A new Maryland law taking effect October 1, 2018, invalidates employment contracts, policies, or agreements that would waive an employee’s rights or remedies in connection with future claims of sexual harassment or retaliation for raising such claims.
The “Disclosure of Sexual Harassment in the Workplace Act of 2018,” impacts Maryland employers in two ways.
First, For All Maryland Employers. Under this new law, provisions in employment contracts, policies, or agreements executed, extended (explicitly or implicitly), or renewed on or after October 1, 2018, that waive an employee’s substantive and procedural rights to raise future claims of sexual harassment or claims of retaliation arising from the attempt to raise such claims will be void as against public policy, except as prohibited by federal law.
In addition, employers will be prohibited from taking adverse action against any employee who refuses to enter into an agreement containing such a waiver, such as discharge, suspension, demotion, discrimination, and retaliation. An employee whose employer enforces or attempts to enforce an unlawful waiver against the employee may recover reasonable attorneys’ fees and costs.
Because this new law would arguably apply to arbitration agreements, it may be pre-empted by the Federal Arbitration Act. However, employers with collective bargaining agreements or who require agreements to arbitrate as a condition of employment, should review their agreements with counsel to determine actual impact.
This law would not apply to settlement, separation, or severance agreements in Maryland, because such agreements only waive claims existing as of the date the agreement is signed, not claims that arise in the future.
Second, For Maryland Employers with 50 or more Employees. This law also carries a disclosure requirement for larger employers that will be implemented between July 1, 2020 – July 1, 2022.
Under this requirement, covered employers will be required to disclose the following information to the Maryland Commission on Civil Rights:
The number of settlements made after an allegation of sexual harassment by an employee;
The number of times the employer paid a settlement to resolve a sexual harassment allegation against the same employee over the prior 10 years of employment; and
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.
The text of the law provides that the employer will have the ability to disclose whether personnel action was taken against an employee who was accused of sexual harassment, but does not otherwise explicitly require the employer to identify the accused employee.
The aggregated information from employers will be posted on the Commission’s website, and information provided by specific employers will be accessible for public inspection on request.
The reporting requirement will expire June 30, 2023. The law does not currently contain any penalties or remedies for an employer’s failure to provide the survey information. It remains to be seen whether this law is amended in the future to remedy this oversight.
What Employers Should Do Now. Maryland employers should review all employment contracts, policies and other agreements (including arbitration agreements), and related templates and forms, to evaluate whether they limit an employee’s substantive or procedural rights to raise claims of sexual harassment and related retaliation, and make any necessary edits to ensure that contracts, agreements, and policies executed on or after October 1, 2018, are compliant.
Employers with 50 or more employees should assess their data storage to determine whether there are adequate systems in place to enable reporting data regarding past settlements of sexual harassment claims.
Melissa Jones, chair of the Labor and Employment Group, counsels companies on employment, labor, and immigration issues. For more information about this new rule and other employment concerns, please contact her.
This information has been prepared by Tydings for informational purposes only and does not constitute legal advice.