Cultural attitudes seem to be changing toward in-office romance. Here's a breakdown of the legal ramifications of making (and breaking) a company policy.
As the old saying goes "you don't dip your pen in the company ink." In other words, you shouldn't get into a dating or sexual relationship with a co-worker.
But consider this: according to a recent Workplace Options survey, nearly 85% of 18-29 year olds would have a romantic relationship with a co-worker, compared to just over 35% for 30-46 year olds and about 30% of 47-66 year olds. Even more shocking is that 40% of those 18-29 year olds would date their supervisors. According to a CareerBuilder survey, interoffice dating has a fairly high success rate--of the 38% of people surveyed that dated a co-worker at least once, 31% went on to marry that co-worker!
Is this age-old adage becoming extinct? If you believe the stats of new employees entering the workforce, it might seem so. But a lot of companies don't let the rank and file decide--they adopt policies that ban or limit workplace dating--all in the name of lowering liability.
Enforcing these policies can take their toll on a company. Just last month, Gary Friedman, the chief executive of Restoration Hardware, stepped down in the middle of the company's public offering. The reason: an internal inquiry into his relationship with a 26-year-old female employee. Friedman was not married, so there was no affair. And the employee? She didn't even work there anymore! Earlier this year, Best Buy's chief executive, Brian Dunn, stepped down after an investigation by the board discovered he had shown "extremely poor judgment" with a 29-year-old female employee. A couple years ago, Hewlett-Packard's chief executive, Mike Hurd, resigned amid accusations of falsifying expense reports to hide a personal relationship with an independent contractor.
As companies grow and add employees, you will often see signs of budding workplace relationships. This can be especially true in high-growth companies that demand long work hours and tend to hire more single employees. When your routine is work-sleep-work, going out to date does not seem like a real option for many. According to the CareerBuilder survey, some industries are more prone to inter-office dating than others. Hospitality, Financial Services, Transportation and Utilities, Information Technology, and Health Services all topped the list as having higher than average office dating.
As a business owner, you might ask: "Where is the legal issue?" or "What's the best policy regarding workplace dating?" While the answer to the first question is pretty simple, the answer to the latter is less obvious.
The legal issue is what I like to call the "amplification" of potential liability that always exists around the employer-employee relationship. There will foreseeably be claims of favoritism, or even discrimination or harassment. When a workplace romance sours, it can expose the company to increased liability, since the connection between alleged actors is easier to establish--essentially giving the plaintiff some good ammunition for his or her case. Relationships between supervisors and subordinates create even more potential problems. In a better scenario, coworkers would find it easier to claim that an employee received preferential treatment from a supervisor he or she is dating. In a poorer scenario, the relationship would end badly, one of the employees could claim that the relationship was non-consensual, or that sexual harassment existed. An employee could even make a case for unlawful retaliation if he or she receives a poor performance review from a former lover (or if a co-worker receives a better evaluation from his or her boss).
There are a few different ways to manage this liability. When it comes to workplace dating policies, here are a few basic options:
You can do nothing. This seems to be the overwhelming favorite for smaller companies or companies that are just starting to formalize employee training. Often a CEO or president will look at the potential for risk and weigh that against the ability to police and enforce a policy. For many smaller companies, they choose to go without a policy, and let the rules on harassment and discrimination do the job. Note that you should always have a policy prohibiting and enforcing sexual harassment and discrimination.
You can ban it. This is another common method, known as an "anti-fraternization policy." This type of "no-dating" policy is not without problems. You have to define and often describe the conduct you want to prohibit. Will the policy restrict casual dating, relationships, romantic involvement, or socializing? Can you even define those terms? I can tell you that the last place you want a policy defined is in the courts. A less restrictive policy that a lot of companies have is one preventing nepotism--prohibiting spouses or relatives from working at the same company or preventing employees from supervising related coworkers.
You can allow it, with written disclosure. This is commonly known as the "Love Contract" approach. A signed document will confirm a consensual relationship and provide additional notice of understanding of the sexual harassment policy. You can often use the contract process to outline expected behavior (like no "PDA"--public displays of affection--at work or retaliation if the relationship ends). Make sure that you inform the employees that they have a right to (and should) talk to a lawyer before signing.
You can allow it, but never within the chain of authority. While this policy is easier to sell to employees (most are not inside each other's reporting chain), you still have a lot of the same problems about defining conduct and what is not allowed. You can also have employees report a romantic relationship to a company representative, like an HR official. Having information up front will allow you to better respond to complaints of discrimination or favoritism. Make sure that your HR representatives understand they can't disclose the existence of the relationship to anyone unless it's necessary to respond to complaints.
Generally, policies cover not only employees, but also contractors, vendors, suppliers, manufacturers, and the like. Essentially, any relationship between two people that could have a negative effect on the company if things sour, or if one party is able to improperly influence the other would fall under the policy.
One last generally acceptable rule: If you have a "C" (think CEO, CFO, COO) or VP in your title, you should always think twice about dating anyone in the workplace, even if he or she is not a direct report or within your chain of command. Even if it does not violate a written policy, your boss (the CEO or the board) might not care, and view it as a lack of senior management acumen.
Think of it this way: Is the potential relationship worth risking your good job or name?
I tend to sound like a broken record when it comes to company policies. So here it goes again: no matter what policy you have, you must follow and enforce it. It doesn't matter if it is a star performer (such as Restoration Hardware's CEO) or not. In my opinion, failure to equitably enforce a corporate policy is often worse than not having one.
CHAS RAMPENTHAL is general counsel and vice president of product development at LegalZoom. He's also a former talk radio host (KTLK AM 1150 at Clear Channel) and an entrepreneur himself, as the founder of LegalEndeavor. @LegalZoom