On October 1, 2018, Maryland’s “Disclosing Sexual Harassment in the Workplace Act of 2018” (Act), Md. Code Ann., Labor & Employment § 3-715, became effective. The Act adds Maryland to a growing number of states responding to the #MeToo movement, and provides protection to employees who are victims of or report harassment at work.
The Act has two important components, one impacting employment agreements and one requiring certain employers to report sexual harassment settlements.
First, unless prohibited by federal law, the Act voids any provision in a contract, policy, or agreement that waives substantive or procedural rights or remedies relating to a sexual harassment claim that accrues in the future or a retaliation claim for reporting or asserting a right or remedy based on sexual harassment. In short, the Act appears to bar employers from requiring employees to arbitrate such claims.
Should an employer enforce, or attempt to enforce a provision prohibited under the Act, the employer will be liable for the employee’s attorney’s fees and costs. Moreover, the Act applies to any employment contract, policy, or agreement executed, “implicitly or explicitly extended,” or renewed on or after the effective date. Thus, the Act could be interpreted to cover policies and agreements implemented prior to October 1st and continue after that date.
Notably, the Supreme Court of the United States has held that the Federal Arbitration Act “preempts any state rule discriminating on its face against arbitration.” Kindred Nursing Ctrs. Ltd. P’ship v. Clark, 137 S. Ct. 1421 (2017); see also AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011) (holding that the FAA preempted a California rule that invalidated class arbitration waivers); Perry v. Thomas, 482 U.S. 483 (1987) (holding that the FAA preempted a California law permitting employees to sue for unpaid wages even where the parties had entered into an enforceable agreement to arbitrate). Therefore, the Federal Arbitration Act may preempt this aspect of the Act.
Second, the Act mandates that employers with 50 or more employees must provide reports regarding sexual harassment settlements to the Maryland Commission on Civil Rights (Commission) that contain the following information:
1. The number of settlements made by or on behalf of the employer after an allegation of sexual harassment by an employee;
2. The number of times the employer has paid a settlement to resolve a sexual harassment allegation against the same employee over the past 10 years of employment; and
3. The number of settlements made after an allegation of sexual harassment that included a provision requiring both parties to keep the terms of the settlement confidential.
Employers subject to this requirement must submit the information to the Commission via an online survey, the first deadline for which is July 1, 2020.
Significantly, the Act also contemplates public access to some of the information employers report. According to the Act, the Commission will allow, “upon request”, the disclosure of the number of times a particular employer has paid a settlement to resolve a sexual harassment allegation against the same employee over the past 10 years of employment. Additionally, the Act authorizes the Commission to publish an executive summary of responses (with identification information redacted) from a random selection of employers.
All employers in Maryland, regardless of size, should review their existing employment agreements and policies to ensure they comply with the Act (or be prepared to challenge the validity of the prohibition on arbitration). Maryland employers should also consider conducting sexual harassment training. Finally, Maryland employers with 50 or more employees should begin preparing for the surveys by reviewing and gathering information on sexual harassment claims and settlements and by maintaining records of future settlements.