LANSING, Mich. — Michigan has joined 13 other states in a federal lawsuit over the U.S. Department of Labor ending grants meant to upgrade state unemployment insurance systems and fight fraud.
Attorney General Dana Nessel announced the case Monday. The states filed their complaint on Oct. 8 in the U.S. Court of Federal Claims, arguing the grant agreements work as binding contracts that the department broke when it stopped the projects early.
The department sent termination letters on May 22, 2025, saying the grants no longer fit its funding priorities. The states say that cut off more than $45 million in remaining money across the coalition and stalled approved work in the middle of its performance periods.
Michigan had been awarded $6.78 million in Equity grants, and $2.83 million of that was clawed back. It also received $4.47 million in Tiger Team grants, with $1.41 million taken back.
Congress created the grants in the American Rescue Plan Act of 2021 after the pandemic surge in jobless claims. In total the department awarded more than $780 million to states to modernize their systems.
The states are seeking money damages. Attorneys general from California, Colorado, Delaware, Illinois, Maine, Maryland, New Jersey, New Mexico, New York, Oregon and Wisconsin joined, along with the governors of Kentucky and Pennsylvania.
