Labor Department missed chance to recover $760 million in overpaid unemployment, audit says

State auditors found Maryland overpaid $807.4 million in unemployment benefits tied to the COVID-19 period and concluded up to $760.7 million was not timely pursued for recovery as of May 2025.

State auditors reported that Maryland overpaid $807.4 million in unemployment benefits during and after the COVID-19 pandemic. The Office of Legislative Audits said the Division of Unemployment Insurance did not timely pursue many recoveries. Auditors concluded that up to $760.7 million was no longer collectible by May 2025. The findings were released days before the 2026 General Assembly convenes as lawmakers prepare for a projected $1.6 billion budget shortfall. Key findings: - Auditors identified $807.4 million in overpaid unemployment benefits covering claims paid between Nov. 16, 2020, and Jan. 15, 2025. - The audit states delays in recovery efforts made up to $760.7 million uncollectible by May 2025; the Labor Department disputes that figure and estimates the unrecoverable amount is closer to $600 million. - The department said a legal challenge suspended collections from January 2022 until September 2023 and described additional back-end work after the suspension that delayed some recoveries. - The Labor Department reported it recovered over $500 million in fraudulent or overpaid claims in 2025 and is pursuing another $1.3 billion; the audit also noted oversight concerns and two cybersecurity-related findings that are redacted from public view. Summary: The audit concludes significant pandemic-era overpayments were not pursued in time, leaving a large portion reportedly unrecoverable. Labor officials say they take the findings seriously, cite a prior legal suspension that paused collections, and report ongoing recovery efforts. Lawmakers will review the report as the 2026 General Assembly begins amid a projected $1.6 billion budget shortfall.