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Maryland employers: Are your contracts ready for October?

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Changes are coming for Maryland employers in terms of how they handle sexual harassment claims. In fact, the new Disclosing Sexual Harassment in the Workplace Act of 2018 goes into effect October 1, 2018. Employers who fail to take action by then could find themselves liable in future litigation.

What's changing?

This new law requires employers in Maryland to enact or adopt certain policies when it comes to sexual harassment claims.

First, the law prohibits employers from including or enforcing any employment-contract provision that seeks to waive the legal rights of employees who may be the victims of workplace sexual harassment. This includes mandatory arbitration clauses that force workers to arbitrate their sexual harassment claims. Furthermore, the law applies to all new contracts and contracts currently in existence for all companies with operations in Maryland.

That means if employees already signed employment or nondisclosure agreements containing mandatory arbitration clauses, those clauses are now null and void as they pertain to sexual harassment claims.

Another key provision seeks to ensure employers don't take the easy way out by simply forcing employees to sign impermissible clauses as a condition of employment. If employees refuse to sign a mandatory arbitration clause and employers retaliate, employers will be held liable for all attorneys' fees and costs of any subsequent litigation.

Finally, the law also instituted the creation of a mandatory sexual harassment survey. All employers with 50 or more employees must annually report on:

  • How many sexual harassment claims the company has settled
  • Whether multiple claims were settled with the same individual within the last 10 years
  • How many of the settled claims included confidentiality agreements

Affected employers must complete these surveys on or before July 1, 2020, and again before July 1, 2022. Journalists and members of the public will have access to survey results through the Maryland Commission on Civil Rights and freedom-of-information requests.

What should employers do?

If your legal team has not started updating your employment contracts and other employment-related materials, now is the time. Employers have until October 1 to comply with the new law. Smaller companies without an in-house legal department may want to seek outside counsel for help updating existing contracts, employee handbooks and personnel policies.

Employers should also take the opportunity to update existing language in contract templates so that all new agreements remain in compliance with Maryland law. Again, smaller companies may want to seek the advice of knowledgeable employment law counsel on how best to go about these updates.

The alternative is to proceed with the knowledge that any existing mandatory arbitration clauses will no longer apply in the case of future sexual harassment litigation. You may be comfortable with that knowledge, but know that it could increase your company's legal and financial liability. As the saying goes, a good offense is often a good defense.

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