Category: Payroll

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Michigan Unemployment Update - July 2021

Work Search Requirement Reinstated

As of May 30, 2021, the Unemployment Insurance Agency (UIA) has reinstated work search requirements for unemployment benefits claimants. The requirement to search for work in order to receive unemployment benefits had been suspended since March 2020 to help the increased volume of hardworking Michiganders who faced unemployment due to the pandemic.

Claimants must now actively seek work and report at least one work search activity per week for each week they claim benefits. A work search activity could include submitting a job application, attending a job fair or employment workshop, interviewing with employers and more.

There are COVID-specific exemptions for people who are self-employed, unable to work due to COVID-19 and parents with children attending school remotely because the school is closed. If an individual has an approved waiver, they are exempt from the work search requirement. Claimants must apply for a waiver prior to their certification for benefits.

In addition to COVID-specific waivers, claimants may also be exempt from the work search requirement if they are granted a temporary layoff waiver. This type of waiver must be requested by the employer before a worker is laid off. The Registration and Seeking Work Waiver may be approved for 45 days. The criteria for establishing a waiver are:

  • The separation must be a layoff for lack of work
  • The layoff is temporary (work will be available within 45 days)
  • The request must be received before the layoff occurs (no later than the week prior to the layoff.)

Refusing an Offer of Suitable Work

When an employer makes an offer of suitable work to an employee or makes an offer for an employee to return to their previous job, the employee can possibly lose unemployment benefits it he/she refuses. Wages, workplace safety and other factors are considered in determining whether work is “suitable.”

Both employers and employees have an obligation to report offers and refusals of suitable work to the Agency. The employer should notify the UIA by submitting details of the refusal in MiWAM.

If a claimant fails to return to work or refuses an offer of work, this can be reported online through your MiWAM account.

  • Under Online Services for Employers
  • Click on Report Refusal of Offer to Work
  • Complete all steps with information and then submit.

If a claimant fails to interview, you can submit the date, time and employer name and address of where the interview was to take place, along with the claimant’s name, address, and phone number so the UIA can research and investigate. This type of protest will need to be mailed to:
UIA, P.O. BOX 169, Grand Rapids, MI 49501-0169.

For more information on suitable work, including what to do if an employee refuses an offer of suitable work see Fact Sheet 144 – Returning to Work and Refusal to Work Information for Employers.

Non-Charging of Benefits Ended

On March 27, 2021, temporary statutory amendments codifying Gov. Whitmer’s Executive Order 20-76 for charging unemployment benefits to Unemployment Insurance Agency’s Non-Chargeable Benefits Account (NBA) has expired. Under the temporary provisions, employers were not charged for benefits paid to claimants who were laid off, placed on a leave of absence, or whose work hours were reduced due to COVID-19. As of March 28, 2021, all benefits paid to claimants based on these types of separations will be charged to the involved employer’s experience account.

When you receive Form UIA 1136, Weekly Statement of Benefit Charges (dated as of March 28 and forward), and you disagree with benefit charging of unemployment claims for separated workers, you must file a protest. Additionally, employers must follow up and respond timely to Form 1713, Request for Information, for fact finding information if a protest is filed.

From April 4 – Sept. 4, 2021, reimbursing employers are eligible for 75% federal reimbursement of the benefit charges for COVID-related or non-COVID related reasons under the American Rescue Plan Act of 2021. Reimbursing employers will be responsible for the remaining 25% of the benefit charges.

For faster service, all documents should be submitted through MiWAM.  It is recommended that all employers gain access to their MiWAM account in addition to your third-party administrator’s access.

Changing Your Work Share Plan

If changes in your business necessitate an update to your Work Share plan, there are two ways to go about it. You can choose to modify your plan, or you can terminate your plan and start a new one.

The Modify Plan link should only be used to update the start date of your Work Share plan. You can backdate your start date by up to two weeks from your original start date requested. If you enter
a date that is more than two weeks from the original plan start date, an error message will display: Start date can only be backdated up to two weeks from original start date requested.

IMPORTANT NOTE: Be sure to answer No when asked “Do you need to change the percentage of work reduction for this unit?” Submitting a percentage lower than the original Work Share plan will result in an overpayment for those affected employees.

If you need to change your percentage of work reduction – you will need to Terminate your Plan, and then start a new plan with the desired percentage. View or download the Work Share Toolkit for step-by-step instructions on how to terminate your plan.

UIA EMPLOYER AUDITS

UIA tax audits are conducted periodically to ensure compliance with the Michigan Employment Security (MES) Act. Employers are selected for tax audits based on computer-generated sampling or employer account referrals. If selected for an audit, you will receive a Notification of Audit letter from a UIA auditor by mail (USPS), and by a web notice in your MiWAM account.

Starting July 12, 2021, in person audits will resume. UIA has also launched an E-Audit (Electronic Audit) process using a Secure Employer Documentation Portal available in your MiWAM account. The E-Audit process allows you to upload all required documents that are needed for an audit so that the auditor can review and perform the audit without going to your place of business. This is a fast and convenient process for employers to use. At the conclusion of either the standard “in person” audit or the e-audit, you will be notified regarding the results in a post audit discussion with the auditor and you’ll be sent a Notice of Audit Results letter via US mail.

Employers may also be contacted by an auditor regarding investigation of a claimant’s request for benefits. The auditor may need to verify claimant wages, W-2’s or 1099’s, or investigate any misclassification of employees. The auditor will ask for documentation to make a determination for claimant benefits.

This information is provided by the Michigan Department of Labor and Economic Opportunity.

SBA Update for PPP Loans
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SBA Update for PPP Loans

Loan Forgiveness

Recipients of Paycheck Protection Program (PPP) loans of $50,000 or less will be able to apply for forgiveness using a simplified application that was released by Treasury and the U.S. Small Business Administration (SBA).

A new interim final rule (IFR) provides new guidance concerning forgiveness and loan review processes for PPP loans of $50,000 or less.

Under the IFR, PPP borrowers of $50,000 or less are exempted from any reductions in forgiveness based on:

  • Reductions in full-time-equivalent (FTE) employees; and
  • Reduction in employee salary or wages.

The new application form, SBA Form 3508S, can be used by PPP borrowers applying for forgiveness on PPP loans with a total loan amount of $50,000 or less, unless those borrowers together with their affiliates received loans totaling $2 million or more. 

Of the 5.2 million PPP loans approved by the SBA, about 3.57 million were for $50,000 or less, according the IFR. Those loans accounted for about $62 billion of the $525 billion in PPP loans. About 1.71 million PPP loans of $50,000 or less were made to businesses that reported having zero employees or one employee.

The IFR streamlines the forgiveness process for PPP borrowers of $50,000 or less because they will not be required to perform potentially complicated FTE or salary reduction calculations. Borrowers of $50,000 or less still will have to make some certifications and provide documentation to the lender for payroll and non-payroll costs.

Lender Responsibilities

For PPP loans of all sizes, the IFR also contains guidance on lender responsibilities with respect to the review of borrower documentation of eligible costs for forgiveness in excess of a borrower’s PPP loan amount.

According to the IFR, when a borrower submits Form 3508S or the lender’s equivalent form, the lender will be required to:

  • Confirm receipt of the borrower certifications contained in the form; and
  • Confirm receipt of the documentation the borrower is required to submit to aid in verifying payroll and nonpayroll costs, as specified in the instructions to the form.

The borrower is responsible for providing an accurate calculation of the loan forgiveness amount. The borrower will attest to the accuracy of the reported information and calculations on the loan forgiveness application. Lenders are permitted to rely on borrower representations, according to the IFR.

In addition, the IFR addresses what a lender should do if a borrower submits documentation of eligible costs that exceed the borrower’s PPP loan amount. According to the IFR, the amount of loan forgiveness that a borrower may receive cannot exceed the principal amount of the PPP loan.

Whether a borrower submits SBA Form 3508, 3508EZ, or 3508S, or a lender’s equivalent form, the lender is required to confirm receipt of the documentation the borrower is required to submit to aid in verifying payroll and nonpayroll costs. If applicable, the lender also is required to confirm the borrower’s calculations on the loan forgiveness application, up to the amount required to reach the requested forgiveness amount.

Deferral Period Clarified

The US Small Business Administration released guidance last week clarifying that lenders must recognize the previously established extended deferral period for payments on the principal, interest, and fees on all Paycheck Protection Program (PPP) loans, even if the executed promissory note indicates only a six-month deferral.

The guidance means that lenders must immediately comply with the extended deferral period and notify borrowers of the change.

The Paycheck Protection Flexibility Act of 2020, P.L. 116-142, extended the deferral period for loan payments to either (1) the date that SBA remits the borrower’s loan forgiveness amount to the lender or (2) if the borrower does not apply for loan forgiveness, 10 months after the end of the borrower’s loan forgiveness covered period.

Before the Flexibility Act became law June 5, the deferral period could end after six months. And while the Flexibility Act extended the deferral period, it did not specify whether lenders and borrowers had to modify promissory notes used for PPP loans to reflect the extended deferral period.

Because the first PPP loans were awarded in April, some PPP borrowers had recently received notices from lenders that payments on their PPP loans were due. The new guidance, found in question No. 52 in the SBA’s frequently asked questions document for the PPP, clarifies that the deferral period extension automatically applies to all loans, with no requirement from the SBA of a formal modification of the promissory note.

This is not intended as legal advice; for more information, please contact your lender.