On October 1, 2018, Maryland’s Disclosing Sexual Harassment in the Workplace Act of 2018 (“Workplace Act”) went into effect. The Workplace Act has two parts. Under the first part, “except as prohibited by federal law,” Maryland employers of every size are prohibited from including in an employment agreement, contract or policy, any provision that waives an employee’s substantive or procedural rights or remedies to a claim of sexual harassment or retaliation for reporting sexual harassment that may arise in the future. With respect to protecting substantive legal rights, the new law is not really new. Under basic contract law principles, a provision in an employment agreement waiving a substantive claim that may arise in the future is against public policy and unenforceable. A pre-dispute waiver of a future sexual harassment claim would undoubtedly be deemed unconscionable, especially in today’s culture, so from a substantive claim standpoint, the Workplace Act does not create any material new protections. However, the statute does provide for an award of an employee’s attorney’s fees and costs against an employer that enforces or attempts to enforce a prohibited waiver, which is a remedy that is not available under common law.

Most of the commentary concerning the Workplace Act has focused on the prohibition of requiring a waiver of procedural rights and most agree that the real issue concerns arbitration agreements (although waivers of right to trial by jury fall into this category as well). Many large employers across the country require employees to agree to submit any employment related claims to arbitration as opposed to seeking relief through the administrative tribunals, such as the EEOC, or the courts. The pros and cons of such mandatory arbitration agreements have been the subject of considerable debate in recent years. Unquestionably, forced arbitration materially limits an employee’s leverage or “procedural” rights. But the Workplace Act’s new prohibitions are limited and arguably duplicative of other Maryland laws.

As noted above, the Workplace Act expressly states that its enforceability is subject to applicable federal law. The federal law at issue is the Federal Arbitration Act (“FAA”).  The FAA applies to contracts involving interstate commerce and it preempts any state law, such as the Workplace Act, that prohibit agreements requiring arbitration of future claims. Consequently, the Workplace Act is limited to Maryland employers and their Maryland employees and their Maryland law-based claims of sexual harassment and retaliation (as opposed to claims under Title VII, which is federal law).

The Workplace Act’s limited scope of claim coverage is also troubling. What happens if an employee has employment claims in addition to the sexual harassment claims, such as sex discrimination or violation of the equal pay acts, and the employee agreed to arbitrate such other claims? It’s fair to assume that an aggrieved employee will not pursue claims in multiple venues; thus, the prohibitions of the Workplace Act are rendered meaningless if an employee has more than a sexual harassment or related retaliation claim.

In addition to its limited scope and resulting futility, the Workplace Act adds only minimal additional protections from forced arbitration of sexual harassment claims. Like most states, Maryland has its own version of the FAA that mandates enforcement of dispute resolution through arbitration when agreed to in writing. (MD Code, Courts and Judicial Proceedings, § 3-206(a).) But many years ago, the Maryland legislature carved out an exception for employment agreements. To be enforceable in Maryland, agreements between employer and employees to arbitrate workplace disputes must expressly reference code section 3-206 in the agreement. This code section is intended to notify employees that they are giving up certain rights when they agree to arbitrate workplace claims that may arise in the future. In practice, this particular code provision is not well known and is not referenced in arbitration provisions in employment agreements applicable to Maryland employees. Without the reference, the arbitration provisions are not enforceable.

The utility of the second part of the Workplace Act is also questionable. Maryland Employers with 50 or more employees are now required to submit a bi-annual survey to the Maryland Commissions on Civil Rights 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 Workplace Act leaves important questions unanswered. For example, the Workplace Act is silent on whether employees not working in Maryland are nonetheless included in determining whether the employer has 50 or more employees. It is also unclear whether settlements made between a Maryland employer with non-Maryland employees should be included in the survey. The reporting of only the number of sexual harassment settlements where both the employer and the employee are required to keep the terms of the settlement confidential is very odd. Why would the Commission be concerned with settlement agreements with mutual confidentiality provisions and not with agreements that restrict only the employee who made the sexual harassment claim? The latter agreements leave open a much greater chance of post-settlement/post-employment blackballing or other retaliation by the employer and its employees not subject to a confidentiality provision. Whether due to poor editing or the legislators’ limited understanding of the issues, the deficiencies highlight the superficiality of the Workplace Act.

The Workplace Act is obviously a reaction to the media coverage of sexual harassment in Hollywood and to the “MeToo” movement. While the legislators had good intentions, the Workplace Act offers very little to the body of law concerning sexual harassment in the workplace. The good news is that the law concerning sexual harassment in the workplace is in place and has been for two decades. The law developed as a result of the Anita Hill – Justice Clarence Thomas controversy and was first articulated by the Supreme Court in Faragher v. City of Boca Raton. We don’t need any more state or federal laws; we need legislators, employers and employees who understand, implement and use the existing laws appropriately.