Effective October 1, 2018, all employers in Maryland face new limits on their ability to obtain waivers of employees' rights and remedies related to future claims for sexual harassment or retaliation for reporting sexual harassment. The "Disclosing Sexual Harassment in the Workplace Act of 2018" also requires large employers (with 50 or more employees) to report sexual harassment settlements to the State's anti-discrimination enforcement agency.
New Limitations on Waivers
The Act provides that any provision in an employment contract, policy, or agreement that waives any substantive or procedural right or remedy to a claim that accrues in the future for sexual harassment, or retaliation for reporting or asserting a right based on sexual harassment, is null and void as contrary to the public policy of the State.
The Act's applicability to "future claims" is important. The Act does not prevent employers from settling claims of sexual harassment that accrued prior to the date of a settlement agreement.
Adverse Action Prohibited
Employers may not take any adverse action (such as demotion, suspension, or termination) against an employee who refuses to enter into an agreement that includes an invalid waiver provision Additionally, if an employer enforces or attempts to enforce a provision that violates the Act, the employer will be liable for the employee's attorney's fees.
Possible Preemption for Arbitration Provisions
The Act limits waivers "except as prohibited by Federal law." Federal law, through the Federal Arbitration Act, favors arbitration and generally preempts state laws that "discriminate" against arbitration provisions. As a result, an agreement requiring employees to arbitrate sexual harassment claims might be enforceable despite the terms of the Act prohibiting employees from waiving rights related to such claims. The preemption question presumably will be addressed through case law.
The Act also imposes two deadlines on employers with 50 or more employees to submit surveys to the Maryland Commission on Civil Rights regarding settlements of sexual harassment claims. On or before July 1, 2020, and on or before July 1, 2022, these employers must report:
- The number of settlements made by the employer following an allegation of sexual harassment by an employee;
- The number of times the employer has paid to resolve a sexual harassment allegation against the same employee over the past 10 years of employment (the survey will provide a space for an employer to disclose whether it took personnel action against the employee); and
- The number of settlements made after an allegation of sexual harassment in which the settlement agreement required both parties to keep the terms confidential.
The Commission will publish on its website, as an aggregate number, the total number of settlements set forth in the survey responses. Additionally, each specific employer's survey response with respect to the number of settlements the employer has paid to resolve allegations against the same employee over the past 10 years will be available for public inspection.
Employers should review their employment contracts, policies, and agreements (and, in particular, forms of separation and release agreements) and remove any provisions waiving an employee's rights to enforce future claims of sexual harassment. Employers should also create a system to collect data on the number of settlements made after allegations of sexual harassment.
Please contact Kathy Hoskins, Steve Metzger or another member of the firm's Employment Law Group, if you need assistance in complying with this new law.