Romances occur in every workplace. Employees date, fall in love, and sometimes drift apart. While most of these relationships come and go without incident, some lead to costly workplace disruptions.

Problems most often occur when romances between managers and subordinates create conflicts of interest, charges of favoritism by coworkers and sexual harassment lawsuits. Companies such as McDonald’s, Intel and BlackRock have recently dismissed executives for conducting consensual relationships with individuals in their chain of command.

Given the potential of workplace dating to erode the bottom line, a growing number of employers are developing and enforcing fraternization policies.

“Companies are starting to enforce zero tolerance policies, cracking down harshly on individuals whose conduct may constitute sexual harassment,” says Robert J. Nobile, partner at Seyfarth Shaw LLP, a law firm in New York, N.Y. “Conduct which in the past might not have resulted in termination may well do so today.”

New legislation

The long arm of the law is fueling the trend. “Ever since the ‘Me Too’ movement began, many states and municipalities have passed tougher legislation related to sexual harassment in the workplace,” says Nobile. “They are requiring employers to conduct annual training on what constitutes sexual harassment, to post notices detailing how employees should report incidents of harassment, and to have employees sign documents acknowledging an understanding of their rights. Some states even require employers to inform workers of the types of damages they can pursue if they are harassed.”

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While a relationship between a manager and a subordinate can go well over the long term, the practical reality is that it can also end badly. “Most people keep their emotions off the job and maturely handle breakups,” says Bob Gregg, co-chair of the employment practice law group at Boardman and Clark LLC, Madison, Wis. “Some do not, and the aftermath can result in litigation.” 

“Continuing advances from a supervisor, while at one time may have been mutual and welcome, may become unwelcome sexual harassment,” he says. “The company can be liable for failure to address and stop these aftermath behaviors.” In fact, a substantial number of sexual harassment cases have resulted from what was at one time consensual relationships.

Employers must take all these possibilities into consideration. But what, exactly, is the best policy? A blanket prohibition on all such relationships? Or a gentler approach requiring reporting and accommodation?

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The first option would seem to offer the greatest protection to the employer. After all, consistently terminating the supervisors in such situations would seem to remove the relationships as potential workplace irritants. But the picture is murkier than it first appears.

“You can say on paper that you prohibit dating with anyone in a chain of command,” says Nobile. “The reality is that romantic relationships will develop anyhow.”

When they do, of course, the partners conduct themselves under a cloak of secrecy, which can make matters worse. When company management has no way of monitoring a relationship, bad things can happen. A breakup can lead to a costly discrimination charge.

Reporting relationships

If you can’t stop people from fraternizing, you can take steps to protect your organization. “What I think is a better policy is to require disclosure when a workplace relationship develops,” says Gary Phelan, shareholder of Mitchell & Sheahan, P.C., Stratford, C.T. “That way it’s out in the open and there can be a discussion with both parties to make sure the relationship is clearly between two consenting adults and is not a product of any sort of unwelcome conduct.”

A policy can state that if anyone in a supervisory role dates a subordinate, both parties are obligated to bring the relationship to the attention of a designated individual. This is may be someone who can monitor the relationship to obviate any favoritism in which the subordinate receives inflated performance reviews or more attractive assignments, and also to assure no sexual harassment occurs down the road if the relationship should end.

Additionally, the employer might neutralize the direct reporting relationship by transferring one of the involved individuals. The larger the organization and the more departments available, the easier this is. At even the largest employer, though, it would be impossible to move a subordinate outside a top executive’s command chain.

Signed contracts

It’s wise to have employees explicitly acknowledge their understanding of the fraternization policies. “While enforcement of a strict policy against manager-subordinate dating is the best approach, rules against falling in love are not always effective,” says James J. McDonald, Jr., managing partner at the Irvine, Calif., office of Fisher & Phillips.

“If an employer does not want to lose one or both employees involved in a relationship, I recommend having the involved parties sign a ‘love contract.’” Such contracts state that the relationship is consensual, that the involved parties acknowledge they are required to act professionally at all times in the workplace, and that in the event the relationship ends, they have the duty to disclose that fact to the company.

While written policies establish clear behavioral guidelines, they can also aid an employer’s defense against charges of invasion of privacy when relationships are investigated. “Having a workplace romance policy, just as having one for anti-harassment, requires monitoring and investigation,” says Gregg. “A policy decreases anyone's expectation of privacy regarding relationships arising from the workplace.”

If signed policies go a long way toward protecting an employer’s bottom line from the costly effects of office dating, they are not a panacea. Lawsuits and conflicts of interest can result even when employees date people outside their chain of command, or fraternize with outside parties such as vendors, independent contractors, and consultants. “You have to be careful about all of these contingencies,” says Nobile. “Employers need bigger pairs of eyes these days to see what is going on.”

And Nobile’s advice for management level people looking to start a workplace relationship? “The best practice is to just say no.”

Perry is an award-winning business writer based in New York City. He has written on employment law, finance and marketing for more than 20 years.