The Maryland Legislature has amended its discrimination statute, Article 49B of the Maryland Code, in a manner that will expose Maryland employers to increased damages and new judicial risks in state court lawsuits. The new provisions, which became effective on October 1, 2007, include:

  • The addition of three new classifications of protected employees – family status, marital status, and sexual orientation. Employees will be able to sue employers for discrimination and harassment based on these new protected classifications.
  • The Maryland Commission on Human Relations (MCHR) will be able to award increased damages, up to a maximum of $300,000 in compensatory and punitive damages, plus attorneys’ fees and expert witness fees. Previously, damages were limited to compensatory damages of up to three years back pay.
  • Individual employees will be able to file civil actions claiming jury trials in Maryland’s 24 circuit courts. Irrespective of the progress of the MCHR’s own investigation, employees can initiate judicial action 180 days after their original complaint was filed without any required authorization from the MCHR.

Article 49B

Article 49B was enacted about forty years ago to provide a state counterpart to the federal discrimination statute, Title VII of the Civil Rights Act of 1964. Article 49B, however, differed from Title VII in significant ways. Under Article 49B, an aggrieved employee could file a complaint with the Maryland Commission on Human Relations. The MCHR’s investigation would conclude either with a finding of probable cause or no probable cause that there was discrimination. Thereafter, the MCHR could move the case to a hearing before an Administrative Law Judge who could award only compensatory damages of three years back pay. No further damages were available. The limited damages available under Article 49B made it unappealing to some plaintiffs. For example, under Article 49B’s remedial scheme, a discriminatorily terminated employee who, as required, diligently sought alternative employment would not be eligible for very much net back pay. The same would hold true for an employee claiming harassment who continued to work for the employer and suffered no loss of back pay.

Newly Empowered MCHR

The new legislation expands the powers of the MCHR. While complaints will be processed in the same manner and the agency still can initiate an administrative hearing before an Administrative Law Judge, the available monetary awards, and therefore the degree of economic pressure on the employer, are significantly higher. Maximum monetary awards will match those available under Title VII, up to $300,000 for compensatory and punitive damages, depending on the size of the employer, plus attorneys’ fees and expert witness fees.

In addition, under the new Maryland law, employees will be able to make a wider range of claims than are available under Title VII. For example, under the amended Article 49B, employees can file complaints and sue for discrimination and harassment based on family status, marital status, and sexual orientation, which are not protected by Title VII. Many employer policies do not adequately address there protected classifications, leaving employers vulnerable to new types of discrimination and harassment claims.

A No-Win Situation for Employers

After October 1, 2007, employees will have two choices where they can have their claims heard, each with its own advantages and disadvantages. As indicated above, an Administrative Law Judge hearing still is available to employees. Under MCHR rules, the hearing process is quicker than in the courts and the rules of discovery and evidence are much more relaxed than in a judicial proceeding. Employees who desire to put early pressure on an employer to settle a case can take advantage of this quick process, while continuing to threaten a lawsuit.

Under the new statutory provisions, employees will always have the option of taking their case to court rather than to administrative hearing. Unlike Title VII, which prohibits employees from filing their own lawsuit based on workplace discrimination until they receive a Right to Sue letter from the the U.S. Equal Employment Opportunity Commission (EEOC), employees will not need any permission from the MCHR to file a lawsuit in Maryland’s circuit courts.

The potential for problems abound when these cases reach the Maryland state courts. Maryland’s 24 circuit courts have not had the opportunity to become familiar with the body of discrimination law that has developed in the federal judiciary system. Moreover, circuit court judges likely are less prone to considering and granting summary judgment motions as compared with federal judges, who regularly adjudicate on summary judgment motions, as well as mediate, discrimination claims. While Montgomery, Prince George’s, and Howard Counties have local ordinances which permit lawsuits on discrimination claims in those counties, each of the other 21 circuits in Maryland do not, and it may be safe to say that the judges there have little, if any, experience in handling discrimination claims.

While Maryland was one of the early states to adopt judicially the concept of at will employment, the courts have not developed a detailed body of workplace discrimination case law. There is no guarantee that the state courts will adhere to federal discrimination law case precedent. Maryland is in the Fourth Federal Judicial Circuit, which is one of the most conservative circuits in the country, with a reputation as a difficult forum in which employees can prevail on discrimination claims. The Maryland Court of Appeals, however, is not bound by Fourth Circuit decisions, leaving uncertain the future development of the law. Certainly, plaintiff’s lawyers will try to whittle away the protection that have inured to employers through federal court decisions, spurring a flurry of early litigation.

New Strategies for Dealing with Revisions in Maryland Discrimination Law

Hogan & Hartson is scheduling breakfast seminars in September as a courtesy to our clients and friends who conduct business in Maryland so that we can review in greater depth the effect of the changes in Maryland Article 49B and suggest strategies for dealing with the increased threat of litigation and higher monetary awards. You will receive notice of exact dates and times shortly.