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Decision on unemployment lawsuit expected Tuesday, but federal benefits will continue until at least mid-August

A Baltimore City judge will decide by Tuesday morning whether to extend a court order forcing Gov. Larry Hogan and the state government to continue paying enhanced federal unemployment benefits to tens of thousands of jobless Marylanders despite the governor’s efforts to cut off benefits.

But the expanded federal pandemic unemployment programs will continue for at least another month after the Biden administration notified Maryland Labor Secretary Tiffany Robinson that the state would need to provide 30 days advance notice before opting out of the programs — even if Baltimore City Circuit Judge Lawrence Fletcher-Hill rules Hogan can end them.

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Hogan announced his plans June 1 to pull Maryland out of the federal programs and filed notice with the U.S. Department of Labor. But, just hours before Hogan’s move was set to take effect July 3, Fletcher-Hill issued a temporary restraining order keeping the expanded benefits in place.

Fletcher-Hill heard hours of testimony Monday about whether he should extend that order in two lawsuits brought by out-of-work Marylanders against the Hogan administration to block the moves. The judge said he planned to issue a written decision no later than 10 a.m. Tuesday.

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The workers who filed the lawsuits are asking Fletcher-Hill to issue a preliminary injunction ordering the Hogan administration to continue the federal benefits until the cases are resolved. No trial has been scheduled yet.

Federal rules require at least 30 days notice before states can opt out of the pandemic unemployment programs. U.S. Deputy Assistant Secretary of Labor Suzi Levine sent an email to Robinson on Friday contending that, because Maryland extended the programs under court order, the Hogan administration would need to submit notice all over again before ending benefits.

Asked about the email while testifying, Robinson said she had not yet responded to the U.S. Department of Labor but indicated that the Hogan administration would go along with the 30-day requirement should the governor win in court.

Hogan previously contended that Maryland could cut off expanded benefits as soon as this Wednesday if Fletcher-Hill allowed the court order to lapse. But a lawyer representing the governor told the judge Monday that the Hogan administration did not plan to challenge the Biden administration’s position.

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The expanded pandemic federal unemployment benefits are set to end nationally on September 6. The programs provide an extra $300 per week to unemployed workers in the state’s traditional unemployment system and also offer benefits for out-of-work Marylanders — such as freelancers or gig workers — who aren’t normally eligible for unemployment as well as those who have exhausted the regular 26-week cap on benefits.

The Biden administration’s requirement that Maryland provide another 30-day notice before canceling the benefits lowers the stakes in the lawsuits. The soonest Hogan could cut off benefits in Maryland would be about three weeks before the federal programs are slated to end.

As of mid-June, about 178,000 people were receiving unemployment benefits in Maryland, and 85% of them were receiving them entirely through federal programs created in response to the pandemic.

Governors in about two dozen states — almost all, like Hogan, Republicans — have canceled those expanded benefits early, claiming that the increased jobless aid was hurting businesses by making people more reluctant to return to work as the economy reopens. Hogan administration officials, including Robinson, testified Monday that the governor’s decision to pull out of the unemployment programs also was driven by rising vaccination rates and concern about what they characterized as “extensive fraud” in claims.

Although the federal government is footing the bill for the benefits, Robinson said the state will end up on the hook for part of the cost of administering the programs, including investigating suspicious claims. Robinson estimated the state’s final share of the expense at roughly $65 million, a figure questioned by the attorneys suing the state.

Critics of Hogan’s move contend that there’s little evidence that the expanded unemployment benefits are to blame for the struggles of some businesses to find workers or that cutting off benefits to scores of workers would solve the labor shortage.

Lawyers challenging Hogan’s decision to end the program pointed to other issues such as lingering concerns about exposure to the coronavirus, working parents’ difficulties finding child care and an uneven economic recovery where some industries have been slower to bring back jobs.

The lawsuits were organized by the Public Justice Center and the Unemployed Workers Union, which is affiliated with the Baltimore activist group, the Peoples Power Assembly, and UNITE HERE Local 7, a union that represents hospitality workers. The first lawsuit was filed June 24 and the second lawsuit followed June 30, setting off a flurry of legal filings as the cutoff of benefits — which Hogan hoped to end at the beginning of July — loomed.

Hogan’s lawyers tried and failed three times over the Independence Day holiday weekend to appeal Fletcher-Hill’s temporary restraining order.

The lawsuits argue that language in state statute requiring the state to participate in federal unemployment programs — recently strengthened by lawmakers in the state’s Democrat-led General Assembly — could be interpreted as a mandate that the Hogan administration accept all available federal funds for unemployment.

The clause states that the Maryland Department of Labor “shall” cooperate with the U.S. Department of Labor and “identify all changes in federal regulations and guidance that would expand access to unemployment benefits or reduce bureaucratic hurdles to prompt approval of unemployment benefits.”

Attorneys representing the Hogan administration rejected that position, contending that the governor was well within his legal authority when he decided to opt out of the programs.

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