Maryland Enacts Law Requiring Disclosures about Sexual Harassment in the Workplace

Maryland Enacts Law Requiring Disclosures about Sexual Harassment in the Workplace

            On May 15, 2018, Maryland’s Governor approved legislation approved by the Maryland General Assembly that requires employers with 50 or more employees to report certain information to the Maryland Commission on Civil Rights (“MCCR”) regarding incidents of sexual harassment in the workplace.  Specifically, on or before July 1, 2020 and on or before July 1, 2022, each employer with 50 or more employees shall submit to the MCCR a survey (produced by MCCR) that identifies:  (1) the number of settlements made by or on behalf of the employer involving allegations of sexual harassment; (2) the number of times the employer paid a settlement to resolve sexual harassment allegations with the same employee during the past ten years; and (3) the number of settlements involving allegations of sexual harassment that included a provision requiring both parties to keep the terms of the settlement confidential.  The survey also will include a space for the employer to disclose whether adverse action was taken against the individual(s) accused of harassment.  Once the information is obtained by the MCCR, it will post on its website certain information about the responses in the aggregate.  In addition, the MCCR will make the number of settlements from a particular employer available for public inspection upon request.

The same statute also declared that any contract that requires an individual to waive any right or remedy related to a claim that accrues in the future for sexual harassment or retaliation for reporting or asserting a right based on sexual harassment shall be null and void.  In addition, the statute makes it unlawful to take adverse action against any individual who refuses to enter into such a contract.

The provision regarding disclosure of sexual harassment claims is set to take effect on October 1, 2018 and expire on June 30, 2023.  The provision that declares certain contracts null and void and makes certain retaliatory acts unlawful became effective immediately.

One of the significant ramifications of the statute is that it bars employers from entering into mandatory arbitration agreements to resolve sexual harassment claims.  It is unclear, however, whether courts will find that the Federal Arbitration Act (“FAA”) preempts the Maryland statute in this regard and makes that provision unenforceable.  With this issue remaining unresolved, companies should consult with counsel about mandatory arbitration provisions in employment agreements.  Regardless of how the issue of arbitration is resolved, some companies enter into agreements with employees that waive the right to a jury trial (as opposed to mandate arbitration) and those agreements likely will be found unenforceable.

The statute also presents other ambiguities.  For example, it is unclear whether the reporting requirements include sexual harassment claims and settlements involving employees in other states or only in the State of Maryland.  Another example of an issue that remains unanswered is the consequences for employers if they fail to provide the required information or they provide inaccurate information.  The statute only requires the payment of attorneys’ fees and costs for any employer that seeks to enforce an unenforceable contract provision regarding the waiver of an employee’s rights.  Additional guidance likely will be provided by the State of Maryland as the disclosure dates near.

Maryland’s new legislation obviously is designed to shed some light on the issue of sexual harassment in the workplace, but the statute will be of only limited utility, as it will require only two reports from employers with 50 or more employees several years in the future, the reporting requirements expire after 2022, and the information gathered from the reports will not be made available after 2023.