Maryland Says “Me Too” with Arbitration Limits and New Reporting Requirements

4 minute read | June.06.2018

On May 15, 2018, Maryland Governor Lawrence J. Hogan signed into law H.B. 1596, the Disclosing Sexual Harassment in the Workplace Act of 2018 (the “Act”), expanding employee rights and remedies under state sexual harassment law and impacting Maryland employers in two ways.

First, as of October 11, 2018, the Act, “except as prohibited by federal law,” renders null and void “a provision in an employment contract, policy, or agreement that waives a substantive or procedural right or remedy to a claim that accrues in the future of sexual harassment or retaliation for reporting or asserting a right or remedy based on sexual harassment.” In other words, the Act renders null and void all agreements requiring arbitration of prospective sexual harassment claims and claims of retaliation arising therefrom. The Act, by using the phrase “except as prohibited by federal law” makes clear, however, that the prohibition does not apply where the Federal Arbitration Act (“FAA”) preempts state law. The FAA governs contracts, such as agreements to arbitrate, involving interstate commerce. In practice, the FAA will apply to the vast majority of employer arbitration agreements and programs. The U.S. Supreme Court has long recognized that the FAA preempts state law that limits arbitration, including state law that “prohibits outright the arbitration of a particular type of claim.” AT&T Mobility v. Concepcion, 563 U.S. 333, 341 (2011). Thus, the prohibition on pre-dispute arbitration agreements should only apply in the limited circumstances where Maryland arbitration law rather than the FAA applies. Notably, the Act does not prohibit parties from entering into a post-dispute agreement to arbitrate claims of sexual harassment and related retaliation.

The Act also contains a retaliation provision forbidding employers from taking “adverse action” against employees who fail or refuse to enter into agreements prohibited by the Act. An “adverse action” includes discharge, suspension, demotion or discrimination in the terms, conditions, or privileges of employment, or any retaliatory acts that result in a change to the terms and conditions of employment that would dissuade others from asserting their rights under the Act, or from testifying in an action involving violations of the Act.

Second, the Act requires that Maryland employers with 50 or more employees (the Act does not specify whether coverage is limited to employers with 50 or more employees in Maryland) submit a bi-annual survey to the Maryland Commission on Civil Rights (“Commission”) containing the following information on or before July 1, 2020 and on or before July 1, 2022:

  1. the number of settlements made by or on behalf of the employer after an allegation of sexual harassment by an employee;

  2. the number of times the employer has made a monetary settlement to resolve claims of sexual harassment against any individual employee over the past 10 years of that individual’s employment; and

  3. the number of settlements made after an allegation of sexual harassment that included a provision requiring both parties to keep the terms of the settlement confidential.
The Act does not specify whether settlements outside of Maryland are included. Employers should monitor the Commission’s website for further guidance. Interestingly, requirement No. 3 only requires reporting of the number of sexual harassment settlements where both parties were required to keep the terms of the settlement confidential. While employers usually in practice do not disclose the terms of such settlements publicly, it is often the case that they do not take on a contractual obligation to keep the settlement terms confidential, with only the employee having such obligation. These settlements would not be included in the numbers reported pursuant to requirement No. 3, but would still be included in the total number of settlements reportable under requirement No. 1. The Act also requires the Commission to include in the survey a space for an employer to report whether the employer took personnel action against an employee who was the subject of a settlement included in the survey under requirement No. 2, presumably to permit the employer to convey to the Commission that it has taken appropriate disciplinary action against a repeated alleged harasser.

Additionally, the Act requires the Commission to make accessible to the public on the Commission website the aggregate results from all employer surveys and to retain for public inspection, on request, the response for a specific employer regarding the number of settlements reported with respect to requirement No. 2. The Act further requires the Commission to review a random selection of surveys (first on December 15, 2020, and again on December 15, 2022) and provide an executive summary of those surveys (with employer information redacted), to the Senate Finance Committee and the House Economic Matters Committee. The sections of the Act concerning employer surveys sunset on June 20, 2023.