As the COVID-19 pandemic shutters businesses across the country, millions of people have been laid off, resulting in a historic surge in unemployment claims. On April 13, the state officially began accepting claims from previously ineligible workers, such as independent contractors, gig workers and self-employed people. Elizabeth Abdnour, a self-employed lawyer, applied that day under the new eligibility rules.

Two days later, Abdnour received four of the six letters she would get from the state disputing her filing. One dealt with confusion over her previous employer, Michigan State University, while two others focused on her status as a self-employed lawyer. 

All four letters contained the same warning regarding the penalty for wrongfully filing for unemployment.

“It is against state law to intentionally make false statements or conceal information to gain or avoid the payment of benefits,” the letters said. “You may have to repay up to 1.5 times the amount of benefits received … You may also be subject to criminal prosecution.”

Unemployment insurance helps people who have lost their jobs replace part of their wages while they look for work. In late March, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which expanded the unemployment insurance system and gave states the option to offer Pandemic Unemployment Assistance to workers who were previously unqualified, including the self-employed. The CARES Act also included a provision to provide an additional $600 per week to people collecting regular benefits.

On March 30, Gov. Gretchen Whitmer announced the expansion of unemployment insurance to self-employed people and other categories of workers. On April 10, the state released the opening date for filing applications: April 13, when Michigan’s Unemployment Insurance Agency began accepting those claims at 8 a.m. 

However, creating an entirely new system of government benefits has not been easy, and some unemployed people, like Abdnour, have struggled to file claims. 

According to a request filed by The Daily under the Freedom of Information Act, since April 10, the state has sent 251,884 messages through its online unemployment application system and via physical mail with a “no employer selected” error to Michigan citizens who filed as self-employed. The state has also sent 14,136 messages regarding what it claims are issues of intentional misrepresentation. Some people, including Abdnour, received multiple notices from the state over their claims.

As a lawyer, Abdnour said she occasionally deals with bureaucratic confusion. She said she wondered how someone who’s never been in this situation would react.

“The average person without legal training would probably be even more confused and scared because they aren’t experienced with the process of going through administrative systems that are messed up,” Abdnour said. “I would imagine that would probably put a lot of people off.”

Jason Moon, communications director for the Department of Labor and Economic Opportunity, pointed The Daily to the state’s press release about self-employed people’s eligibility for these benefits. 

“Michigan was (one of) the first states to make unemployment applications (available) to self-employed workers and independent contractors through the federal Pandemic Unemployment Assistance,” Moon said. “Many states, including (some of) those in the Great Lakes, did not make the application available until mid-May.”

Michael Evangelist, a graduate student at the University of Michigan School of Social Work, has experience researching unemployment insurance and social welfare policy. In an interview with The Daily, he explained why self-employed people had previously been denied unemployment benefits.

“That’s a federal rule, and that’s just historical,” Evangelist said. “There are a lot of people out there that have different proposals to cover self-employed workers and independent contractors. If you’re self-employed, how do you define unemployment — like you can’t procure enough business? How you become unemployed is less cut and dry, so I think there’s a lot of administrative barriers that just make it kind of difficult to cover those people.”

Many of the “no employer selected” letters, Evangelist explained, could probably be attributed to the sudden changes the state had to make in processing these claims.

“The biggest barrier is just … an administrative barrier,” Evangelist said. “How do you make this pandemic unemployment insurance program work because basically, Congress invented a program out of thin air. It’s not really unemployment insurance, (and) the states have to reprogram their systems because unemployment was so low prior to this, they don’t have the staff on hand to process all these claims and to deal with issues and answer phone calls.”

From March 15 to May 13, more than 1.7 million claimants in Michigan have applied for state and federal benefits, with a total of $5.62 billion in benefits paid out. About 92 percent of eligible claimants have either received benefits or been approved for them.

UIA had to hire more staff to cope with the spike in applications. In an April 8 press release, the agency noted it had “nearly quadrupled staffing levels over the last several weeks” after a more than 4,000 percent increase in initial unemployment claims in March. 

Residents seeking benefits have lodged complaints about long wait times and problems submitting applications. On April 13, the first day that new classes of workers could apply for benefits, the state website crashed as a “record-setting” number of residents filed claims.

Andrea Van Hoven, a clinical teaching fellow at the Michigan Law Workers’ Rights Clinic, said some of the most common questions she sees involve technical issues with the online system itself, which she called “tremendously vague and ambiguous.”

“Claimants spend countless hours on hold, just to be hung up on by the system,” Van Hoven said. “Others send countless messages through their account with the hopes of reaching someone, to no avail. Most recently, claimants have indicated that the messaging tool on their accounts is either malfunctioning or the tool has been removed and then reappears after hours.”

For Abdnour, the confusion began when she filed her initial claim. Though the state had said self-employed people could file for benefits, Abdnour said she felt as though the online form was unequipped to handle her claim.

“I went online and I did the application,” Abdnour said. “It was really very confusing to do the application because it was … asking me questions that didn’t relate to me as a contract employee or as a self-employed person. I thought it was weird that they wouldn’t have fixed it because we’d had to wait a month to even apply.”

Abdnour received her first four error letters two days later. It was the wording in one of the letters about self-employment that most confused her.

“The first notification said that they were denying me … because they had no record of my employer, which is me,” Abdnour said. “Of course they wouldn’t have a record of that. So I filed a challenge and I said, ‘I’m challenging this because … I’m self-employed. That’s why you don't have a record of me as an employer. I’m entitled under the CARES Act to this money, and you need to reconsider this.’” 

After reporting this challenge, the state opened a second case regarding Abdnour’s filings. As Abdnour began sending information regarding her income to the state, she said she continued to receive letters requesting information.

Two were sent to Abdnour by the state on April 27 and one on April 29, respectively. Both referred to a “no employer selected” error in Abdnour’s cases.

After receiving another letter, Abdnour filed a request under the Freedom of Information Act for evidence of why the state was denying her benefits. Abdnour said she has not yet received a response from the state to her request. In early April, Whitmer gave state officials more time to respond to public records requests due to the pandemic.

The state has since chosen to grant Abdnour some benefits. She’s also attempted to draw attention to the confusion around her case, tweeting about the letters she received and communicating with her state representatives. 

Abdnour said she fears for the many self-employed people who are entitled to benefits but may be discouraged by the letters. 

“If you’re with somebody who has their own auto mechanic shop or has their own nail salon … you’re going to get terrified when you get these threatening letters,” Abdnour said. “You’re not going to be able to figure out your way through all this. And all those people are entitled to the benefit.”

Van Hoven said these types of technical difficulties could result in people’s benefits getting delayed.

“If a claimant makes an innocent mistake, or interprets a question wrong, it can halt their claim and prevent benefits from being timely paid,” Van Hoven said. 

According to Evangelist, paying benefits quickly is important, both for the recipients and for the economy on a larger scale.

“When you lose your job, you’re not able to pay for all these important things,” Evangelist said. “Your bank depends on you to pay your mortgage or your landlord depends on you to pay your rent. And if you can’t do that, then that has a ripple effect that is felt throughout the economy. These unemployment insurance benefits will hopefully help mitigate that a little bit.”

Daily Investigative Reporter Sammy Sussman can be reached at sbsu@michigandaily.com. Managing News Editor Leah Graham can be reached at leahgra@umich.edu.

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