Dating among co-workers can be the source of numerous problems for employers, potentially leading to sexual harassment claims, preferential treatment and resentment among others who suspect favouritism. To curb such problems, employers have become increasingly receptive to the idea of regulating workplace romances by implementing anti-fraternization policies and disciplining employees who are involved in romantic relationships in the workplace. In a recent decision affirming the right of employers to regulate the workplace, the US Court of Appeals for the Second Circuit opined that an employer may dismiss its employees for dating their co-workers. However, a sharp concurring opinion in that case and continuing uncertainty regarding the manner in which various other courts would rule on the issue, including New York's highest state court, leave employers still wondering whether taking an adverse employment action against an individual for dating a co-worker may result in liability for the employer.

In McCavitt v Swiss Reinsurance America Corp 237 F 3d 166 (2d Cir 2001) the Second Circuit held that romantic dating is not a "recreational activity" protected by the New York State Labour Law. Therefore, according to the Second Circuit, employers are not prohibited from dismissing employees for dating their co-workers.

Jess McCavitt, a senior vice president at Swiss Reinsurance Inc, was romantically involved with Diane Butler, another senior vice president at the company. The company had no written anti-fraternization policies. Although under no duty to do so, Butler informed the company's human resources director of her relationship with McCavitt. When McCavitt was denied a promotion and ultimately dismissed, he sued the company, claiming he was fired in violation of Section 201(d) of the New York Labour Law, which prohibits employers from dismissing employees for their legal, after-hours recreational activities.

The Second Circuit decided that since the Labour Law issue was purely an issue of state law, it was bound by an Appellate Division, Third Department case - State v Wal-Mart Stores Inc, 207 AD 2d 150 (3d Dep't 1995) - which held that, because 'romance' is different from 'recreation', dating is not a recreational activity.

Although the Second Circuit thus found that dating is not a protected activity under New York law, the state's highest state court has yet to rule on the issue. Recognizing this fact, Second Circuit Justice McLaughlin, who concurred with the majority's opinion "grudgingly", wrote in his opinion that:

"It is repugnant to our most basic ideals in a free society that an employer can destroy an individual's livelihood on the basis of whom he is courting, without first having to establish that the employee's relationship is adversely affecting the employer's business interests." (McCavitt, at 169)

He further expressed his hope that the Court of Appeals would not agree with the majority in Wal-Mart and his view that the state legislature should amend the statute in order to afford employee protection. Notwithstanding his strong views on the subject, McLaughlin was unable to find persuasive evidence that the New York Court of Appeals would reach a different conclusion from that in Wal-Mart and thus rendered a concurring, not a dissenting, opinion.

The Second Circuit has also ruled in favour of employers in a related scenario, dubbed the 'paramour' cases. Specifically, the court has expressed unwillingness to recognize a legal claim against employers by employees who are not granted the favourable treatment afforded to co-workers who are sexually involved with their supervisors (eg, DeCintio v Westchester City Medical Center, 807 F 2d 304 (2d Cir 1986), cert denied, 484 US 825 (1987) - Title 7 claim does not arise where consensual personal relationship affected professional advancement; preferential treatment was based on hired female's sexual liaison with her employer, not upon male employee's gender.).

Extending the paramour cases even further, a federal district court recently held that a male employer's discharge, at his wife's insistence, of a female employee with whom he had a consensual sexual relationship does not constitute actionable sex discrimination under Title 7 (Kahn v Objective Solutions Int'l, 86 F Supp 2d 377 (SDNY 2000)). New York's Appellate Division, Third Department reached the same result under the New York State Human Rights Law in a case factually similar to Kahn. (See Mauro v Orville, 259 AD 2d 89, 697 NYS 2d 704 (3d Dep't 1999) - "Although surely antithetical to good business practices, discrimination against an employee on the basis of a failed voluntary sexual relationship does not of itself constitute discrimination because of sex.")

Although the law in this area is unclear, it is recommended that employers implement anti-fraternization policies that disallow romantic relationships between supervisors and subordinates. Romantic relationships between supervisors and subordinates frequently result in lawsuits when the relationship ends, a perception of favouritism while the relationship continues and a decrease in employee morale. Employers who ensure the fair and non-discriminatory enforcement of such policies are likely to reduce their risk of sexual harassment lawsuits and promote a more efficient workplace.

For further information on this topic please contact Kevin B Leblang or Robert N Holtzman at Kramer Levin Naftalis & Frankel LLP by (+1 212 715 9100) or by fax (+1 212 715 8000) or by email ([email protected] or [email protected]).