Sign in the Name of Love

Can 'love contracts' decrease an employer's litigation risks and keep office romances in check?

Lynn D. Lieber, an employment law attorney and founder and chief executive officer of Workplace Answers, a San Francisco-based provider of legal compliance education via the Internet, tells the story of a company she represented whose president was spending three to six hours with a subordinate behind closed doors. "He would come out with his hair messed up. He ended up promoting her so she worked directly for him. It was horrible for the other people who worked with him," says Lieber, who was forced to confront the president.

Workplace romances can lead to accusations of poor judgment, breaches of ethics, favoritism, lost productivity, poor employee morale, sexual harassment claims and even workplace violence. It's no wonder, then, that HR professionals worry about the possible consequences of employees dating one another. Such concern has led an increasing number of companies to institute "consensual relationship agreements," also known as "love contracts."

The dating parties sign contracts that state the relationship is consensual, explain what the parties should do if the relationship ever ceases to be consensual, and affirm that the employees are aware of the company's policies on sexual harassment and workplace ethics and understand the consequences of failure to follow those policies.

"The number of workplace relationships that end up in litigation are low. The bigger problem is the morale and poor publicity when these relationships go bad," says Lieber. "Love contracts help maintain a functional office environment. Having people dating each other can wreak havoc on an organization, especially a small organization."

Office Mating

If you put individuals with common interests together for 40-plus hours per week, office romance is bound to happen, experts say. Statistics seem to bear that out: According to a 2003 survey by Vault.com, an online career center, 47 percent of the 1,000 professionals surveyed had been involved in an office romance, and another 19 percent would consider it. Of those individuals who had a romance, 11 percent had dated their bosses or another superior. Twenty percent of those who had an office romance admitted to having a physical tryst in the office.

"This issue is not going away," says Helaine Olen, co-author of Office Mate: The Employee Handbook for Finding--and Managing--Romance on the Job (Adams Media, 2007). It's crucial, she says, for HR professionals to accept the likelihood of office romance and have policies and procedures in place to address it when it occurs.

Most experts warn against forbidding office romance altogether. They see it as futile. "Our experience was if a company tried to forbid it, more people started dating for the thrill of it. It was counterproductive," Olen says. She adds that this is an issue among every employee demographic, not just single 20-somethings, although in her experience members of each cohort handle the situation differently.

For instance, "The average 22-year-old wasn't concerned about who knew what and when. The older employees were more likely to keep it quiet. But it was still fairly common," Olen says. Surprisingly, though, a whopping 72 percent of companies have no policy regarding workplace romance, according to the Society for Human Resource Management (SHRM) 2006 Workplace Romance Poll. "The vast majority of companies do not have rules around dating, and they should. Of the few [companies] that do, most of them involve a boss dating a subordinate. If they perceive a conflict of interest or see the relationship as disruptive or potentially disruptive, [HR] should step in," asserts Olen.

Decoding Love Contracts

Love contracts often grow out of no-fraternization policies. The scope of the company's no-fraternization policy determines the scope of a love contract. "In some states, such as California, privacy laws restrict an employer's ability to regulate employee relationships unless a conflict of interest is involved. A romantic relationship between a manager and a nonmanagement employee provides the potential for such a conflict, which justifies an employer in requiring the employees execute a love contract," says James J.

McDonald Jr., a partner in the labor law firm Fisher & Phillips LLP in Irvine, Calif. "Once an office romance is revealed, an employer can require the parties to enter into a personal love contract that contains a 'declaration of rights' that spells out the expectations and responsibilities of the people involved in the romance and of the employer," says Ann Margaret Pointer, a labor and employment attorney with Fisher & Phillips LLP in Atlanta.

"By requiring such promises, the employer gains the benefit of knowing that up to this time, there has been no harassment, and if any develops, the duty to report it is squarely on the shoulders of those involved," says Rebecca Winterscheidt, an attorney for Snell & Wilmer LLP in Phoenix. She says that when such contracts are used, it is almost always for supervisor- subordinate relationships: "I've never used them for coworkers." McDonald says HR professionals should not be the ones to draft their companies' love contracts, but instead should have them drawn up by a labor and employment attorney familiar with relevant jurisdictions' sexual harassment laws and laws protecting employee privacy.

Attorneys say the number of companies using love contracts has increased, particularly in California, where the sexual harassment laws are strict and comprehensive (see California, the Bellwether, on the December 2007 online issue of HR Magazine). "A love contract is a highly individualized noharassment policy," says Pointer. "Love contracts carry harassment policies a bit further because they focus on individual situations and actively involve the employer in what many employees consider their 'private business.' "

Still, currently their use isn't widespread. Even among attorneys familiar with love contracts, most write fewer than a dozen a year. And, only 10 percent of HR professionals say corporations should make employees sign a consensual agreement statement, based on responses to the 2006 SHRM Workplace Romance Poll.

Setting Boundaries

Despite love contracts' limitations, Pointer says they can help employers and employees avoid problems "since badly managed office romances are sometimes replayed as courtroom dramas--workplace nightmares for employers." Experts say the reasons for asking employees to sign a love contract include:

Decreasing sexual harassment litigation risk. "After a workplace romance fails, the subordinate employee sometimes claims to have been pressured into the relationship. A love contract, signed after the relationship has commenced, can effectively refute such claims as it provides compelling evidence the subordinate employee entered the relationship voluntarily," says McDonald. "Love contracts are a relatively painless way to mitigate risk of unlawful harassment liability," says Lieber. "They aren't bulletproof, but it is more likely the [judge] will believe [the relationship was] consensual if it is in writing." Barbara Reeves Neal, mediator and arbitrator with JAMS, a nationwide alternative-resolution company headquartered in Irvine, Calif., agrees that love contracts can be effective in reducing employers' liability, "provided [the employers] enforce them equitably." But what if employees refuse to sign? "You could make it a condition of employment," suggests Lieber. Experts advise approaching employees about signing love contracts by showing them how the documents protect them, too, in the event the relationship turns sour. "Even though an employee wants to keep things private, there's always the risk of something going wrong," says Neal. "If you can find a helpful, responsible way of working with the employee, the more likely the situation can be normalized."
Reducing perceptions of favoritism. Favoritism--or the appearance of it--isn't just poor employee relations. In some cases, it is a cause for sexual harassment lawsuits. In California, the interpretation of sexual harassment laws includes third parties: If an employee views a supervisor as favoring a subordinate, the employee can sue the company--and the supervisor personally-- for sexual harassment. "Allowing a relationship can be cause for [favoritism] harassment," says Lieber.
Creating a forum to discuss professional workplace behavior. A love contract provides a forum for HR professionals to talk to dating employees about what is appropriate and inappropriate workplace behavior. Remind employees to be sensitive to their co-workers, especially concerning displays of physical affection, verbal affection or lovers' quarrels. "I had a case where a secretary used to come up to her supervisor and rub his shoulders and rub her [breasts] against him. She seemed to like it. He seemed to like it. But their co-workers were completely grossed out," says Lieber. "Just because it is an office romance doesn't mean it should be conducted in the office," adds Olen.
Reminding dating employees of lack of privacy in the workplace. When employees bring their relationships into the workplace, they don't have a right of privacy, says Lieber. "They are governed by a no-harassment policy. This doesn't mean the employer has the right to ask about intimate details, but when you are in the workplace, the employer has the right to set reasonable rules," she adds. Lieber recommends that HR caution dating employees not to instant message or e-mail each other about intimate issues. Even an innocuous note such as "Where do you want to go to dinner tonight?" can be misconstrued if the relationship goes sour. Encourage employees to only speak privately and in person about personal issues, Lieber says. Warn dating employees that this guideline is applicable at home as well. "People don't realize if there is a lawsuit, everything on their home computers could be discoverable. Personal e-mails sent to each other can be subpoenaed. All of that is evidence," Lieber says.

Tabloid HR?

Before your organization adopts the use of love contracts, you might want to listen to critics who argue that they can be intrusive, ineffective and unnecessary, and can cause as many problems as they solve.

Reasons why some HR professionals spurn love contracts:

Employees may regard them as an invasion of privacy. "It feels intrusive, almost like Big Brother getting into our bedrooms," says Chris Edmonds-Waters, head of HR for SVB Financial Group, a diversified financial services firm of 1,100 employees in San Francisco. SVB Financial Group does not use love contracts, although the company has a no-fraternization policy that applies to supervisor-subordinate relationships.

They put HR in an awkward position. Love contracts can put HR professionals into the tawdry position of keeping track of who dates whom. "Managing employees' personal relationships is not the best utilization of their time," acknowledges Lieber.

Moreover, "calling it a 'love contract' is the kind of verbiage that gives HR a bad name," says Edmonds-Waters.

Love contracts do not always protect against the most problematic romantic relationships. Romantic relationships most likely to cause problems for the company are those in which the participants will be the least likely to agree to sign love contracts. "They are ineffective with the most [potentially destructive] relationships--for instance, the chief executive officer is having an affair with the vice president, and they're both married. ...The cases that bite the company are the ones in which the people wouldn't [sign love contracts] anyway," says Neal.

A recent case in point: In November 2007, Mark W. Everson was forced to resign as president and CEO of the American Red Cross because of his relationship with a female subordinate. Everson was married at the time. It is unlikely he would have signed a love contract.

Love contracts "can be very awkward to request, especially if one of the participants is having an extramarital affair and is understandably reluctant to sign such an 'admission' of his or her extracurricular activities," says Winterscheidt.

They create additional paperwork. "How do you balance the regular course of business every day with a practical, relevant approach, not one which over-engineers the process? … We, as HR professionals, sometimes think the panacea of solving theills of poor management are pieces of paper like this. They aren't," says Edmonds-Waters.

Handling Heartbreak

Love contracts aren't for every company, and HR professionals need to be aware of alternative tools available to mitigate sexual harassment litigation risks. Begin by carefully considering how romantic relationships have played out at your organization in the past and if they have resulted in scandalous publicity or sexual harassment litigation. Where your company is located could make a difference in shaping your policies: HR professionals in California, where sexual harassment laws are strictest, should take a closer look at adopting love contracts than employers in states where the laws are less prescriptive. All HR professionals would be wise to create no fraternization policies clearly outlining acceptable behavior within the organization as well as consequences for employees who cross those boundaries.

Don't get stuck in denial, says Pointer. "If you pretend these problems do not or cannot exist in your workforce, then you are setting yourself up for potential major liability with punitive damages, costly legal fees, poor publicity and an effect on your workforce morale that is hard to calculate." Most important, be sure that any policies are enforced consistently with employees at all levels.

Kathryn Tyler, M.A., is a freelance writer and former HR generalist and trainer in Wixom, Mich., who has written business-related articles for the last 13 years. She may be contacted at www.kathryntyler.com.

Web Extras

Online sidebar:
No-Fraternization Training

SHRM toolkit:
Sexual Harassment

SHRM research:
2006 Workplace Romance Poll

SHRM article:
"No-Fraternization Policies Under the Judicial Microscope"
(SHRM Legal Report)

SHRM white paper:
Office Romance: HR's Role
(SHRM Online Compensation & Benefits Focus Area)

SHRM video:
Joe Beachboard of Ogletree, Deakins, Nash, Smoak & Stewart discusses workplace dating policies

Sample contract:
Acknowledgment of Consensual Relationship

Water Cooler Romance

Percentage of companies with a no-fraternization policy