In preparation for the effective date of October 1, 2018, Maryland employers should review existing employment agreements and contracts to ensure that they do not contain impermissible waivers of sexual harassment and related retaliation claims. 

On May 15, 2018, Maryland Governor Larry Hogan signed into law the Disclosing Sexual Harassment in the Workplace Act of 2018, which prohibits contractual waivers of sexual harassment claims and imposes significant reporting requirements for certain Maryland employers as well. The Act, largely a response to the #MeToo movement, becomes effective on October 1, 2018. 

Waivers of Substantive and Procedural Rights and Remedies

Except as prohibited by federal law, the Act makes null and void any provision in an employment agreement that waives a substantive or procedural right or remedy to future claims of sexual harassment or related retaliation. Effectively, this aims to prohibit mandatory arbitration of sexual harassment and associated retaliation claims. The Act specifically provides that an employer cannot take adverse action (discharge suspension, demotion, discrimination or retaliatory action) against an employee who fails or refuses to sign an agreement that contains a prohibited waiver. Moreover, the Act imposes liability for employee attorney’s fees and costs if an employer attempts to enforce such an agreement.

The specific carve out excepting provisions that are permissible under federal law presumably acknowledges that the Federal Arbitration Act, which embodies strong congressional intent favoring enforceability of arbitration agreements, may preempt the purported prohibition on arbitration. The Act also only covers claims that accrue in the future. As such, it appears that past claims of sexual harassment could still be subject to arbitration.

Reporting Requirements

In addition to the waiver requirements, the Act contains certain reporting requirements for Maryland employers with 50 or more employees. On or before July 1, 2020 (and again on July 1, 2022), affected employers will have to respond to a survey from the Maryland Commission on Civil Rights and disclose:

1. The number of settlements made on 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.

The survey will also include a space for an employer to report whether it took personnel action against an employee who was the subject of a settlement. While not specifically addressed in the Act, by its plain terms, disclosure of the identities of the alleged harassers and/or victims or amounts of any settlements are not required.

The Commission will post on its website the aggregate number of responses from employers for each item listed above. Upon request, the Commission will also permit public inspection of the response from a specific employer regarding the number of settlements to resolve allegations against the same employee over the past 10 years.  

The Act further provides that on or before December 15, 2020 (and then again on or before December 15, 2022), the Commission will review a random selection of the surveys and create an executive summary redacting any identifying information for specific employers to submit to the governor. Finally, the reporting requirement of the Act contains a sunset provision, which means that it will remain effective only until July 30, 2023, unless extended by the General Assembly.

Next Steps for Employers

In preparation for the effective date of October 1, 2018, Maryland employers should review existing employment agreements and contracts to ensure that they do not contain impermissible waivers of sexual harassment and related retaliation claims. Employers will want to monitor further developments regarding such waivers as well in light of the potential preemption issue mentioned above. Finally, employers should review policies and practices related to sexual harassment and seriously consider specifically tailored training for leadership, management and employees.

Employers covered by the reporting requirements should consider review of practices with regard to settlements of sexual harassment claims and inclusion of nondisclosure provisions in settlement agreements. Affected employers should additionally address how to track the settlements to ensure effective and accurate reporting.

For Further Information

If you have any questions about this Alert, please contact any of the attorneys in our Employment, Labor, Benefits and Immigration Practice Group or the attorney in the firm with whom you are regularly in contact.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.