July 20, 2005--Superiors engaged in consensual sexual relationships with their employees might be sued for creating a hostile work environment by third-party employees, the California Supreme Court ruled on Monday.

The ruling argued that the affairs of prison warden Lewis Kuykendall with three employees and, subsequently, his preferential treatment toward them, demonstrated "sexual favoritism" that was severe enough to create a "hostile work environment" for other workers.

Previously, though someone might feel that an office affair implied they had to sleep with the boss to get ahead, most states did not recognize the claim if the affair was consensual and did not directly impact the third party, said lawyers representing both employers and employees.

"While the decision does not create entirely new standards, it does stretch the boundaries of sexual harassment law farther than they have been stretched in most previous cases," said Marguerite Ruby, president of ProWorkplace, a workplace consultancy and division of law firm Hunton & Williams, an international law firm.

Some believe that expanding the definition of "sexual harassment" can be dangerous. "I am suspicious of the ruling -- I represent employers and believe it will open the door to claims that are difficult to prove with certainty and make the courts vulnerable to people using law for their own agenda," said Gregory Robertson, head of the Labor and Employment Law practice at Hunton & Williams.

Others defend the ruling, arguing that greater breadth does not necessarily make the law easier to apply. "To win a case you still need to prove that the less qualified employee is getting favored treatment," said Michael Maroko, partner at Allred, Maroko & Goldberg, a California law firm dedicated to representing wronged employees.

Ruby's advice to companies seeking to avoid trouble remains the same. "Romantic relationships between supervisors and subordinates create business and legal risks for an employer, and employers are best served by prohibiting them. Such relationships can interfere with teamwork, productivity, recruitment and retention, work quality, management credibility and employee morale -- all critical elements for any business to succeed," she said.

But in light of reality, since it is difficult to govern employee relationships between people who see each other everyday, said Maroko, "if someone is having an affair, he or she should not be responsible for making decisions regarding the other person's salary or promotion."

In addition, companies should have sexual harassment, as well as conflict of interest and consensual relationship policies to clarify their stance against favoritism, according to Kim Parker, executive vice-president of the California Association of Employers.

"While there is no silver bullet to protect you from office romance lawsuits, the more policies you have, the more documentation you have on your side in a court of law," Parker wrote in her August newsletter to CAE members.