Sexual harassment in the me-too era Mela 14th annual conference PRESENTERS: Joyce E. Smithey, Esquire Diane A. Seltzer Torre, Esquire joyce.smithey@smitheylaw.com dseltzer@seltzerlawfirm.com www.SmitheyLaw.com www.seltzerlawfirm.com 706 Giddings Avenue, Suite 200 4800 Hampden Lane, Suite 200 Annapolis, MD 21401 Bethesda, MD 20814 410-919-2990 301-500-1500

Disclosing Sexual Harassment in the Workplace Act of 2018

Adds Section 3-715 of the Labor and Employment Article, effective October 1, 2018

May not waive any substantive or procedural right or remedy to a claim that accrues in the future of sexual harassment or related retaliation Ends mandatory arbitration in sexual harassment cases Employers cannot require employees to stipulate to private arbitration Must allow employees to make claims publicly in court Sexual harassment not defined in act

Why end mandatory arbitration for sexual harassment claims? In response to “Me Too” movement Allows public to learn about harassment complaints to end culture of silence Less protection for serial violators

Is this retroactive? Will apply to any employment contract, policy or agreement executed, extended or renewed on or after October 1, 2018 What about at-will employee agreements that were entered into prior to october 1, 2018?

No adverse actions against employees for refusing to enter into agreement to arbitrate harassment claims Adverse actions include discharge, suspension, demotion, discrimination in terms of employment or any other retaliatory act Amended NOT to include failure to hire - does not cover applicants

Retaliation - change to the terms or conditions of employment that would dissuade a reasonable employee from making a complaint

Employers attempting to enforce or enforcing any violative arbitration provision SHALL be liable for employee’s reasonable attorney’s fees and costs

Possible preemption and effect of federal arbitration act If an employee agreement contains a mandatory arbitration clause covered by the faa, then may preempt the new maryland statute If not preempted by faa, litigants face the prospect of parallel proceedings in different forums

Likely prohibits jury waivers, statute of limitations restrictions, and limitations on remedies

Section 2- Mandated surveys to Maryland Commission on Civil Rights Applies to employers with 50 or more employees (employee not defined in act)

On or before July 1, 2020, and on or before July 1, 2022, an employer shall submit a short survey to the MCCR

Survey must include: Number of settlements made by or on behalf of the employer after an allegation of sexual harassment by an employee 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 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

Why collect surveys? Track which companies are using money to settle sexual harassment claims Not collecting total dollar amounts as opposed to proposed federal legislation Not collecting information on length of time to resolve complaint unlike proposed federal legislation Does not extend to contractors Victims still remain anonymous- companies do not need to include their names

Survey will be submitted electronically

Survey will include space for employer to report whether it took personnel action against the employee who was the subject of a settlement.

MCCR’s obligation to publish results Must post aggregate number of responses from employers for each item Public inspection of employer responses Must retain for public inspection on request

What will MCCR do with the surveys? On or before December 15, 2020, and on or before December 15, 2022, MCCR will review a random selection of surveys and create an executive summary of those surveys Executive summary will not include identifying information of employers Summary is submitted to governor and the Senate Finance Committee and the House Economic Matters Committee

Limited duration of Section 2 of Act Effective for a period of 4 years and 9 months Section 2 abrogated as of June 30, 2023

TAX CUTS AND JOBS ACT of 2017

Nicknames: “the Weinstein tax” Section 13307 of Tax Cuts and Jobs Act: “Denial of Deductions for Settlements Subject to Nondisclosure Agreements Paid in Connection with Sexual Harassment or Sexual Abuse Nicknames: “the Weinstein tax” “#MeToo tax”

New Section 162(q) of Internal Revenue Code: 26 U.S.C. §162(q) PAYMENTS RELATED TO SEXUAL HARASSMENT AND SEXUAL ABUSE – No deduction shall be allowed under this chapter for – (1) any settlement or payment related to sexual harassment or sexual abuse if such settlement or payment is subject to a nondisclosure agreement; or (2) attorney’s fees related to such a settlement or payment

Effective Date: For amounts paid or incurred after December 22, 2017

PRACTICAL CONCERNS “NONDISCLOSURE AGREEMENT” NOT DEFINED IN ACT “RELATED TO Sexual harassment OR SEXUAL ABUSE” not defined in act “NONDISCLOSURE AGREEMENT” NOT DEFINED IN ACT NO REGULATIONS OR INTERPRETIVE GUIDANCE HAVE BEEN ISSUED

PRACTICAL CONCERNS What IF EMPLOYEE HAS MULTIPLE CLAIMS tHAT ARE BEING SETTLED? ALLOCATION OF PAYMENTS IN SETTLEMENT AGREEMENTS WHEN THERE ARE MULTIPLE CLAIMS NONDISCLOSURE AGREEMENT PERMISSIBLE AS TO OTHER CLAIMS AND PAYMENTS?

PRACTICAL CONCERNS What IF EMPLOYEE WANTS CONFIDENTIALITY? IF THE PROVISION THAT STATES “UNDER THIS CHAPTER” IS INTERPRETED TO MEAN ALL OF CHAPTER 1 OF THE TAX CODE, IT WOULD APPLY TO BUSINESS ENTITES AND INDIVIDUALS AND THUS PRECLUDE DEDUCTIBILITY FOR NOT ONLY THE EMPLOYER, BUT ALSO THE EMPLOYEE. THE PROVISION DOES NOT EXPLICITLY REFER ONLY TO PAYOR’S ATTORNEYS FEES. WILL THIS DETER EMPLOYEES FROM MAKING CLAIMS?

PRACTICAL CONCERNS What IF EMPLOYER PREFERS CONFIDENTIALITY OVER THE TAX DEDUCTION? WHAT IF ONE PARTY PREFERS CONFIDENTIALITY BUT THE OTHER PREFERS THE TAX DEDUCTION?

PROPOSED LEGISLATION: ENDING FORCED ARBITRATION OF SEXUAL HARASSMENT ACT OF 2017 S. 2203: INTRODUCED DECEMBER 6, 2017 BY KIRSTEN GILLIBRAND (D-NY) LATEST ACTION: READ TWICE AND REFERRED TO COMMITTEE ON HEALTH, EDUCATION, LABOR AND PENSIONS ON DECEMBER 6, 2017 NO PREDISPUTE ARBITRATION AGREEMENT FOR SEX DISCRIMINATION DISPUTES IS VALID OR ENFORCEABLE

PROPOSED LEGISLATION: ENDING SECRECY ABOUT WORKPLACE SEXUAL HARASSMENT ACT H.R. 4729: INTRODUCED DECEMBER 21, 2017 BY CAROLYN MALONEY (D-NY-12) LATEST ACTION: REFERRED TO HOUSE COMMITTEE ON EDUCATION AND THE WORKFORCE ON DECEMBER 21, 2017 WOULD REQUIRE ANNUAL REPORTING BY EMPLOYERS TO EEOC OF THE NUMBER OF SETTLEMENTS OF SEX DISCRIMINATION CLAIMS (INCLUDING VERBAL AND PHYSICAL SEXUAL HARASSMENT)