Michigan to Begin Repayment of $2.7 Billion Unemployment Overpayments

Thousands of Michigan residents who received unemployment benefits during the COVID-19 pandemic will be required to repay money after the state determined that about 350,000 claimants were overpaid by roughly $2.7 billion. The Michigan Unemployment Insurance Agency said it would restart collections for claims dating back to March 2020.

That pause was sparked by a January 2022 class-action lawsuit accusing the agency of violating the law by determining ineligibility more than a year after benefits were paid. A preliminary injunction blocked the UIA from seeking repayment during the litigation. The case settled in May 2025 for $55 million, and the judge presiding over the matter allowed the UIA to lift the pause on Sept. 12.

Collections will resume with a two-week grace period, the UIA said, and payments will begin on Sept. 29. The agency has emphasized that many affected workers already faced years of uncertainty about the status of these overpayments and that the two-week window is intended to ease the transition back into repayment.

UIA Director Jason Palmer told reporters that the agency is legally obligated to recover overpayments and argued that replenishing the state’s Unemployment Insurance Trust Fund is essential to supporting future laid-off workers. He added that while the department recognizes the burden on households, the Department of Labor requires states to recover these funds and that Michigan must comply.

Michiganders who want to seek relief can request a financial hardship waiver. If the waiver is approved, the debt can be erased. The waiver process is described in the claimant account, and claimants can apply by navigating to the "UI Claim" screen in their online unemployment benefits account under the "Claimant Services" tab. Payments can be submitted online through MiWAM, or by sending checks or money orders with the Form 1088 Payment Voucher to the Unemployment Insurance Agency-Restitution, Dept. No. 771760, P.O. Box 77000, Detroit, MI 48277-1760. Claimants are advised to write their claim or account number on the check or money order if the voucher is not included. The UIA will not accept cash.

Missed payments could result in penalties and interest being added to what is owed, garnishment of wages, tax intercepts or recoupments from future benefit payments, the agency cautioned. The move to restart collections marks a rare reversal of the pause that followed a long-running dispute over how overpayments were calculated, and it underscores the ongoing tensions between pandemic-era benefit programs and the balance sheets of state unemployment systems. The funds recovered through these collections are intended to strengthen Michigan’s ability to assist workers who lose their jobs in the future.