Maryland extends jobless claims settlement oversight as backlog persists

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The Maryland Department of Labor has improved its unemployment insurance claims process since settling a 2022 lawsuit over its ineffective and overwhelmed system, but a continued backlog of people awaiting word on their benefits has prompted a second extension of a monitoring and enforcement period under the settlement.

To avoid returning to court, plaintiffs and the state agreed to prolong the period of monitoring progress toward the settlement terms for another 22 months. The three-member Board of Public Works, composed of the governor, comptroller and treasurer, is scheduled to vote on the extension during its meeting Wednesday. Items that make it on the board’s agenda generally receive approval.

Quarterly reports show that the labor department has improved its claims process in the last year, even amid a recent uptick in the number of claims filed.

But, the department has yet to meet a requirement — under state law and as part of the settlement — to process a certain percentage of claims within three weeks and within eight weeks, and to resume or deny payments for all paused claims within two weeks.

Department officials declined to comment, citing the ongoing settlement.

Debra Gardner, the legal director for the Baltimore-based nonprofit Public Justice Center, one of two law groups representing six plaintiffs in the case, said Tuesday that her hope is the latest extension will be the last.

She said the department has so far done “a great deal” to comply with the settlement, including improving a troublesome online portal and increasing the number of staff members available to take calls and questions from claimants.

The department has in recent years been reliant on contracting with call centers to handle questions, but the arrangement proved frustrating for those involved, in part because call center agents didn’t have access to specifics of claimants’ files.

“They haven’t gotten there yet, for a lot of reasons,” Gardner said of the department’s progress toward the settlement benchmarks. “One (reason) is all of this infrastructure and technology work that they’re doing to try to speed up the processing of claims. But also because of some pretty unforeseen things.”

After a deluge of unemployment claims during COVID-19 pandemic exacerbated issues with the system, an increase in claims following the collapse of the Francis Scott Key Bridge in 2024 added further strain.

The Trump administration’s policies and decisions, including mass layoffs of federal workers and cancelling of federal contracts, are now threatening to slow the department’s progress, said state Del. Lorig Charkoudian, a co-chair of the state’s Joint Committee on Unemployment Insurance Oversight and sponsor of the bill that established Maryland’s unemployment insurance metrics.

“We’ve made a great deal of progress on the performance metrics,” Charkoudian said in a phone interview. “The question is going to be, if unemployment rises — which it is right now because of the Trump policies, both layoffs and federal contracts, as well as tariffs — if unemployment rises, can we keep those same improving metrics in our performance?”

More than 3,500 people filed unemployment insurance claims in the first full week of March, the most recent period for which the labor department has such data. The weekly count hovered in the mid-2,000 range for most of the year before spiking in late April.

“It’s quite understandable, even from my perspective as plaintiffs’ counsel, why the agency is still working on reaching the goal of the settlement,” Gardner said in a phone interview.

The 2022 settlement included an initial 18-month monitoring period, which the plaintiffs and the state agreed to extend by one year after the department failed to reach the requirements for claims processing.

The latest extension will be 10 months longer than the first, at least in part to account for the uncertainty that Trump policies have posed.

Claimants and attorneys who sued the state in 2021 have blamed then-Labor Secretary Tiffany Robinson, who was in the role during former Republican Gov. Larry Hogan’s second term. Robinson oversaw a department that was inundated with claims as people lost work and wages during the COVID-19 pandemic and was, like most states, grappling with a flood of fraudulent claims.

The plaintiffs alleged that the department showed “gross and systemic failures” in administering benefits and prevented tens of thousands of Marylanders from receiving payments, according to federal court documents.

They alleged that people had their claims languish for months or had their benefits suddenly cut off without notice or an explanation from the department.

They also contended that the department issued tens of thousands of overpayment notices without providing written notices for why or a chance to contest them.

The two parties eventually reached a settlement agreement that included a $300,000 payout to the Public Justice Center and the Baltimore law practice Gallagher Evelius & Jones, as well as state-required targets for processing claims quicker.

The Department of Labor must eventually process 92% of claims within three weeks and 97% within eight weeks. It must also either resume or deny payments for all paused claims within two weeks.

Between Jan. 1 and March 31, 2025, the most recent period for which the state has a quarterly report, the department processed 84% of claims within three weeks, up from 77% during the same period in 2024.

The department also processed 93% of claims within eight weeks, up from 88% in the first quarter of 2024.

The department lost progress in its processing of paused claims, as 95% had payments resumed or denied within two weeks, down from 99% in early 2024.