New Maryland Law Would Close the Door on Mandatory Arbitration of Sexual Harassment Claims

June 11, 2018

If there are any doubts about the continuing impact of the #MeToo movement, here is one more manifestation. A bill approved by Maryland Govern Larry Hogan makes null and void any employment contract, policy, or agreement that waives any substantive or procedural right or remedy to a claim accruing for sexual harassment or retaliation for reporting or asserting a right or remedy based on sexual harassment. The waiver ban, which takes effect on October 1, 2018, would seem to close the door on mandatory arbitration of sexual harassment claims.

No adverse actions. Effective the same day, the Disclosing Sexual Harassment in the Workplace Act of 2018, also prohibits employers from taking adverse actions against an employee because he or she fails or refuses to enter into an agreement that contains a prohibited waiver. Prohibited adverse actions include discharge; suspension; demotion; discrimination in the terms, conditions, or privileges of employment; or any other retaliatory action resulting in a change to the terms or conditions of employment that would dissuade a reasonable employee from making a complaint, bringing an action, or testifying in an action related to violation of the waiver provision.

Liability. Employers that enforce or try to enforce a provision in violation of the waiver bar may be liable for the employee’s reasonable attorney’s fees and costs.

Employer reporting. The measure also carries employer reporting requirements. On or before July 1, 2020, and on or before July 1, 2022, employers with 50 or more employees must submit a short survey to the Maryland Commission on Civil Rights certain data, including:

  • 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
  • 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 survey is to be submitted electronically, with a space in which the employer will report whether it took any personnel action against an employee who was the subject of a settlement included in the survey.

The Commission is required to make public on its website the aggregate number of responses from employers for each of the survey items, and to retain for public inspection, on request, the response of a specific employer on the number of settlements included in the survey.

The employer reporting requirements are to remain effective for four years and nine months and, at the end of June 30, 2023, with no further action required by the General Assembly, will be abrogated and of no further force and effect.