This article discusses how employers can best manage the delicate question of workplace relationships, particularly in the light of recent high-profile sexual harassment allegations.

By: Joanna S. Rich, Priya Amin, Salvador Simao

Firm: FordHarrison

Surveys show that 40% of workers date or have dated co-workers. With the recent surge in sexual harassment allegations, the evolution of the #MeToo movement and ongoing legislative reform, it is crucial that employers remain proactive in setting boundaries around office relationships. Employers can minimise liability associated with office relationships by establishing clear policies, providing annual training for employees and managers, improving procedures to report sexual harassment complaints, and monitoring developments in relevant legislation and case law.

‘Love Contracts’

Consensual relationship contracts, also known as ‘love contracts’, are becoming increasingly popular with employers seeking to avoid sexual harassment claims and limit employer liability. Essentially, a ‘love contract’ affirms that the relationship is consensual in nature and that both parties are voluntarily involved in the relationship. Moreover, by signing, the employees acknowledge that they understand the company’s anti-harassment policies and Equal Employment Opportunity Commission (EEOC) commitment. These agreements are intended to refute one of the fundamental elements of a sexual harassment claim: that the advances were unwelcome. The agreements may also address additional concerns such as retaliation, use of technology, favouritism, at-will employment, confidentiality and conflicts of interest. They also frequently include arbitration provisions. If an employer chooses to include an arbitration clause, it should consult state and local laws to ensure such clauses are enforceable. Arbitration agreements should not expressly waive sexual harassment claims against the employer; as such provisions are generally unenforceable. Before deciding whether to use ‘love contracts’, employers should assess the company’s culture and environment to see if such agreements would be appropriate.

Dating Policies

In addition to standard sexual harassment policies, some employers have adopted dating or non-fraternisation policies, which typically include provisions to set boundaries between personal and business relationships, discourage fraternisation between superiors and subordinates, prohibit physical contact between employees during work hours and at the workplace, and establish reporting procedures for violations. These policies are designed to provide clarity and guidance for office dating and relationships as well as to avoid inappropriate workplace behaviour, prevent losses in productivity, and limit exposure to harassment claims. It is important that the policy identify the reason for implementation, the types of relationships that must be reported, and the steps the company may or will take after the relationship is reported.

Because sexual harassment claims can cause significant disruption in the workplace and result in potentially costly litigation, some companies have implemented stronger protections against sexual harassment with stricter dating policies. For example, certain companies have instituted policies that only allow an employee to ask a colleague out once. If the answer is not a clear ‘yes’ but rather ‘I’m busy’ or ‘I’m not free tonight,’ the policy requires employees to treat such responses as ‘no’. This is referred to as the ‘one and done’ rule.

Legislative Reform

In the wake of the #MeToo movement, lawmakers are pushing to overhaul the current system and backing several new bills in response to sexual harassment allegations. For example, the new tax law enacted in 2017 under the Trump Administration includes a provision denying tax deductions for settlement payments and legal fees in sexual harassment or abuse cases that settle subject to a confidentiality or non-disclosure agreement. Traditionally, legal settlements and related legal fees were almost always deductible and only fines or penalties paid to the government were not. It is unclear whether an allocation of the settlement proceeds between various claims could reduce tax exposure. However, for many employers, the loss of tax deductions may outweigh the benefits of confidentiality and keeping harassment claims from the public eye.

Moreover, numerous states are promoting legislation to end workplace arbitration of these issues. For example, New Jersey currently has two nearly identical bills, pending in the House and Senate, prohibiting prospective arbitration agreements and jury trial waivers with respect to employment discrimination, retaliation and harassment claims. In addition, the bills seek to ban confidentiality provisions in settlement agreements related to such claims. If enacted, these bills could make resolving employment disputes more difficult by limiting options for alternative dispute resolution.

Balancing privacy and harassment protection

In a rapidly transforming legal landscape, employers can mitigate risk through training, policies, and other efforts to create a culture of transparency and fairness. Working with legal advisors can help strike the right balance between the employer’s need to manage its workforce proactively and protect itself from harassment claims and employees’ privacy rights. We anticipate further developments in this rapidly changing area of the law as the demographics of the workplace and expectations regarding workplace environments change.