2017 Maryland General Assembly Employment Legislation Update

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During the Maryland General Assembly session that ended in April 2018, Shawe Rosenthal lawyers again worked with the Maryland Chamber of Commerce to oppose or moderate legislation that would adversely affect employers. Several employment-related bills were passed by the General Assembly, and Governor Hogan either has signed or is expected to sign them.

HB 1596/SB 1010 – Disclosing Sexual Harassment in the Workplace Act of 2018

The law prohibits an employer from requiring a waiver of future sexual harassment or retaliation claims and prohibits an employer from taking adverse action against an employee for refusing to enter into an agreement with such a waiver. The law does not prohibit agreements permitted under federal law, which would include arbitration agreements under the Federal Arbitration Act. The prohibitions apply to agreements executed, extended or renewed after October 1, 2018.

The law also contains a reporting provision, by which employers with 50 or more employees must submit an electronic survey on or before July 1, 2020 and on or before July 1, 2022 that contains:

  • the number of sexual harassment settlements made (it is unclear over what period and whether only Maryland settlements are covered),
  • the number of settlements paid to the same employee over the past 10 years, and
  • the number of sexual harassment settlements containing a confidentiality provision (again, it is unclear over what period and whether only Maryland agreements are covered)
  • Whether personnel action was taken against an employee who was the “subject” of a settlement (it is unclear if this means the harasser or the victim or both)

The Maryland Commission on Civil Rights will post the aggregate number of responses for each item and make specific employer responses available for public review. The Commission will prepare a summary of a random selection of each set of surveys six months afterwards for submission to the Governor, the House Economic Matters Committee and the Senate Finance Committee. The reporting provision has a sunset date of June 30, 2023.

SB 853 – General Contractor Liability for Unpaid Wages

This law makes general contractors on construction projects jointly and severally liable for wage payment violations committed by a subcontractor. The subcontractor is required to indemnify the general contractor for wages, damages, interest, penalties or attorneys’ fees resulting from the subcontractor’s violation unless there is an indemnification provision in any contract between the two or the violation occurred because the general contractor failed to make timely payments to the subcontractor in accordance with the terms of any contract between the two.

SB 134 – Small Business Relief Tax Credit (for Earned Sick and Safe Leave)

The Maryland Healthy Working Families Act (MHWFA), which took effect in February 2018, requires employers of 15 or more employees to provide paid sick and safe leave, while smaller employers must provide unpaid leave. In order to encourage those smaller employers to provide paid leave, SB 134 provides a tax credit against the employer’s state business income tax.

In order to qualify for the tax credit, the employer must employ “qualified employees,” who are individuals earning wages equal to or less than 250% of the annual federal poverty guidelines for a single-person household (currently $12,140), and the employer must provide paid leave benefits in accordance with the MHWFA. The allowable tax credit will be the lesser of either (1) $500 per qualified employee, or (2) the total amount of the paid leave benefits accrued by all qualified employees. If the credit exceeds the employer’s state income tax for the year, the employer may claim a refund.

The law also sets up a mechanism for employers to apply for a tax credit certificate. Regulations will be issued to implement the law and to set forth the criteria and procedures for the application for, approval of, and monitoring of continuing eligibility for the tax credit.