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Sexual Harassment Lessons From a New Maryland Law
San Diego and California businesses are aware that sexual harassment is not allowed and is not to be tolerated in California workplaces. The #MeToo movement has highlighted the issue and among the goals of the movement is to remove the cloud of secrecy that surrounds sexual harassment settlements. As we wrote here, at the end of 2017, Congress modified the federal tax code to disallow, as a business deduction, any settlement of a sexual harassment case that is cloaked with a nondisclosure agreement.
Following a similar path, the Maryland Legislature recently enacted a law that focuses on another aspect of sexual harassment in the workplace – employee agreements and restrictions. The new law sounds some cautionary notes for employers here in San Diego and throughout California. This article will discuss the act as it relates to California law and employers.
San Diego Corporate Law: Waiving Statutory Rights in California
Usually, under general provisions of California contract law, individuals and business can, by contract, waive and forgo rights to which they are entitled under the laws of California. For example, Cal. Civil Code, § 3513 states, “Anyone may waive the advantage of a law intended solely for his benefit.” In theory, one could agree to waive one’s right to sue for sexual harassment.
However, in general, a person or business cannot waive by contract rights that are derived from public policy or that are for the public benefit. The second sentence of Cal. Civil Code, § 3513 is this: “…. But a law established for a public reason cannot be contravened by a private agreement.” This is further codified at Cal. Civil Code, § 1668 which states: “All contracts which have for their object, directly or indirectly, to exempt anyone from responsibility for his own fraud, or willful injury to the person or property of another, or violation of law, whether willful or negligent, are against the policy of the law.”
Put succinctly, if the contractual waiver is “against public policy,” then the waiver will be deemed void. Sexual harassment is an example of a “public policy” that cannot be waived. See generally, Armendariz v. Foundation Health Psychcare, 6 P. 3d 669 (Cal. Supreme Court 2000).
San Diego Corporate Law: Maryland’s New Law
As noted, Maryland just enacted what is termed “The Disclosing Sexual Harassment in the Workplace Act of 2018 (the “DSHA”). See here. The first section of the DSHA nullifies any provision in an “employment contract, policy or agreement” that waives “any 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 is null and void as being against the public policy of the State.”
The second section prohibits various adverse employment actions against an employee who refuses to sign an employment contract that contains a provision that violates the DSHA.
Finally, for employers with more than 50 employees, the DSHA requires that, prior to July 1, 2020, each employer shall report the following:
- The number 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 that included a provision requiring both parties to keep the terms of the settlement confidential
The DSHA requires that certain metadata be made available to the public, that a report be prepared and that data with respect to individual employers be made available “upon request.”
San Diego Corporate Law: Legal Lessons for California Employers
Of course, the new Maryland law does not apply to San Diego and California businesses. However, it is well known that state legislatures closely watch what laws are passed in other states. Thus, the Maryland Act may soon be proposed here in California. Either way, it is clear that laws and policies are trending AGAINST confidentiality provisions in sexual harassment settlements and cases. As such, you need advice and counsel from a good San Diego corporate lawyer with respect to your employment contracts, employment policies, and employee handbooks. Be particularly careful if, at the beginning of the employment relationship, your business is asking for confidentiality of some future sexual harassment incident.
Contact San Diego Corporate Law Today
If you would like more information about updating your company’s anti-harassment contracts, policies, and employee handbook, contact attorney Michael Leonard, Esq., of San Diego Corporate Law. Mr. Leonard can be reached at (858) 483-9200 or via email.
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