Michigan House Bill HB5375

Michigan 2025-2026 Regular Session

• Introduced: 12/16/25
• Refer: 12/16/25

Caption

Employment security: administration; assessment of penalties, interest, or fees on certain unpaid restitution of benefit overpayments; prohibit. Amends sec. 15 of 1936 (Ex Sess) PA 1 (MCL 421.15).

Impact

If enacted, HB 5375 will fundamentally change the existing framework under which the unemployment insurance agency operates. It is designed to provide greater protection for claimants who are not primarily responsible for their benefit overpayments by eliminating interest charges that would otherwise accumulate during disputes or delays caused by errors not attributable to the claimants. The bill permits waiving interest on unpaid restitution if the overpayment was due to an error by the employer or the unemployment agency itself, thus providing a small measure of fairness to those affected.

Summary

House Bill 5375 seeks to amend the Michigan Employment Security Act, specifically targeting the assessment of penalties, interest, or fees applied to unpaid restitution of benefit overpayments as outlined in section 15 (MCL 421.15). It proposes significant changes to how the unemployment insurance agency manages unpaid contributions and restitution due to benefit overpayments. The bill introduces provisions to prevent the assessment of interest on penalties unless certain conditions are met, thereby aiming to alleviate the financial burden on individuals who may inadvertently fall behind due to administrative errors or circumstances beyond their control.

Contention

Notably, the bill's provisions may spark debate regarding their implications for the unemployment insurance agency's ability to recover debts efficiently. Stakeholders may express concern that reducing penalties and interest could hinder the agency's revenue generation and operational effectiveness. Opponents may argue that leniency towards benefit overpayment rectifications may encourage negligence at the claimant and employer levels, leading to an increase in fraudulent claims. Supporters, however, emphasize the need for reform in light of instances of systemic errors within the agency itself, advocating for the elimination of punitive measures against individuals who are already facing financial hardship.