Smart Answers February 12, 2010, 12:42PM EST

How Employers Should Handle Workplace Romance

Don't establish a policy prohibiting it, and don't ignore gossip that it exists. Do provide sexual harassment training—and buy employment liability insurance

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There's no doubt that each year, lots of people fall in love with their co-workers or their bosses. Other employees typically get swept up in workplace romances through the gossip mill. But while they can't be prevented, office liaisons are not always a joy for business owners. And they're more difficult to handle when they occur at small companies, says attorney Mark Kluger, who chairs the labor and employment practice at Mandelbaum Salsburg in West Orange, N.J. He spoke recently to Smart Answers columnist Karen E. Klein about workplace relationships from a decidedly nonromantic perspective. Edited excerpts of their conversation follow.

You advise your clients against establishing a written policy prohibiting workplace romance. Why?

Employers cannot control human nature, so a workplace romance policy is unenforceable. And if you establish one, it sends a negative message to employees about your company's willingness to impose itself into their personal lives.

The other thing is that you don't want to create a Romeo and Juliet situation. If there's a policy against workplace romances, people will feel they must lie and sneak around, and that's the last thing you want.

So what should an employer's reaction be if a romance develops in the office?

If a workplace relationship develops between a supervisor and a subordinate, there's a definite need for the employer to step in.

But when it's co-workers who have a relationship, the employer only needs to be involved if it becomes a distraction. Issues may arise, such as public displays of affection or the couple spending inordinate amounts of time together during work hours. Their co-workers may feel uncomfortable if there is sexual banter, and that can create a hostile work environment. That's a legal term that gets into the wheelhouse of sexual harassment.

Does an employer have a legal obligation to get involved at that point?

Yes. I teach sexual harassment training, and I make clear to management that if it's heard through the grapevine, the employer must look into it. Gossip is recognized by the courts as a means of information to the employer. If he knew of some behavior, or should have known because it was all over as gossip, he could be liable.

What is the best course of action for the employer to take?

Don't blow the situation out of proportion. If you start sounding punitive right away, things can deteriorate quickly. Then you've got resentment, anger, and bad morale extending to the entire workplace.

Most problems can be easily diffused with effective communication. You have a meeting with the couple and tell them you're happy for them, but they need to cool it in the office. More often than not, that approach works. Once they understand that their jobs may be on the line if they don't comply with your instructions, people tend to comply.

What happens if they don't?

Well, that's certainly a legitimate reason for the employer to split people up so they don't work in the same department or building. This can be a problem for smaller employers, because there are typically fewer places to move people. The employer has to be careful not to punish one party or promote them because of this relationship. Often it's the woman who's moved out, and that could be grounds for gender discrimination if she feels she's being demoted.

You want to come up with a game plan that works for everybody and try to create a buy-in from the two employees.

What other issues make this situation more difficult for small business owners?

It is tougher in a smaller work environment because there are often fewer options. And it's expensive for small business owners to insure against it by purchasing employment practices liability insurance. We always recommend that they do have that, because it covers employee lawsuits and attorney's fees.