Major Changes in Maryland Labor & Employment Law

Major Changes in Maryland Labor & Employment Law

September 17, 2020

Several labor and employment laws affecting Maryland employers will go into effect on October 1, 2020. These laws include: tougher requirements under the State’s “Mini-WARN” Act; a CROWN Act, which expands the law to prohibit discrimination based on hair style; an amendment to the Equal Pay for Equal Work law; and a ban on salary history inquiries.

Maryland’s Mini-WARN Act

            Unlike the Federal WARN (aka “plant closings”) law, which applies to employers with 100 or more employees, Maryland’s Mini-WARN law, SB780, applies to employers operating industrial, commercial, or business enterprises in Maryland with 50 or more employees for at least 12 months. Like the Federal law, employees averaging 20 or fewer hours of work per week, or employees who have worked for the employer for less than 6 of the preceding 12 months are not included in the count for the purpose of determining an employer’s coverage under the law.

Under the new Maryland law, covered employers must provide employees with 60 days’ notice of a reduction in operations, defined as:

a) A relocation of a part of an employer’s operation from one workplace to another existing or proposed site; or

b) The shutdown of either  a workplace; or a portion of the operations of a workplace that reduces the number of employees by the greater of at least 25%, or at least 15 employees, over any 3-month period.

Maryland’s reduction in operation threshold is therefore lower than that of the Federal WARN Act which is triggered when there is a plant closing that results in at least 50 employees losing their jobs for at least 30 days, or a mass layoff which is an employment loss of 33 percent of the workforce impacting at least 50 employees or a mass layoff of 500 employees. Another striking difference between Maryland and Federal law is that Maryland law is silent as to the minimum geographic distance requirement or the minimum number of reduced employees that trigger the relocation prong of the law.

Under the law, covered employers must provide 60 days’ notice to:

  • All employees at the workplace subject to reduction;
  • Any union or bargaining agency of the affected employees;
  • The Maryland Workforce Development’s Dislocated Worker Unit; and
  • All elected local officials in the area of the affected workplace.

Maryland’s requirement that all elected local officials receive notice is another departure from Federal law which only requires notice to the chief elected official.

Under the law, the Maryland Secretary of Labor is required to develop regulations for employers to continue providing health, pension, and severance benefits to affected employees. The regulations are expected to be released for public comment in November 2020, with full implementation occurring in April 1, 2021. The Department of Labor has stated that it will not enforce the full implementation of the law until its regulations are available. Upon enforcement, employers who violate the law could face a civil penalty of up to $10,000 per day for failure to provide notice to all required parties. This penalty is very significant compared to the Federal WARN Act which imposes a $500 per day penalty for an employer’s failure to provide notice to the chief elected official. Violating employers who are covered under Maryland law and Federal law could face civil penalties under each law.

Finally, the law does not apply to reductions in operation that are the result of labor disputes; that occur in state or politically run commercial, industrial, or agricultural businesses; occur at construction sites or other temporary workplaces; that are the result of seasonal factors, as determined by the Department of Labor; or occur when an employer files for bankruptcy.

Maryland’s CROWN Act

            In keeping up with the several states and Montgomery County, Maryland which have passed similar legislation, Maryland’s CROWN Act , which stands for “Creating a Respectful and Open World for Natural Hair,” will also go into effect on October 1, 2020. The law expands the definition of race to include “certain traits associated with race, including hair texture and certain hairstyles.” “Braids, twists, and locks” along with “hair texture, afro hairstyles, and protective hairstyles” are specifically named and included in this protection. The Senate version of the bill included a provision permitting employers to establish workplace requirements that require employees to “adhere to reasonable workplace appearance, grooming, and dress standards,” but that language was struck from the final version bill.

            Employers with workplace grooming and appearance policies should revisit those policies to ensure compliance with the new law.

Equal Pay Protection

            In a new amendment to its Equal Pay for Equal Work law, Maryland closed a loophole that only protected employees from retaliation for inquiring about the wages of other employees. Under the amended law, HB14, employers are prohibited from taking any adverse employment action against an employee who inquiries about the employee’s own wages or another employee’s wages. Under the law an employer may not:

(1) Prohibit an employee from:

  • Inquiring about, discussing, or disclosing the wages of the employee or another employee; or
  • Requesting that the employer provide a reason for why the employee’s wages are a condition of employment;

(2) Require an employee to sign a waiver or any other document that purports to deny the employee the right to disclose or discuss the employee’s wages; or

(3) Take any adverse employment action against an employee for:

  • Inquiring about the employee’s wages or another employee’s wages;
  • Disclosing the employee’s own wages;
  • Discussing another employee’s wages if those wages have been disclosed voluntarily;
  • Asking the employer to provide a reason for the employee’s wages; or
  • Aiding or encouraging another employee’s exercise of rights under this section.

Ban on Salary History Inquiries

            In another law that follows the legislative trend amongst states and cities making an effort to close the wage gap, Maryland state law will now prohibit an employer from relying on an applicant’s wage history in screening or considering an applicant for employment or in determining an applicant’s wage. Under the law, employers are prohibited from inquiring about an applicant wage history orally or in writing, or through an applicant’s former employer. The law, however, acknowledges that applicants may voluntarily share their wage history during the hiring process. In those circumstances, and after an employer makes its offer of employment including compensation, an employer may rely on the voluntarily shared wage history to offer the employee a higher wage. In relying on the voluntarily shared wage history, an employer may not offer compensation at a level that creates an unlawful pay differential based on sex or gender identity. The law also requires employers to provide a wage range for a position, upon an applicant’s request.

            The Department of Labor is permitted to issue a discretionary sanction for any violations of the law. First time violators may receive a letter compelling compliance; second time violations may incur a $300 penalty for each applicant; and a subsequent violation may incur a $600 penalty per applicant, if the subsequent violation occurred within three years of the previous determination of violation. In assessing penalties, the Department of Labor may consider the severity of the violation, the size of the employer, the employer’s good faith, and the employer’s history of violations.

            Hiring managers and human resources employees should be trained on the new restrictions to ensure that the employer’s hiring process is not violative of the law. To ensure compliance, employers also should develop formal wage ranges for all positions and review their application materials to make sure that they do not request wage history.

If you have any questions, or would like to discuss how these new Maryland laws will impact your business, please contact your regular Saul Ewing Arnstein & Lehr LLP labor and employment attorney.