Unemployment Compensation Information for Claimants

The purpose of this document is to provide information which may be useful to individuals who have found themselves in the unfortunate situation of losing their jobs and who may be eligible for unemployment compensation. The following information is based on my experience serving on the Michigan Employment Security Board of Review (appeals) and for the past several years representing claimants in administrative law judge unemployment compensation eligibility appeal hearings. Unemployment compensation regulations throughout the U.S. are similar but vary in a number of important respects from state to state. This information is based solely on my experience in Michigan.

BACKGROUND ON STATE-FEDERAL UNEMPLOYMENT COMPENSATION SYSTEM

Most people find themselves unemployed at some time in their life. Unemployment was not such a problem when the U.S. was an agrarian, small town society where most people had families nearby who could help out in a pinch and where people grew much of their own food. But as the country industrialized and people flocked from the farms to cities to work in factories like Henry Ford's Rouge plant which employed 100,000 at its peak, unemployment became a critical social problem. People were no longer independent farmers living on their own land and growing their own food, but instead they were far from their relatives and dependent on the success of their employer and the good will of their boss for economic security. The federal-state unemployment compensation system was established to help tide people over in periods of involuntary unemployment.

A lot of thought went into the system. It's funded by a tax on employer payrolls. The tax in most states ranges from around one percent of payroll to twelve or thirteen percent of payroll depending on the number of layoffs previously experienced by each employer. In Michigan the maximum tax rate is 10.3 % of wages up to $9,000/ year and the minimum is 0.06%, as of November 2008. This variable tax rate is called experience rating. It's designed to provide an incentive for employers to plan their business to avoid layoffs. The firms with the fewest layoffs are rewarded with having to pay the lowest unemployment compensation tax rate. And, conversely, employers whose employment fluctuates widely, such as those in cyclical industries or in seasonal industries like construction, pay the highest unemployment compensation taxes. Employers don't like to pay high taxes so the experience rating system also provides them an incentive for them to protest unemployment compensation claims filed by their employees.

Another reason underlying unemployment compensation is that it has a counter-cyclical economic effect. That is, when there is a recession and people lose their jobs involuntarily, money is pumped into the economy by unemployment compensation payments to laid off workers, helping to stabilize the national economy or that of a particular state or region.

Like Social Security, Unemployment Compensation was established during the Great Depression in the 1930s, and like Social Security, it has become accepted and, by and large, accomplishes its mission of providing income to assist unemployed workers and provide a boost to the economy during recessions.

COMMENT: If you become involuntarily unemployed you should not hesitate to apply for unemployment compensation. That's what it's for. You are entitled to collect benefits so long as your are eligible, provided you carefully follow the procedures required by the unemployment agency in your state.

DISPUTES OVER ELIGIBILITY FOR UNEMPLOYMENT COMPENSATION ARE QUITE COMMON

However, from the point of view of unemployed workers and employers, the system is far from perfect, and disputes over eligibility are common.

In general, employees who have worked long enough to establish eligibility and who are laid off by their employer are eligible for a maximum of 26 weeks (only 20 weeks in Michigan thanks to Governor Snyder and the Republican dominated state legislature) of unemployment compensation at an amount less than their previous pay up to a maximum of around $400 per week (in Michigan).

Employees who quit, with certain exceptions, are not eligible.

Employees who are fired for serious misconduct are not eligible.

FOLLOWING THE PRESCRIBED PROCEDURES IS VERY IMPORTANT

Finally, to be eligible claimants must apply for benefits in accordance with procedures and within deadlines established by the state unemployment compensation agency, and they must certify every two weeks that they are available and seeking suitable (jobs they have previously performed or for which they have received training) employment and that they did not receive disqualifying earnings during the period. Certification is generally accomplished by telephone or on the Internet. The rules for applying and certifying are generally very strictly enforced by state unemployment agencies. Failure to call in or report in person to certify as required will result in disqualification for two weeks or more of benefits unless there is a compelling reason for failure to do so. Failure to apply within the prescribed deadline after layoff also will result in loss of benefits for the weeks prior to filing, absent a compelling reason for failure to do so.

Comment: Many otherwise eligible individuals are disqualified from receiving benefits for which they would otherwise be eligible due to their failure to read and understand and comply with the unemployment agency's rules. Read the rules carefully and make sure you comply with them to the letter. Keep a record of your job search activities such as companies contacted, interviews, etc., so that in the event you are required to show that you are seeking work you will be able to do so.

IF YOU ARE LAID OFF

If you are laid off you should file promptly for benefits in accordance with the procedures in your state, either in person or on the internet. To be eligible for benefits for any given week or weeks you must certify in accordance with procedures in your state by telephone or in person that you were unemployed and available for and seeking suitable full-time employment. "Suitable" employment means work for which you are qualified by experience or training on any shift on which a job is available at an employer located within a reasonable distance of your residence. When you certify in accordance with established procedures you must report any earnings you have received during the period. Depending on the amount, earnings may reduce your benefit or render you ineligible for the week(s) for which you received them.

IF YOU QUIT YOUR JOB

As stated above, the general rule is that if you quit your job you will not be eligible for unemployment compensation. The rule in Michigan and most states is that a reasonable person will find another job before quitting the one he or she has. An exception to the rule disqualifying people who quit occurs when there is "good cause for quitting attributable to the employer." What is or is not good cause is a gray area subject to differing interpretations by employment agency examiners and by the courts. In general, good cause for quitting is something that would cause a reasonable person to quit even though he or she does not have another job. Examples of good reasons are being required to work in unsafe conditions, being asked to violate the law, discrimination, sexual harassment, repeated verbal abuse or physical abuse by a supervisor, bounced pay checks, or a significant change in the terms and conditions of your job (e.g. a wage or benefit cut).

Generally speaking, the courts require that before quitting, the employee must use the prescribed complaint procedure and give the employer a chance to correct the situation. In Michigan employees are not required to file an OSHA, or discrimination complaint with a state or federal agency before quitting, but they are required to raise the issue with their employer using prescribed procedures and give the employer an opportunity to address the issue before quitting in order to qualify for unemployment compensation. In disputes over good cause for quitting the burden of proof is on the employee to establish that he or she had good cause for quitting attributable to the employer. Generally, this is not easy to do. Most unemployment agency claims examiners and administrative law judges are hard to convince that a reasonable person would not secure another job before quitting, absent serious abuses.

COMMENT: Recently, I represented a claimant in an administrative law judge (referee) hearing who quit because his supervisor repeatedly referred to him as a "terrorist," apparently because he appeared to be of Arabic descent. The claimant asked his supervisor not to refer to him as a terrorist and complained twice with no result to his supervisor's boss. The judge found good cause attributable to the employer for the claimant to quit. Going into the hearing I was not confident that the claimant would be found eligible. We argued at the hearing that calling someone a terrorist, even in jest, had taken on much greater significance since 9/11. The judge agreed. On the other hand there are Michigan court decisions that have said that an employee doesn't have the right to expect a "perfect supervisor" and they have excused some pretty sorry supervisory conduct. In most cases, the best advice is to find another job before quitting or don't count on being eligible for unemployment compensation.

IF YOU ARE FIRED

Dismissal for serious misconduct is another disqualifier for unemployment compensation and another frequent gray area which is a common subject of disputes and appeals. What may seem to an employer as serious misconduct may not amount to misconduct under the unemployment compensation statute or court interpretations of if. In Michigan, the controlling court ruling defines disqualifying misconduct as "wanton or willful disregard of the employer's interest." That's a pretty high bar for employers to meet in contested unemployment compensation cases. However, those words leave much room for interpretation and dispute. Generally speaking, misconduct will be found in event of a single serious offense (e.g. theft, drug or alcohol offenses, insubordination, assault or fighting) or repeated minor offenses such as habitual tardiness or excessive absenteeism or other repeated and intentional violations of company rules or policies. Nevertheless, much remains for dispute.

The following is the definition of misconduct adopted by the Michigan Supreme Court in the case of Carter v. Employment Security Commission, 364 Mich 538, 541(1961):

"[Misconduct in an unemployment compensation case is] ... conduct evincing such wilful or wanton disregard of an employer's interests as is found in deliberate violations or disregard of standards of behavior which the employer has the right to expect of his employee, or in carelessness or negligence of such degree or recurrence as to manifest equal culpability, wrongful intent or evil design, or to show an intentional and substantial disregard of the employer's interests or of the employee's duties and obligations to his employer. On the other hand, mere inefficiency, unsatisfactory conduct, failure in good performance as the result of inability or incapacity, inadvertancies or ordinary negligence in isolated instances, or good-faith errors in judgment or discretion are not to be deemed 'misconduct' within the meaning of the statute."

Some employers abuse the system by firing employees for alleged misconduct when they need to reduce the work force rather than laying them off because they do not want the employees to collect unemployment compensation against their account and cause their tax rate to go up. In dismissals, the burden of proof is on the employer to establish misconduct.

COMMENT: Don't press your luck. Comply with the rules and policies of your employer and, if you are going to be late or absent, call your employer and let him know. Administrative law judges take a dim view of employees who are absent or late and don't bother to call in. On the other hand, they will find claimants eligible in cases of absence or tardiness due to illness, emergency situations requiring care for children and the like.

Some employers use automatic point systems to discipline for absence or tardiness which do not take into account the reasons for the absence or tardiness. Most judges do not consider automatic point systems valid for establishing misconduct under unemployment compensation statutes. Absence, per se, is not misconduct. Only absence without reasonable cause is misconduct--illness or child care needs, court appearances and the like are not absence without reasonable cause. Of course, the more tardynesses and absences there are, the more skeptical the judges are of the employee and the more likely they are to find misconduct. Medical records and other tangible evidence can be helpful in establishing good cause for absences in unemployment compensation hearings. In Michigan, a court decision has said that in cases where an employee has been absent or tardy many times, the burden shifts from the employer to the employee to establish that his absences should have been excused because of illness or other good reason.

COMMENT: I have represented claimants in many cases fired by their employers for alleged misconduct who have been found eligible for unemployment compensation by administrative law judges. Generally speaking, the employee must have been informed of the rules, and the employer must prove the violation by first-hand testimony. With few exceptions hearsay evidence is not admissible.

TEMPORARY EMPLOYMENT AGENCIES

The Michigan unemployment statute provides that anyone who is employed by a temporary help firm is obligated to notify the temporary help firm of the termination of an assignment with a client of the temporary help firm within 7 days of the end of the assignment, provided he was notified in writing of this obligation by the temporary help firm before the employee began performing services for the client.

Failure to notify the temporary help firm of the end of an assignment causes many claimants to be disqualified from receiving benefits. Many employees are required to sign several papers when they start an assignment or sign up with a temp agency. They receive a job with a client of the agency and work for months or even years and then are laid off. By then they have forgotten that they were notified of their obligation to notify their temporary agency that their assignment has ended with the result that they are disqualified from receiving benefits.

COMMENT: The requirement to notify temp agencies, in my opinion, is very unfair to claimants and should be stricken from the Act. Notifying the temp agency should be the obligation of the client employer, not the employee. Or, at very least, the client employer should be obligated to notify the employee, in writing, at the time the assignment ends, of his or her obligation to call the temp agency within 7 days and inform the agency that their assignment has ended. Moreover, a phone call is sometimes not enough to avoid disqualification. I have seen cases where the temp agency failed to record a phone notification. And some unscrupulous temp firms who have been notified by phone deny in appeal hearings that they have been notified. If I were a temp employee whose assignment came to an end I would follow up my phone call with a notification by a fax or registered letter. The notification provision in the statute is badly in need of change.

EXTENDED UNEMPLOYMENT BENEFITS REQUIRE WEEKLY REPORTS OF TWO JOB SEARCHES

Claimants who become eligible for extended benefits (beyond 26 weeks, currently and, effective January 1, 2012 20 weeks in Michigan) should take note of the requirement under the Michigan statute that they must provide the Unemployment Insurance Agency with "tangible evidence" of at least two job searches for each week for which they are receiving benefits. The Agency is enforcing this requirement strictly and is terminating extended benefits for claimants who are non-compliant with the job search reporting requirement.

IMPORTANT COMMENT: You must continue to certify that you are laid off, available and seeking work in accordance with established procedures while you are receiving benefits and/or until your appeal is finally resolved. You will not be eligible to receive benefits for any week or weeks for which you do not certify.

APPEALS PROCEDURES

All states provide for appeals of eligibility determinations by unemployment agencies. You should appeal any decisions which you believe are not in accordance with the law in your state. You don't have to hire a lawyer in order to appeal an agency determination or to appeal a re-determination to an administrative law judge hearing. Administrative law judge decisions may be appealed to the state appeals board without charge and without hiring an attorney. Michigan provides free representation by attorneys or lay representatives for claimants and employers in administrative law judge hearings. However, most states do not provide this service. It is to your advantage to be represented in administrative law judge hearings by someone who is familiar with unemployment compensation regulations and court decisions.

Unemployment agency claims examiners and other personnel involved in administering the statute are not infallible. Their decisions are reached without the benefit of having complete information from claimants and employers, and they deal quickly with large numbers of cases. Therefore, their error rate is significant. If you feel you have been found ineligible in error or unfairly, you should not hesitate to appeal. Administrative law judge decisions are much more likely to be correct than determinations by unemployment agency claims examiners. Nevertheless, the judges aren't infallible either, and if you disagree with the judge's decision you should appeal it to the state appeals board. In Michigan nearly all appeals board decisions are based on the facts found by the administrative law judge and on his written decision plus a transcript of the administrative law judge hearing. The cost to claimants or employers of an appeal is only the postage for the appeals letter which must be RECEIVED (not postmarked) by the appeals board by 30 days from the date of the judge's decision.

COMMENT: The appeals procedures for agency determinations and re-determinations and for appeals to administrative law judge and appeals board reviews carry STRICT time limits. If your appeals are not timely you will be out of luck in most cases.

IMPORTANT: If you are appealing an unemployment agency determination or administrative law judge eligibility decision, you must CONTINUE TO CERTIFY in accordance with agency procedures (calling Marvin in Michigan) that you are unemployed and seeking employment until your case is finally settled one way or the other. Even if you win your appeal you will not receive unemployment compensation for any week for which you failed to certify.

IMPORTANT: Getting to the administrative law judge hearing on time or preferably a bit early is critical. The judges' dockets are busy and the hearings start on time even if the claimant or the employer is not present. Moreover, being late does not make a good impression on the judge. Make sure in advance that you know how to get to the Hearings Office. Most judges will not accept your excuse that you were late because you got lost on the way to the hearing.

VERY IMPORTANT! Read the green book "Unemployment Benefits in Michigan" very carefully. The green book is provided to claimants. It explains almost everything you need to know about how to apply for and qualify for unemployment compensation benefits.

Part One describes "Benefit rights, Responsibilities and Terms Every Unemployed Worker Must Know."

The Forms Section of the green booklet contains tear-out forms for various aspects of the process of applying for unemployment compensation, appealing unemployment agency decisions and so forth.

Part Two explains how to phone MARVIN to certify/claim weeks of unemployment benefits. Failure to call MARVIN will result in a loss of benefits for the reporting period.

VERY IMPORTANT: Don't forget to register with Michigan Works!!

You must register for work before your first unemployment benefit payment can be made.

You register for work by posting your resume on the Michigan Talent ?Bank at a Michigan Works! Agency (MWA). You must do this at least three days before contacting the Unemployment Insurance Agency's automated telephone system, MARVIN, or using MARVIN Online, to collect your first unemployment payment. To locate the MWA nearest you, call 1-800-285-9675. You can also post yoru resume into the Talent Bank through the Internet by going online to www.michworks.org. If you register online, you still must report in person to an MWA to verify your registration is active in the system. See Form UIA 1222 "Notice to Register for Work" on page 23 of the green booklet (Unemployment Benefits in Michigan, A Handbook for Unemployed Workers). You must take this form with you when you go to the MWA. Failure to register for work can result in a delay or loss of your benefits.

If you are on a temporary layoff (less than 120 days from your last day worked) from a full-time job, you do not have to register for work to be eligible for benefits. When you filed your new or additional (reopened) claim, you were asked a question about returning to work and the date. If you answered that you have a return-to-work date with the same employer within 120 days from your last day of full-time work, you do not have to register for work.

If you get your job by going to a union hiring hall that assigns you to companies, you do not have to register for work unless the union hall has not reassigned you within 120 days from your last day worked.

NOTE: The Unemployment Insurance Agency is quite strict in its enforcement of the requirement to register with Michigan Works!

Appeals to Circuit Court and Higher Courts

State appeals board decisions in Michigan and most other states may be appealed to the circuit court nearest the employer or residence of the claimant and to appellate courts all the way to the U.S. Supreme Court. Practically speaking, few unemployment compensation cases are appealed beyond the state appeals board or circuit court.

Only the Agency can Determine Eligibility

Finally, and most important, only the unemployment agency can determine whether or not you are eligible and qualified for benefits, not your employer nor your friends. Therefore, if you are in doubt, file a claim with the unemployment agency. Delay in filing for failure to file is likely to result in loss of rights and benefits. Moreover, simply talking with an agency representative does not protect your rights. You must file a claim and continue to certify for each week you are unemployed in order to protect your rights and benefits.

DISCLAIMER: Unemployment compensation statutes vary in significant respects from state to state. The above information and comments are based on my experience as a member of the Michigan Employment Security Board of Review (appeals board) and on my experience for the past several years representing claimants in administrative law judge (referee) hearings in Michigan. I am certified by the Michigan Unemployment Insurance Agency to represent claimants, but I am not a lawyer. My intention is to provide accurate and helpful information for claimants based on my experience in Michigan; however, I make no guarantee of the accuracy or completeness of the material on this website, and the content of this site is not specific legal advice for any individual.

Note: As of December 31, 2013 I have retired from representing claimants in unemployment compensation Administrative Law Judge hearings. Steve Baumer, who is a competent claimant representative in Administrative Law Hearings is joining me in maintaining this website, and is available to represent claimants as he has been doing successfully for nearly ten years. He may be reached by telephone on 586-212-4769.

CHIEF OF MICHIGAN UNEMPLOYMENT AGENCY FIRED AMID FALSE FRAUD ALLEGATIONS (Detroit Free Press 1-6-17)

LANSING — The state on Thursday removed the director of the Unemployment Insurance Agency and announced a "top-to-bottom review" of the agency, which faces widespread public complaints, lawsuits and legislative scrutiny over false fraud allegations made against thousands of benefit applicants whose wages and tax returns were wrongly seized.

Sharon Moffett-Massey, who had been in charge of the agency since 2014, has been "reassigned," but will remain in leadership at the Talent Investment Agency, which includes the UI Agency, according to Talent Investment Agency Director Wanda Stokes..

Bruce Noll, the TIA's legislative liaison, will oversee the UI Agency while a national search is conducted for Moffett-Massey's replacement, Stokes said in a news release.

http://www.freep.com/story/news/local/michigan/2017/01/05/michigan-unemployment-insurance-agency/96205168/

Jonathan Oosting, Detroit News Lansing BureauPublished 12:15 p.m. ET Dec. 13, 2017Buy Photo

(Photo: The Detroit News, file)

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Lansing — The Michigan Senate on Wednesday unanimously approved a plan to reform the state’s unemployment insurance system following a false fraud scandal that ensnared tens of thousands of jobless residents.

The bipartisan eight-bill package would reduce the state’s highest-in-the-nation penalties for unemployment fraud and delay interest penalties to allow for due process, but it does not require compensation for those wrongly penalized in the past, a point of contention among legislators. It now goes to Republic Gov. Rick Snyder for potential signature.

The Snyder administration was pushing to include a “framework to set up a victims compensation fund” as part of the reform legislation in order to “help those who were adversely affected by the inappropriate fraud determinations,” spokeswoman Anna Heaton said.

That was not included in bills approved Wednesday, but Snyder is “still pleased with the final version” and the administration intends to “work with UIA to address victim compensation funding in the future,” Heaton added.

While Democrats had urged a funding component when the proposal passed the House in November, Senate Appropriations Chairman Dave Hildenbrand, R-Lowell, said it only came up recently in negotiations between Snyder and legislative leaders.

“We didn’t have the time to vet it, and we wanted to get these reform bills done before we break for the holidays,” Hildenbrand said as the Senate prepared to wrap up voting for 2017.

“That piece I’ve committed to the governor’s office — that we’ll look very quickly next year at maybe how to set up a fund and the appropriate amount of money that would go into that fund.”

The state unemployment agency’s automated computer system made nearly 48,000 false fraud accusations against jobless claimants between October 2013 and August 2015, according to a review by the department, which said in August that it was in the process of refunding affected residents more than $20.8 million in penalties.

But wrongly accused residents deserve more than a refund, said state Rep. Kevin Hertel, D-St. Clair Shores, who sponsored one of the reform bills now heading to the governor’s desk.

“At a minimum, they should be given interest on top of that money,” said Hertel, noting other victim costs may be hard to quantify. “There were individuals who lost their homes because money was taken from them and they couldn’t make mortgage payments. We’ve heard stories that the financial hardship it has created caused divorces.”

The legislation approved by the House would allow the UIA to recover full compensation for verified unemployment fraud but cap penalties at 150 percent for a second or subsequent offense. The current 400 percent penalty, believed to be the highest in the country, would only apply to imposters who commit identity theft.

The eight-bill package would also delay interest penalties, prohibit interest on over-payments due to agency mistakes, allow fraud determinations to be reconsidered for up to three years and give those accused of unemployment fraud access to an advocacy assistance program.

The proposal was designed to address agency failures identified by a work group chaired by state Rep. Joseph Graves, R-Argentine Township, that included Democratic legislators and other stakeholders.

Wanda M. Stokes, who was appointed to lead the Michigan Talent Investment Agency in July 2016, has said the bills will “build on the work” the state is already doing to improve the Unemployment Insurance Agency.

“This legislation is a great bi-partisan effort to help improve the unemployment insurance operations on a number of important issues both for the general public and employers,” Stokes said Wednesday in a statement. “I am especially pleased that we will have better tools to combat identity theft.”

Other bills in the package would create a new mechanism for addressing identity theft, require the UIA to report imposter claims each year and clarify eligibility for penalty waivers for residents living in poverty.

Michigan AFL-CIO President Ron Bieber called the package “a big win for Michigan families” but said more work must be done to “make things right” for victims.

“These important bills will make much-needed changes to improve the UIA, and give a helping hand to working people who have lost a job through no fault of their own, so they can continue to support their families while they search for work and get back on their feet,” Bieber said in a statement.

joosting@detroitnews.com

LANSING — After the state falsely accused tens of thousands of Michigan residents of unemployment insurance fraud — garnishing wages and seizing income tax refunds to satisfy millions of dollars in penalties that were wrongly imposed — lawmakers from both parties say they are determined no such fiasco will ever happen again.

A bipartisan package of eight bills sailed through the Senate Oversight Committee by 5-0 votes Thursday after passing the full House in early November. They are expected to pass the full Senate and be sent to Gov. Rick Snyder for his signature as early as next week.

Business and labor groups are supportive of the bills they say will help prevent another rash of false fraud accusations, while at the same time addressing a growing problem of genuine unemployment insurance fraud resulting from identify theft.

Also on Freep.com:

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But advocates for claimants say the legislation does little or nothing to help those whose lives were turned upside down when the state's $47-million automated system for fraud detection, the Michigan Integrated Data Automated System (MiDAS), ran amok between 2013 and 2015, when it was used to identify fraud in jobless claims going back as far as 2007.

And one of those advocates says that despite state claims to the contrary, some of the tens of millions of dollars wrongly taken from Michigan residents have still not been returned.

"I want to make very, very certain that we don't forget the thousands of people out there who are still hurting and still haven't gotten refunds," said Jennifer Lord, a Royal Oak attorney pursuing a class-action lawsuit against the state.

Senate Bills 5165-5172, would, among other changes:

• Require the Unemployment Insurance Agency to send notices of suspected fraud by claimants to all known addresses, not just the last address on file with the agency. Because of problems with notice, many of those falsely accused of fraud did not find out until their wages were garnished or their income tax refunds were seized.
• Allow alleged fraud cases to be reopened, after the appeal period has expired, if claimants can show the notice was sent to an incorrect address.
• Reduce Michigan's highest-in-the-nation 400% fraud penalties to 100% for a first offense and 150% for subsequent offenses. The 400% penalty would be maintained for impostors who fraudulently obtain benefits through identify theft.
• Create an advocacy program to help claimants navigate administrative hearings. Claimants accused of fraud would only have to pay the costs of the advocacy if the fraud finding was upheld.
• Remove the 1% monthly interest charge on overpayment of unemployment benefits in cases where the overpayment was because of an error by the agency, not the claimant.

Another key remedy — prohibiting MiDAS from making a fraud determination without review by a human being — was implemented in 2015.

State Rep. Joe Graves, R-Linden, who co-chaired a work group that helped develop the legislation between March and October, told the Senate committee Michigan's changes could be "a model for the rest of the country."

More on Freep.com:

Aide warned Mich. Governor Rick Snyder about jobless agency leadership

Data glitch was apparent factor in false fraud charges against jobless claimants

Suit dismissed over false fraud charges; court says jobless claimants filed too late

Sen. Vincent Gregory, D-Southfield, a member of the committee that reported the bills to the full Senate, said "it's great to see so many different, diverse groups coming together to solve a problem."

Business groups voiced particular support for measures intended to stop impostors from obtaining benefits through identify theft — which is costly to companies that pay employment taxes to fund the benefits.

Wendy Block, senior director of health policy and human resources for the Michigan Chamber of Commerce, said the legislation represents a fragile compromise between advocates for business and claimants. She urged senators not to amend the bills in ways that could undo a hard-fought agreement.

Stephanie Glidden, director of public affairs for the Michigan AFL-CIO, said the package "takes large steps," but "there is still much work to be done to make sure those harmed in the past ... are made whole."

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Jennifer Lord, an attorney, at the Macomb County Administration Building in May 2017. (Photo: Kathleen Galligan, Detroit Free Press)

The state said in Thursday it has refunded about $21 million to about 20,000 Michigan claimants. Those reimbursements followed a review, completed in August, of nearly 63,000 cases in which claimants were assessed a fraud penalty found that more than 44,000 of those cases — or about 70% — did not involve fraud.

That's the end of the reimbursements except for a few individuals the state is still trying to contact, said Chris DeWitt, a spokesman for the agency.

But Lord, the Royal Oak attorney, said a review of state government accounting suggests the amount wrongly seized from claimants must be much higher. More than $46 million collected from such penalties was placed in a state contingent fund between 2014 and 2016, and that amount does not include the value of actual benefits seized, which were deposited in a separate fund, Lord said.

She said none of the claimants she has spoken to who have received refunds have received full refunds. She said she does not know why.

Lord's suit on behalf of claimants was dismissed in July by the Michigan Court of Appeals, which said the suit was filed too late. Lord is now waiting to hear whether the Michigan Supreme Court will take up the case.

Steve Gray, a clinical assistant professor at the U-M Unemployment Insurance Clinic in Ann Arbor, who was a member of the work group that helped develop the legislation, said several provisions of the bills — such as the reduced penalties and improved notice requirements — will help claimants going forward.

But even for claimants who have 100% of the money wrongly taken from them returned, "does it really compensate them for all the other stress and problems that came as a result of being falsely accused?" Gray asked.

"These bills really don't make people whole. They prevent this from happening in the future."

Contact Paul Egan: 517-372-8660 or pegan@freepress.com. Follow him on Twitter @paulegan4.

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LANSING — Michigan would no longer assess extraordinarily high fraud penalties on people who receive unemployment benefits, and those accused of wrongdoing could get help from an advocate instead of having to represent themselves or hire a lawyer under bipartisan legislation unveiled Thursday.

The eight-bill package was proposed in the wake of a scandal at the state Unemployment Insurance Agency. It has reversed at least 44,000 unemployment benefit fraud cases covering a two-year period and is refunding nearly $21 million after a computer system wrongly accused people of collecting excessive benefits.

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A law enacted earlier this year prevents the agency from adjudicating a claimant's case as fraud without human verification and reduces the statute of limitations so it can pursue fraud three years back instead of six. But legislators said other improvements are needed. The state Unemployment Insurance Agency is supportive of the new proposals developed by Republican and Democratic leaders of the GOP-led House Oversight Committee, business officials and other experts.

"It really will create a more fair process for individuals accused of fraud," Democratic Rep. Curtis Hertel of St. Clair Shores said at a Capitol news conference.

In many cases between 2013 and 2015, claimants did not commit fraud and — to compound being forced to pay restitution — were hit with interest along with penalties above the overpayment.

Under the legislation, penalties would be 100 or 150 percent instead of 200 or 400 percent. The 400 percent penalty is the highest in the U.S.

Claimants could not be charged interest due to the government's mistakes. Those accused of fraud, who are now prohibited from getting help through an advocacy program, could qualify for help making their case at a hearing.

"We don't want to ruin people financially for the rest of their lives," said Steve Gray, director the University of Michigan Law School's Unemployment Insurance Clinic, which helps 300 families navigate the system annually. The bills, he said, would strengthen notification requirements so it is more likely that claimants actually know of potential overpayments and can defend themselves.

The smaller financial penalties would still be at the high end compared with other states, Gray said.

People filing for benefits would have to give additional proof of identity. The agency would be required to verify identities to the best extent possible before making payments.

Also, employers and past employees could alert a newly created investigative officer of identity theft cases.

Delaney McKinley, senior director of government affairs and membership for the Michigan Manufacturers Association, said impostor claims are a "huge issue" for employers. The legislation would better prevent payments from being made to identity thieves and create a clearer process for employers to report suspicious activity, she said.

Hertel and other Democrats said while the bills would help prevent a similar debacle in the future, they would not do enough to assist those who were wrongly accused. They proposed a nine-bill package last month to reimburse the accused for litigation and bankruptcy expenses, restore the maximum duration of benefits to 26 weeks instead of 20, lessen wage garnishments and change the statute of limitations to sue.

In July, the Michigan Court of Appeals tossed a lawsuit filed by people who were wrongly accused of defrauding the system. The judges said the plaintiffs should have sued sooner — a ruling that their lawyer blasted as "ridiculous" and "nonsensical."

"Until the state remediates all of the damage these families have suffered, we haven't done our job," said House Minority Leader Sam Singh, an East Lansing Democrat.

LANSING — A Republican lawmaker says the state should assess the costs and benefits of a $47-million computer system that falsely accused tens of thousands of Michigan unemployment insurance claimants of fraud and also improperly exposed the names, Social Security numbers and other personal information of up to 1.9 million claimants.

State officials have not said whether the problem was the Michigan Integrated Data Automated System (MiDAS), used to detect unemployment insurance fraud, or simply the way the state used the system.

In public statements over the last several months, and again on Thursday at a hearing before the House Oversight Committee, officials from the Michigan Unemployment Insurance Agency have not placed any specific blame for the false fraud allegations — which resulted in quadruple penalties, wage garnishes, seizure of income tax refunds, and personal bankruptcies — on the vendor that sold the state the MiDAS system, Fast Enterprises of Colorado.

The main problem was that the "programming allowed MiDAS to make discretionary findings without the intervention of a human," UIA Acting Assistant Director Bruce Noll told the committee Thursday. "That's what was missing."

Related:

Suit settled over false fraud claims against Michigan's jobless

Embattled Michigan jobless agency reassigns 21 managers

The agency continues to use MiDAS to detect unemployment fraud, despite a 93% error rate on automated fraud findings. But since about August 2015, a human must review and sign off on the findings before any further action is taken, officials say.

On the separate issue of unauthorized release of personal information, which began in October 2016 and was identified and corrected on Jan. 30 of this year, that problem was caused by a software update provided and performed by the vendor, Tiziana Galeazzi, general manager for talent and economic development in the Department of Technology, Management and Budget, told the committee Thursday.

The update affected information at Michigan companies that use third-party vendors to do their payroll. Authorized officials with access to MiDAS at those companies — generally top executives and human resources professionals — who would normally only have access to personal information about their own employees were able to access such information on employees at other affected companies. An investigation continues with the Michigan State Police, but so far no criminal intent or wrongdoing has been found, Galeazzi said. Those affected can request a free credit report by calling 877-322-8228.

Rep. Martin Howrylak, R-Troy, vice-chairman of the House Oversight Committee, called for a cost-benefit analysis of the MiDAS system to be completed and shared with lawmakers.

"That is something we would definitely want to look at doing," Galeazzi said.

Related:

Michigan unemployment ticks up to 5%

A phone call and e-mail seeking comment from Fast Solutions were not immediately returned Thursday.

After the meeting, Howrylak said he looks forward to review, but "there's no way on God's green Earth" the system has provided a cost benefit to the state, given the amount of time, money and effort now being used to rectify mistakes.

Howrylak said he's frustrated trying to establish accountability on the issue because key employees who were in place at the time the false fraud findings were made, between Oct. 1, 2013, and Aug. 7, 2015, have since been moved to other jobs. The two officials with responsibility for UIA who testified Thursday — Noll and Talent Investment Agency Director Wanda Stokes — were not connected with the agency when the false fraud findings were made.

"Everybody is innocent ... everybody is going to have clean hands," Howrylak said.

"I'm just really frustrated. It's an injustice to taxpayers, to employers and employees."

Noll said the agency continues to review about 28,000 fraud determinations that were made during the relevant period and expects to complete that review in June. The 93% error rate was found during an earlier review of about 22,000 separate fraud findings that had no human involvement. So far, the state has reimbursed about $6 million to people wrongly accused of fraud, Noll said.

The state has passed legislation to prevent a recurrence and recently settled a federal lawsuit that halted collections involving affected cases pending further review. A class-action lawsuit continues in state court.

The affected claims date back as far as 2007 because MiDAS was used to do a six-year "look back" at earlier claims.

The agency is undertaking a top to bottom shake-up of management responsibilities and job assignments, Stokes said.

Contact Paul Egan: 517-372-8660 or pegan@freepress.com. Follow him on Twitter @paulegan4.

LANSING -- An attorney suing the Michigan Unemployment Insurance Agency, alleging it has wrongly accused tens of thousands of residents of fraud and unlawfully confiscated tens of millions of dollars in benefits and penalties, says an auditor general's report released last week that was highly critical of the agency supports her claims.

In the state's response to the report released April 21, "they're admitting (the state's unemployment insurance system) is flawed in the ways we're claiming it's flawed," Royal Oak attorney Jennifer Lord told the Free Press on Wednesday.

Michigan Court of Claims Judge Cynthia Stevens is expected to rule soon on the state's motion to dismiss Lord's proposed class action. Arguments were heard on March 8.

The lawsuit, filed in 2015, alleges the automated system the agency uses for detecting and adjudicating unemployment insurance fraud "deprives UIA claimants of due process and fair and just treatment because it determines guilt without providing notice, without proving guilt and without affording claimants an opportunity to be heard before penalties are imposed."

The suit also alleges the state agency engages in unlawful collection practices when it seizes benefits and income tax returns and garnishes wages to collect the penalties it arbitrarily assesses.

In a motion filed in October, attorneys for the Unemployment Insurance Agency urged Stevens to dismiss the suit, saying the system worked the way it should because lead plaintiff Grant Bauserman appealed the agency's fraud determination against him and "the agency reconsidered its previous determinations and held Bauserman not liable for interest and penalties."

The state agency argued "Bauserman has been refunded all monies intercepted and he owes the agency no money," and therefore "there is no claim upon which relief may be granted."

But another client of Lord's, Daniel Di Gregorio, told the Free Press on Wednesday he's continued to receive letters from the UIA accusing him of fraud, even after Administrative Law Judge Stephen Goldstein threw out all allegations against him in February saying that by failing to specify details about its allegations against Di Gregorio, "the agency violate(d) the most rudimentary demands of due process of law."

Di Gregorio, a crane operator in the concrete business, said his wife Shirl took the lead in fighting the $33,000 demand he received from the state agency and "if it wasn't for my wife, I don't know what I would have done." He said he might have rolled over and found a way to pay the money.

Weeks after the judge ruled in her husband's favor, he received another payment demand from the agency, this time for $6,000, Shirl Di Gregorio said.

Lord said the report issued April 21 by Auditor General Doug Ringler supports her case because the audit details how the state's MiDAS (Michigan Integrated Data Automated System), introduced in 2013, arbitrarily makes fraud determinations based on answers to innocuous questions such as whether someone applied for benefits because they needed the money. The audit also details how the agency fails to spell out details that would allow claimants to defend themselves against fraud allegations, and says the agency fails to give proper notice of allegations and repeatedly sends notices to incorrect addresses even after letters have been returned as "undeliverable."

In each case, the agency agreed with the auditor's findings, though it says it has made changes. Di Gregorio's experience shows that even if methods have changed, similar results continue, Lord said.

Lord said she sees parallels with the state's conduct in the lead poisoning of Flint's drinking water: "The parallel I see is that there's a CEO mentality," in which the human element is ignored and "it's all based on the bottom line," she said.

Ken Silfven, a spokesman for the UIA, wouldn't comment on whether the auditor general's report supports Lord's allegations, citing the ongoing litigation.

But Silfven took issues with the Flint comparison and suggestions Gov. Rick Snyder places too much emphasis on the bottom line.

"To the contrary, the governor reminds his team constantly that everything we do is about serving people," Silfven said in an e-mail.

"I know that’s what motivates him as he does his job. That’s why he had the courage to lead the way on such things as the Healthy Michigan program. He’s driven by compassion and a clear sense of duty. It’s not just dollars and cents. He’s made clear time and again that we can never forget the human element when it comes to shaping programs or policy."

Contact Paul Egan: 517-372-8660 or pegan@freepress.com. Follow him on Twitter

Detroit Free Press Editorial Board 12:07 a.m. EDT April 27, 2016Buy Photo

(Photo: Kathleen Gray, Detroit Free Press)

If government is a business, and taxpayers its customers, Gov. Rick Snyder's revamp of the state's unemployment agency is a colossal failure.

In 2009, the unemployment insurance fund was a mess, driven to the brink of insolvency by a spike in claims, thanks to the worst recession to hit Michigan since the 1980s. The state owed billions to the federal government for money borrowed to keep its unemployment insurance fund afloat. To bring more into the fund, it raised taxes on employers. And the recession was far from over.

After his 2010 election, Snyder took pride in cleaning up the unemployment fund.

DETROIT FREE PRESS

Audit rips Michigan Unemployment Insurance Agency

DETROIT FREE PRESS

Suit: Michigan wrongly charging unemployment aid applicants

But the $47-million automated system the state purchased to make the agency more efficient has had what one law professor calls "grievous unintended consequences," spawning a class action, a rebuke from the state's auditor general and hardship for an unknown number of Michiganders, falsely accused of fraud, consigned to fight a seemingly intractable system.

U.S. Rep. Sander Levin, a Royal Oak Democrat, has called on Snyder to re-examine all cases of fraud flagged by the automated system, and to repay Michiganders whose wages were garnished or tax returns were seized improperly. And legislation introduced last year would require the state to present more evidence for a fraud determination, and work more diligently to notify claimants they had been accused of fraud.

Last year, the unemployment agency stopped relying on the automated system, requiring staff to investigate findings of intentional misrepresentation. It's not enough.

We encourage the Legislature to pass the legislation posthaste -- and Snyder to press pause on fraud determinations made under the new system. Because 40% of fraud determinations have been overturned by administrative law judges -- and because the sums at stake can reach amounts large enough to crush a family hoping to recover from a period of unemployment -- the governor must order his unemployment agency to freeze ongoing garnishments and review extant fraud determinations.

The Michigan Integrated Data Automated System, called MiDAS, automated not just the claim filing process, but a review that scans for fraud. Out-of-work Michiganders whose claims don't match answers provided by their former employers were flagged by the system for fraud, and the state takes action to recoup improperly paid benefits, plus penalties.

But there's a problem: The system is flawed, claimants allege (and the state's response to such criticism has seemed to acknowledge) sometimes pursuing penalties from Michiganders who were entitled to the unemployment benefits they’d received.

Other claimants charged with fraud have been victims of computer programming errors that, for example, falsely distributed earnings -- reported in compliance with state law -- over an entire quarter, creating the incorrect impression that the claimant received benefits while working, according to an examination of the system last year by the Metro Times.

Because the state can seek stiff penalties for fraud -- and because it has almost unilateral authority to garnish wages of those determined to have committed fraud -- the sums paid out in unemployment insurance can be dwarfed by penalties and fines, spiking as high as $100,000, said Steve Gray, a University of Michigan law professor who leads a law clinic aimed at helping folks navigate unemployment law.

MiDAS processed about 1.4 million claims since 2013; it has established 46,638 fraud cases since then, unemployment agency spokesman Ken Silfven wrote in an e-mail. Of those, Silfven said, 60% of the fraud determinations were "at least partially affirmed." This, the state seems to view as positive. But flip that number: 40% of fraud determinations were overturned, and an even greater percentage have been partially overturned.

Silfven said that "most" fraud determinations were made after staff review, not solely by the system. Nonetheless, he said the agency halted "the process when fraud was determined without human intervention" in 2015, and that the agency takes such concerns seriously.

The auditor general found that the unemployment agency's efforts to notify Michiganders they had been found in violation of the law and had 30 days to appeal were inadequate. Nearly 10% of notices were returned by the post office as undeliverable, the audit found, but because the new notice would arrive past that 30-day deadline, the agency didn't bother to resend.

It's an incomprehensible rationale.

Take a moment to understand what all of this means: An automated system could, in error, determine that an out-of-work Michigander seeking unemployment benefits had committed fraud. A notice sent out could arrive at the wrong address, with the agency obligated to take no steps to ensure the notice was received. And so without that Michigander ever knowing he or she had been accused of fraud, the state could garnish that person's wages or tax return.

That happened to a Garden City man interviewed last summer by Michigan Radio. Because the agency sent notice of suspected fraud to the wrong address -- two years before it started garnishing his wages -- the man first became aware he'd been charged with fraud when money started disappearing from his paycheck. After he filed a late appeal, an administrative law judge cleared him of the fraud charge.

Claimants hoping to get information on the phone are similarly out of luck, the auditor general found. Over two months in 2014, 89% of claimants' calls to the agency went unanswered. (The agency, it is worth noting, defended itself by insisting that it only failed to answer 50% of calls.) More than 28% of callers placed on hold abandoned the calls.

This system is broken. But it can be fixed. Snyder and the state Legislature need to make this a top priority.

WASHINGTON — Some 45,000 Michiganders who are receiving unemployment checks through a federal program will lose them on the last week of December, now that members of the U.S. House are leaving town without making another extension.

Democrats in Congress — U.S. Rep. Sander Levin of Michigan chief among them — had been clamoring loudly for another extension of what’s known as Emergency Unemployment Compensation, or EUC, a program that adds 14 to 47 weeks of unemployment checks after regular state benefits are exhausted.

But Republicans who control the House adjourned for the December break Thursday without passing what would have been the 13th extension of the program since 2009. Some said the $25-billion cost of extending it is too high.

In Michigan, regular unemployment benefits and 36 available weeks of EUC provided for a total of 56 weeks of benefits. Without the extension, no claims for EUC benefits will be paid after those filed for the week of Dec. 28, and only the state’s maximum benefit of 20 weeks will be available.

Lynda Robinson of the state Unemployment Insurance Agency said Friday there were 44,889 Michiganders receiving EUC as of last month and that remains the best estimate of about how many people will lose those benefits at the end of December.

A notice of the expiration of the program is set to be mailed to beneficiaries next Wednesday.

After agreeing to past extensions, there was growing sentiment among House Republicans that the EUC has failed to generate new jobs and might help to keep unemployment higher than it would otherwise be by putting upward pressure on wages. Emergency Unemployment Compensation has cost more than $200 billion.

“This program still hasn’t produced the jobs the administration promised,” said U.S. Rep. Dave Camp, R-Midland, chairman of the House Ways and Means Committee. “In fact, recent academic studies show the program is hurting job creation.”

Camp, whose committee has oversight for unemployment insurance, cited what he called “real world experience in North Carolina. There, the program ended in July and the state has seen rapid job creation.”

“Clearly, it is time to focus on other policies that will actually lead to real economic growth and jobs for families,” he said.

Democrats counter that 1.3 million people nationally will lose their benefits under the program by the end of December and they say they will continue to press House Speaker John Boehner and other Republican leaders to pass an extension in 2014. But it may be a hard sell to Republicans, who say it’s time to end what was supposed to be a temporary measure started in response to the 2008-’09 recession.

Earlier this month, the Obama administration put out a report that says unemployment benefits remain one of the best tools for stimulating the economy, however, and that letting the federal program expire could hurt spending. The report said the national unemployment rate of 7% —Michigan’s was 9% in October — is high enough to warrant continuing the extra benefits.

“Historically we have never, never ended these emergency provisions when long-term unemployment has been as high as it is today,” Levin said on the House floor Thursday.

Contact Todd Spangler: 703-854-8947 or tspangler@freepress.com

SIXTEEN WAYS TO AVOID LOSING YOUR UNEMPLOYMENT APPEAL

Probably more unemployment compensation cases are lost than are won. "In most cases, you will not win unless the facts and the law are in your favor. It is possible, however, to bungle a potential winner." (William DeMartini, Chief Administrative Law Judge 1979-82, California UI Appeals Board)

The following list covers the most common mistakes parties make in appeal cases.

1. File your appeal on time. An appeal to the Board must be filed (in person at the Job Center or postmarked) within 15 calendar days of the mailing date of the decision. There are no provisions for extension of time and if you file late, you face a heavy burden in proving you were prevented from filing on time Also, it is strongly recommended that you state clearly the reasons for the appeal.

2. Prepare your case early and on the proper issues(s) You should identify the issue involved in the appeal and begin preparing for the hearing as soon as you learn of the appeal -either when you decide to appeal or when you receive a copy of another party's appeal.

Be careful not to overlook multiple issues in a decision. The claimant's benefit entitlement may be combined with an overpayment, or combine voluntary leaving and availability. Also check the hearing notice, as the referee may signal a need to consider a different section of law at the hearing than the one used by the Job Center, such as voluntary leaving instead of discharge, or Section 3 instead of 402 (e).

Time is very important. Secure your documents and witnesses immediately. If you wait until you receive notice of the hearing to seek counsel, your advocate will have far less time to prepare.

3. Plan to get right to the point at the hearing. As you prepare your case, remember that a clear and concise presentation is generally better. Avoid drowning your main point in a cascade of background material. Concentrate on the legal issues which control eligibility. Be sure you know who has the burden of proof; it governs how much you need to present.

4. If you have a problem with the hearing date, request a new hearing date promptly. Unless you face a dire unanticipated emergency, you will not be granted a last-minute change in hearing date.

5. Make early requests to subpoena witnesses whose attendance you cannot control. Subpoenas are up to you to serve. A subpoena served on a witness the day, or even the day before the hearing may be unenforceable.

6. Don't subpoena witness(s) against you. This happens more than you might think. Be sure you know each witness's testimony before bringing them to the hearing. Do not count on an adverse witness turning friendly because he or she is subpoenaed or under oath at the hearing.

7. When in doubt, present testimony. First-hand testimony is always better than a written statement or document. Moreover, a valid hearsay objection to a document may cause the referee to discount the document completely.

8. Show up on time. Do not count on a referee waiting beyond the scheduled time for you to appear. If you have a last minute emergency or an unforeseen delay en route, contact the referee office immediately.

Follow the advice on the hearing notice to arrive early. You can review the Job Canter documents in advance and avoid facing a "surprise from the file" during the hearing.

9. Present the eyewitness. This is one of the most common mistakes. Offering a witness who has no firsthand knowledge of the event in question is a waste of time and could cost you the case.

10. Object to hearsay evidence of the other side. They have the right to object to any evidence of yours which is hearsay, so you should object to theirs.

11. Present the key document. Be prepared to leave it with the referee. Photocopies are acceptable but bring along the original in case the other side tries to challenge it. If you do not possess a key document, it can be subpoenaed in the same manner as a witness.

12. Summarize voluminous written material. Evidence is judged on quality, not quantity. Submitting a bewildering stack of papers can hurt you rather than help you. If you feel you must, then at least prepare a summary to help the referee and Board take proper note of the items. Be aware, however, that the other side has a right to challenge your summary and to examine the original material from which the summary was compiled.

13. In questioning your witness, avoid leading questions. A leading question is one which suggests the answer, often a "yes" or "no". These types of questions detract from the credibility of the witness. In eliciting the direct testimony of your witness, ask short questions which allow the witness to relate a fact or describe an event in his or her own way. (You may ask leading questions when cross-examining a witness of the other party, however.)

14. Explain technical terms, occupational slang and strange customs of the trade. If it's not commonly understood outside of your business, trade or profession, explain it. Otherwise, you may confuse the referee, the Board and the courts (if it goes that far) and receive a disappointing decision.

15. Avoid excessive cross-examination. It is very rare for a party to make his or her case on cross-examination. More commonly, you can lose the case by unintentionally giving the witness the chance to repeat and elaborate upon all the adverse testimony just given. However, make sure any claimant statement, related to the issue being ruled on, and which is not considered factual, is refuted during the hearing.

16. Do not assume the referee knows every law enacted or every decision issued. You can reasonably assume the referee will know about a point of law in the unemployment field, but offering the referee copies of, or the citations to, unemployment court decisions related to your case would not hurt.

Statues and decisions outside of the unemployment field should be accurately cited, and a copy of the pertinent material provided if possible.

-- January 1996, Penn-Jersey Assn's "The Keystone"

Unemployment Compensation Solvency Tax

40,000 Michigan employers will pay an extra $67.50 per employee in 2009 to pay off a $472.8 million shortfall in the unemployment benefits trust func, moneh the state borrowed from the federal  government to pay benefits to 650,000 people in 2008.

The article linked below will be of interest to workers who have accepted buy-outs. The authors point out that the law is not clear on whether workers who accept buy-outs are eligible for unemployment compensation benefits. The authors argue that while buyouts are often presented as "voluntary"' in effect, however, the workers to whom they are offered have limited volution. The offer in itself acts as a signal to the worker that a job is not secure. This signal is often received in a deteriorating economic climate. The resulting apprehension of job loss is coupled with the realization that a worker who refuses a buyout now may be jobless with no parting payment in the near future. Reat the entire excellent article here:

[Unfortunately the link is dead. The Detroit Free Press kills links to their articles after a brief period and charges an exorbitant fee for access to the material. Too bad!)

Governor Snyder has recently taken actions that undermine Michigan’s unemployment compensation system. In June he signed a bill passed by the legislature which reduced the maximum duration of unemployment insurance benefits by 23%, from 26 weeks to 20 weeks. Twenty-six weeks has been the maximum benefit duration since the inception of the program. All other states continue to provide 26 weeks of benefits.

As if that weren’t enough, in July Governor Snyder signed an executive order abolishing the Board of Review (unemployment compensation appeals board) and moving the function to a new appeals body combining workers compensation and unemployment compensation appeals. Only two members of the current Board of Review were reappointed.

For many years the Board of Review has been composed, in accordance with the unemployment compensation statute, of five members--a chair person and four members appointed by the Governor for 4-year terms. Two of the members have been designated as “employer members” and two as “claimant members.” Experience representing employers was a requisite of appointment as an employer member and experience representing claimants was a requisite of being appointed a claimant member. These requirements were intended to assure fair consideration of the interests of claimants and employers in accordance with the purpose of the unemployment statute. This safeguard was dropped under Governor Snyder’s executive order which provides for a 9-member appeals body without a requirement of experience representing employers or claimants. In the current Republican administration there may be an employer thumb on the scales of justice, and perhaps toward claimants in a future Democratic administration. Thus, the governor’s executive order is unwise, short-sighted public policy, in my opinion.

Moreover, the Unemployment Insurance Agency recently announced that it will levy a 1 percent per month interest charge on benefit amounts determined to have been paid incorrectly and restitution ordered.

Published: March 18, 2007

Federal wage insurance is a pilot program for a small subset of workers, age 50 or older, who lose their jobs to trade competition. Under the program, a worker who takes a lower-paying replacement job can receive a government subsidy for two years, equal to 50 percent of the difference in earnings up to a total of $10,000, provided the new job pays less than $50,000 a year.

Congress is now examining whether wage insurance should be expanded to a national program and added to existing aid for the unemployed. There are some attractive aspects to the program. But it should not be the first priority in dealing with job loss. Given the nation's limited budget resources, it would be very difficult to incorporate wage insurance into the social safety net without cannibalizing other programs.

First, traditional unemployment insurance must be improved before wage insurance is expanded. A joint federal/state program, unemployment insurance is currently available to about 35 percent of workers and replaces, on average, about a third of their weekly earnings, usually for up to 26 weeks. Critics portray it as a license to loaf. But people who collect unemployment insurance generally find better-paying jobs than those who do not and are more likely to find jobs with health insurance. That is a strong argument in favor of expanding unemployment insurance, not curtailing or replacing it.

There is also no reason to believe that taxpayer dollars are better spent on wage insurance than on retraining for displaced workers. States and localities have had good results from retraining, which could be bolstered with federal support.

On the positive side, wage insurance could be a pragmatic response to the downward pressure on wages from globalization. Not everyone who loses a job in today's economy is able to find a comparable new one. Wage insurance would help keep displaced workers working and, possibly, help them to acquire new skills on the job. But there are still many unanswered questions about its efficacy.

So far, the issue has divided on predictable lines. House Republicans have introduced a bill that would let states use unemployment insurance funds to pay for wage insurance or other programs, like private employee accounts, that could be tapped in case of job loss. That would be good for free-market cheerleaders, but not for laid-off workers.

In contrast, a Democratic representative, Jim McDermott of Washington, has drafted two proposals. One, costing roughly $7.5 billion over five years, would expand unemployment insurance, to be paid for by extending an expiring federal unemployment tax on employers, equal to about $14 per worker per year. The other would allocate $3.5 billion a year to establish a national program of wage insurance, to be paid for by a new employer tax equal to about $40 per worker per year.

Congress should first proceed with improvements to unemployment compensation and then further explore the merits of direct job retraining and wage insurance. Ideally, the nation would be able to provide unemployment insurance, retraining and wage insurance. But lawmakers have to make tough choices. It's crucial to the economic well being of families that they choose well.

Jobless claims overwhelm state workers

Unemployment office's 800 workers ordered to log 140 overtime hours by year's end

Mark Hornbeck / Detroit News Lansing Bureau

Lansing -- While most state workers are about to take their last unpaid furlough day, Unemployment Insurance Agency employees are racking up overtime.

The 800 employees, including call center and problem resolution staff, recently received a memo saying they'll have to put in 140 more hours of overtime before the end of the year to keep up with the crush of applications from Michigan's legions of jobless. They'll have to work seven Saturdays or holidays and then another 80-plus hours of overtime during regular workdays.

The overtime will cost $3.4 million, about $4,300 per employee, a tab picked up by the federal government.

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Michigan has an unprecedented 450,000 residents receiving unemployment compensation and "hundreds of thousands" waiting to get benefits, said Norm Isotalo, spokesman for the Unemployment Insurance Agency. The state's 15 percent jobless rate is the highest in the nation.

"We do need to get the work done," Isotalo said.

Call center phone line times have been expanded until 6 p.m., and offices are open longer, from 7 a.m. to 4 p.m., he said.

Staff members have been required to put in overtime for much of the year, Isotalo said, to cut down on waiting time.

Because of the flood of business, Unemployment Insurance Agency workers were not compelled to take the six furlough days required of more than 37,000 other state workers, whose last payless day will be Friday. It's not certain whether more furlough days will be required in the next fiscal year that begins Oct. 1 as a measure to help balance a budget that is $2.8 billion out of whack.

The unemployment office isn't the only help center trying to cope with increased demand.

The waiting lines are mounting for job training and tuition under the state's 2-year-old No Worker Left Behind program because there are more applicants than dollars.

While applications are being processed across most of the state, there are waiting lists in western Wayne and Monroe counties, said Andy Levin, deputy director of the Department of Energy, Labor and Economic Growth. Most of the program is financed with federal grant money, and the state applied to the U.S. Department of Labor for $58 million in late June to address the need, Levin said. Officials are waiting for an answer.

People will be put into training as money becomes available, he added.

One contractor in southeastern Michigan who is handling No Worker Left Behind benefit requests erroneously sent e-mails to applicants earlier this month saying there is no money for the program, Levin said. He added that the Southeast Michigan Community Alliance, which is running the program in Wayne and Monroe counties, neglected to set up a waiting list.

"We're not sure why that happened, but it has been taken care of," he said.

Under the program, laid-off workers can get up to $10,000 for two years of tuition at a community college, four-year university or other approved training program. About 88,000 people have enrolled, Gov. Jennifer Granholm has said.

mhornbeck@detnews.com (313) 222-2470