Changes to State Civil Rights Statutes: The Continued Increase of Employment Liability Risks

In addition, states and the District of Columbia can ' and generally do ' enact their own civil rights laws. State and local statutes cannot remove or restrict rights granted to employees by federal law, but they can provide greater, additional, or more comprehensive protections. The complementary role that the states and localities play becomes apparent when one compares the federal statutes with the District of Columbia Human Rights Act ('DCHRA'), DC ST '2-1401.01 et seq., Washington, DC's primary civil rights statute. The DCHRA forbids the types of workplace discrimination already prohibited by Title VII, the ADEA, and the ADA. Unlike those federal laws, however, the DCHRA also prohibits discrimination based on sexual orientation. Moreover, the DC law applies to employers of all sizes ' even those that employ only one person. Likewise, while the federal civil rights statutes put caps or ceilings on the amount of damages that can be awarded to a successful employee, the DCHRA contains no such limitations.

Another difference between the federal and state/local laws involves procedure. Before suing under one of the federal civil rights statutes, an employee must proceed through the Equal Employment Opportunity Commission ('EEOC'). The EEOC cannot award relief to the employee, though it will evaluate the case. In a rare case, the EEOC will decide to sue on the claimant's behalf ' but it will usually limit its tasks to investigating the allegation, making a non-binding determination, and possibly providing services such as mediation. Assuming that the EEOC does not file suit for the employee, it will eventually authorize the employee to file suit on his or her own.

The states, on the other hand, vary with regard to procedure. For example, some states require submission of complaints to EEOC-like state/ local agencies before allowing lawsuits, whereas others do not. Similarly, some states empower their administrative agencies to make binding decisions and grant relief (such as orders to reinstate fired employees and issuance of money awards), and some states allow employees to choose between proceeding through an agency or going directly to court. Still others provide little substantive help for employees on the state or local level.

The Maryland Anomaly

The Maryland Fair Employment Practices Act ('FEP'), Md. Ann. Code Art. 49B, '14 et seq., is different from most employment discrimination statutes. That's because Maryland is different from most states. Under Maryland law, certain counties enjoy a limited degree of 'self-rule.' Although those counties are bound by statewide laws, they also are empowered to enact and enforce some of their own additional laws. (The relationship between the self-rule counties and the states is just like the relationship between the states and the federal government. The counties may pass laws that add to, but do not contradict, federal law.) As a result, employees located in some of the self-rule counties enjoy greater protection under the FEP than do those located in other counties.

Maryland's FEP, which applies only to those employers with 15 or more employees, forbids the types of workplace discrimination already prohibited by Title VII, the ADEA, and the ADA ' plus 'sexual orientation'-based discrimination. Under the FEP, a covered Maryland employee who has suffered ' or believes he or she has suffered ' from unlawful workplace harassment may initiate an administrative action and appear for a hearing before the Maryland Human Rights Commission (the 'MHRC'). Until recently, however, the MHRC was empowered to do little more than order reinstatement of the employee and award limited lost back pay and attorneys' fees. Further, for employees located outside of the self-rule counties, the possibility of this administrative relief was the only weapon available under state or local law; that is, those employees could not sue in court under Maryland state law.

In contrast, some of the self-rule counties have provided ' and continue to provide ' additional protections for employees. First, employees located within those counties may use the statewide remedies, proceed through county agencies, or even file lawsuits under county laws. Second, employees lucky enough to be in those counties are permitted to seek, in addition to reinstatement and back pay, 'front pay,' compensatory (e.g., emotional distress) damages, and punitive damages ' all of which have the potential to drastically increase the amount of money they receive. In those counties, in fact, employees even have an advantage over those who sue under federal laws. Like the DCHRA, those county laws do not put caps on the amount of damages that one may obtain in court. Finally, some counties apply their statutes to each and every employer, regardless of the number of employees, whereas one county covers all employers that have five or more employees.

In 2007, the state of Maryland acted to reduce ' but not completely eliminate ' the disparities among the counties. Pursuant to recent amendments to the FEP, much greater relief has become available to employees on a statewide basis. As of last October, employees may obtain compensatory ' and sometimes punitive ' damages in addition to other relief. In addition, an employee proceeding under the FEP may choose between: 1) seeking such relief in an administrative hearing before the MHRC, 2) having the MHRC file suit in court on his or her behalf, or 3) directly filing the lawsuit. There are two catches, however. First, the FEP, like its federal counterparts, puts caps on damages. Second, the statute's 15-employee threshold remains unchanged.

What This Means for Franchisors

Franchisors and franchisees need to know what the dangers are on the federal level and in the particular state(s) where they operate. Maryland's developments offer a useful glimpse of the interaction between various discrimination laws and the issues that most employers need to consider. By remaining conscious of these dangers, you can work to avoid them.

David L. Cahn, who is the principal of Franchise & Business Law Group in Baltimore, MD, can be reached at [email protected]. David G. Ross, who is Of Counsel to Franchise & Business Law Group and principal of Ross Law Firm, LLC, can be reached at [email protected].

Franchisors probably know that workplace discrimination is 'against the law.' But, as business owners who could suffer the consequences of a real or imagined violation, they probably don't know enough. What types of discrimination are prohibited? Who enforces these laws, and what are the consequences if you fail to comply? Does the size of your business play a factor in determining the level of risk? And do rights and obligations vary from state to state and locality to locality? A review of the state of Maryland's recent changes to its Fair Employment Act provides an excellent illustration of these issues ' and should give business owners such as franchisors and franchisees a greater understanding of how the system works.

A Primer on Civil Rights Laws

The issue of employment discrimination is largely governed by federal, state, and (sometimes) local statutes. The most famous of these statutes are Title VII of the Civil Rights Act of 1964 ('Title VII'), 42 U.S.C. '2000e et seq., which prohibits discrimination (including harassment) based on characteristics such as race, sex, national origin, and ethnicity; the Americans with Disabilities Act ('ADA'), 42 U.S.C. '12101 et seq., which prohibits discrimination based on disability; and the Age Discrimination in Employment Act ('ADEA'), 29 U.S.C. '621 et seq., which provides similar protections against age-based discrimination. These statutes are federal laws that apply throughout the country, regardless of the state in which the employee works. Their application is limited, however, to those employers that have a certain minimum number of employees: Title VII and the ADA cover only those employers that have 15 or more employees for a substantial portion of the year, whereas the ADEA requires a minimum of 20 employees.

In addition, states and the District of Columbia can ' and generally do ' enact their own civil rights laws. State and local statutes cannot remove or restrict rights granted to employees by federal law, but they can provide greater, additional, or more comprehensive protections. The complementary role that the states and localities play becomes apparent when one compares the federal statutes with the District of Columbia Human Rights Act ('DCHRA'), DC ST '2-1401.01 et seq., Washington, DC's primary civil rights statute. The DCHRA forbids the types of workplace discrimination already prohibited by Title VII, the ADEA, and the ADA. Unlike those federal laws, however, the DCHRA also prohibits discrimination based on sexual orientation. Moreover, the DC law applies to employers of all sizes ' even those that employ only one person. Likewise, while the federal civil rights statutes put caps or ceilings on the amount of damages that can be awarded to a successful employee, the DCHRA contains no such limitations.

Another difference between the federal and state/local laws involves procedure. Before suing under one of the federal civil rights statutes, an employee must proceed through the Equal Employment Opportunity Commission ('EEOC'). The EEOC cannot award relief to the employee, though it will evaluate the case. In a rare case, the EEOC will decide to sue on the claimant's behalf ' but it will usually limit its tasks to investigating the allegation, making a non-binding determination, and possibly providing services such as mediation. Assuming that the EEOC does not file suit for the employee, it will eventually authorize the employee to file suit on his or her own.

The states, on the other hand, vary with regard to procedure. For example, some states require submission of complaints to EEOC-like state/ local agencies before allowing lawsuits, whereas others do not. Similarly, some states empower their administrative agencies to make binding decisions and grant relief (such as orders to reinstate fired employees and issuance of money awards), and some states allow employees to choose between proceeding through an agency or going directly to court. Still others provide little substantive help for employees on the state or local level.

The Maryland Anomaly

The Maryland Fair Employment Practices Act ('FEP'), Md. Ann. Code Art. 49B, '14 et seq., is different from most employment discrimination statutes. That's because Maryland is different from most states. Under Maryland law, certain counties enjoy a limited degree of 'self-rule.' Although those counties are bound by statewide laws, they also are empowered to enact and enforce some of their own additional laws. (The relationship between the self-rule counties and the states is just like the relationship between the states and the federal government. The counties may pass laws that add to, but do not contradict, federal law.) As a result, employees located in some of the self-rule counties enjoy greater protection under the FEP than do those located in other counties.

Maryland's FEP, which applies only to those employers with 15 or more employees, forbids the types of workplace discrimination already prohibited by Title VII, the ADEA, and the ADA ' plus 'sexual orientation'-based discrimination. Under the FEP, a covered Maryland employee who has suffered ' or believes he or she has suffered ' from unlawful workplace harassment may initiate an administrative action and appear for a hearing before the Maryland Human Rights Commission (the 'MHRC'). Until recently, however, the MHRC was empowered to do little more than order reinstatement of the employee and award limited lost back pay and attorneys' fees. Further, for employees located outside of the self-rule counties, the possibility of this administrative relief was the only weapon available under state or local law; that is, those employees could not sue in court under Maryland state law.

In contrast, some of the self-rule counties have provided ' and continue to provide ' additional protections for employees. First, employees located within those counties may use the statewide remedies, proceed through county agencies, or even file lawsuits under county laws. Second, employees lucky enough to be in those counties are permitted to seek, in addition to reinstatement and back pay, 'front pay,' compensatory (e.g., emotional distress) damages, and punitive damages ' all of which have the potential to drastically increase the amount of money they receive. In those counties, in fact, employees even have an advantage over those who sue under federal laws. Like the DCHRA, those county laws do not put caps on the amount of damages that one may obtain in court. Finally, some counties apply their statutes to each and every employer, regardless of the number of employees, whereas one county covers all employers that have five or more employees.

In 2007, the state of Maryland acted to reduce ' but not completely eliminate ' the disparities among the counties. Pursuant to recent amendments to the FEP, much greater relief has become available to employees on a statewide basis. As of last October, employees may obtain compensatory ' and sometimes punitive ' damages in addition to other relief. In addition, an employee proceeding under the FEP may choose between: 1) seeking such relief in an administrative hearing before the MHRC, 2) having the MHRC file suit in court on his or her behalf, or 3) directly filing the lawsuit. There are two catches, however. First, the FEP, like its federal counterparts, puts caps on damages. Second, the statute's 15-employee threshold remains unchanged.

What This Means for Franchisors

Franchisors and franchisees need to know what the dangers are on the federal level and in the particular state(s) where they operate. Maryland's developments offer a useful glimpse of the interaction between various discrimination laws and the issues that most employers need to consider. By remaining conscious of these dangers, you can work to avoid them.

David L. Cahn, who is the principal of Franchise & Business Law Group in Baltimore, MD, can be reached at [email protected]. David G. Ross, who is Of Counsel to Franchise & Business Law Group and principal of Ross Law Firm, LLC, can be reached at [email protected].