oversight Committee wrote that a single mother with a small business lost all of her clients when the coronavirus took hold. The individual sought help from Charnizon.
The woman’s claim for benefits under newly expanded federal aid was delayed months for unknown reasons, and then she was finally paid before the benefits halted for several months and then were reinstated. Then the agency sent her a letter stating she owed $27,000 to the state based on “new or additional information,” the letter said.
“Shamefully, this is not uncommon,” Charnizon wrote.
The attorney added that “contradictory and confusing correspondence is the norm,” as well as “irrelevant and misleading information” from the agency to unemployment assistance applicants.
The agency has lad longstanding problems across administrations. Previously, under GOP former Gov. Rick Snyder, the UIA made more than 20,000 false fraud determinations between October 2013 and August 2015 because of a faulty computer program, the Detroit News reported. The state recently renewed a contract with the same company, Fast Enterprises, that created that software.