Michigan unemployment agency will pay $55M to workers under class-action settlement

LANSING, Mich. (FOX 2) - The agency tasked with distributing jobless benefits to unemployed workers in Michigan has settled a class action lawsuit against the department after it clawed back millions in funds that may have been improperly distributed.

The agreement includes a $55 million settlement that will be distributed to workers who qualify, which will be determined by a claims administrator.

Those who are eligible would have had their funds collected by the Unemployment Insurance Agency without going through the proper process. It includes people who had funds taken from them after March 1, 2020 through April 2024.

The massive settlement fund was created to help resolve a class action suit against the UIA after it tried collecting repayments it mistakenly paid out during the pandemic when millions of workers were forced out of a job during the public health crisis.

An audit determined the agency potentially issued almost $250 million in improper payments to dead people or those who were incarcerated. It was among several issues the Office of Auditor General found while reviewing the claims process used by the UIA.

"This settlement agreement lets us focus staff and resources on customer service and the reforms we are making at the Unemployment Insurance Agency to benefit Michigan workers and employers alike," UIA Director Julia Dale said. "Throughout this legal process, the parties worked cooperatively with each other and the court to establish new processes and procedures so Michigan residents won’t find themselves in a similar situation in the future."

Before it can distribute the $55 million, the UIA will need legislative approval. 

Under the settlement, the UIA also would not resume collecting improperly-distributed overpayments until after a court says so. 

The agency will not admit any wrongdoing or liability in the case as part of the agreement.