The Maryland Disclosing Sexual Harassment in the Workplace Act of 2018, which takes effect October 1, 2018, prohibits Maryland employers from requiring employees to arbitrate sexual harassment claims and requires larger employers to disclose information related to sexual harassment settlements. Employers should take several steps to prepare for the new law.

Legal Landscape

Maryland Governor Larry Hogan signed the Maryland Disclosing Sexual Harassment in the Workplace Act of 2018 (the Act) into law on May 15. The Act takes effect on October 1, 2018, and contains two primary requirements for Maryland employers.

A. Restriction on Waiver of Rights or Remedies Related to Future Sexual Harassment Claims

The Act’s first requirement takes aim at contractual provisions requiring that claims of sexual harassment be resolved through mandatory arbitration. Specifically, except as prohibited by federal law, the Act prohibits all Maryland employers who enter into, extend, or renew arbitration agreements after October 1 from requiring employees to waive “a substantive right or remedy” related to a future claim of sexual harassment or retaliation for reporting sexual harassment.[1]

In addition, the Act prohibits an employer from taking any adverse action against an employee—including discharge, suspension, demotion, or discrimination or retaliation with respect to the terms and conditions of the employee’s employment—because the employee refuses to enter into any agreement (e.g., an arbitration agreement) prohibited by the Act. Employers who attempt to enforce a provision containing an invalid waiver are liable for an employee’s reasonable attorney fees and costs. It is unclear whether this latter provision indirectly creates a private right of action or, more likely, relates to attorney fees and costs in cases where an employer seeks to compel arbitration in the course of an already existing dispute.

B. Reporting Requirements and Publication of Employer Information Related to Sexual Harassment Settlements

The Act also creates a reporting requirement for certain employers related to sexual harassment settlements. In particular, the Act requires Maryland employers with 50 or more employees to submit an electronic survey to the Maryland Commission on Civil Rights (the Commission) on two occasions: on or before July 1, 2020, and on or before July 1, 2022.

The contents of the mandatory survey shall include:

  • the number of settlements made by or on behalf of the employer after an allegation of sexual harassment by an employee;
  • 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 whether it took any personnel action against that employee); and
  • the number of settlements made after an allegation of sexual harassment that included mutual confidentiality provisions.

The Commission will collect the employer-provided data and publish the aggregate data so that it is publicly available. In addition, the Commission will, upon request, publish the response of a specific employer regarding the number of settlements paid by an employer to resolve sexual harassment allegations against the same employee over the past 10 years. The Commission will also publish an executive summary based upon a review of a random selection of employer surveys on two occasions: on or before December 15, 2020, and on or before December 15, 2022.

The reporting requirement of the Act contains a sunset provision and will expire on June 30, 2023, unless the Maryland General Assembly takes further action.

Employer Outlook

Maryland employers should take several steps to prepare for the Act’s October 1, 2018, effective date.

First, Maryland employers who enter into, extend, or renew arbitration agreements after the Act’s effective date should draft those agreements to provide that they are subject to the Federal Arbitration Act (the FAA). Employers should also monitor developments to see whether this provision draws a preemption challenge under the FAA.

Second, Maryland employers with 50 or more employees should also monitor for any future regulations or other guidance issued by the Commission, as certain parts of the Act’s employer reporting provision remain unclear. For example, the Act does not address whether the employer reporting requirements relate only to those employees located in Maryland. Nor does the Act provide for any penalties or enforcement mechanisms if an employer fails to comply with the mandatory reporting requirements. In addition, employers should develop a reliable and accurate method for tracking not only settlements involving sexual harassment claims but also the subjects of those claims, as that information will be required in order to complete the Commission survey.