New Maryland Sexual Harassment Law Creates Important Implications for Employers Both Inside and Outside the State

May 24, 2018

By Matthew E. Feinberg

On May 15, 2018, Maryland Governor Larry Hogan signed into law the Disclosing Sexual Harassment in the Workplace Act of 2018. Described by bill sponsor Craig Zucker (D-Montgomery) as a “national model,” the law, which goes into effect on October 1, 2018, is the first of its kind in the Mid-Atlantic region. And, it has important implications, not only for employers in the State of Maryland, but for out-of-state employers who allow employees to telecommute from, work from time to time in, or participate in events in Maryland.

The law imposes new obligations on employers in two major ways. First, the law prevents an employer from enforcing any provision in a non-disclosure agreement, confidentiality agreement, or other employment contract whereby an employee agreed to waive: (a) any right or remedy to a future sexual harassment claim or (b) any claim the employee may have that they were retaliated against for asserting a right or remedy in relation to a sexual harassment claim. Critically, the law deems such provisions “null and void as being against the public policy of the State,” making it what Maryland courts generally refer to as an “anti-waiver law.” And, if an employer attempts to enforce such a provision, it will be liable for the employee’s attorneys’ fees and costs. Simply put, under these terms, any provision of an employment contract that limits an employer’s liability for future sexual harassment in any way is unenforceable.

The bill also prevents an employer from taking any adverse action against an employee who refuses to sign an agreement that includes such a provision. Under the statute, an adverse employment action includes termination, suspension, demotion, imposition of terms or conditions of employment different than similarly situated employees who did sign the agreement, or any other action that alters the terms and conditions of employment.

The statute does not impose an employer size limitation on the anti-waiver law; therefore, it applies to all employers within the state. However, even employers outside Maryland may find themselves subject to its provisions. Historically, Maryland courts treat anti-waiver laws as announcing important public policy for the state—public policy that is so strong that Maryland law must apply to the issue, even where the law of another state would typically control or where parties to a contract have specifically agreed that their relationship will be governed by the laws of another state. The practical impact of the new Maryland law is that, no matter where the employer is located or where the employee spends the majority of his or her time, so long as the employee is assigned or permitted to work in Maryland at some point, even for a small amount of time, the provision very likely applies to the employer-employee relationship. Therefore, understanding the reach of this statute and making employment decisions and assignments in accordance with it is important not only for Maryland employers, but for employers in other states that permit Maryland residents to telecommute or that have clients, customers, or contract sites in Maryland.

The second major implication of the law is that it imposes a disclosure requirement on Maryland employers with 50 or more employees. Under the new law, these employers are required to submit to the Maryland Commission on Civil Rights a survey that discloses: (a) the number of settlements made in response to or after allegations of sexual harassment are made; (b) the number of times the employer has paid a settlement to resolve a sexual harassment allegation against the same employee over the preceding 10 years; and (c) the number of settlements made after an employee’s allegation of sexual harassment where the parties agreed to keep the terms of the settlement confidential. The survey will also include a request for information about whether an employer took personnel action against an employee who was the subject of a sexual harassment settlement. The disclosures are due on or before July 1, 2020, and on or before July 1, 2022, but future disclosures may be required through subsequent legislative action. Once it has received the surveys, the commission will post the aggregate survey results to the public on its website and, importantly, will permit public inspection of an individual employer’s surveys.

Due to the increase in sexual harassment claims following the rise of the #MeToo movement, regional employers must be particularly vigilant to ensure that they are following Maryland’s new sexual harassment statute closely during the hiring process, when making decisions about employee location assignments and telecommuting, and when addressing claims of sexual harassment. And, when faced with a sexual harassment claim, larger Maryland employers must be cognizant of the ramifications of settlement, understanding that a quick resolution may not guarantee confidentiality. The attorneys at PilieroMazza are available to assist you in navigating this new statute and the current landscape of sexual harassment law to help protect your business’ bottom line.

About the Author: Matt Feinberg is an associate with PilieroMazza who practices in the areas of litigation, labor and employment, and business and corporate law. He may be reached at mfeinberg@pilieromazza.com.
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