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`Love contract'? It's office policy

Voluntary agreements help employers avoid legal liability if a work romance turns sour.

February 13, 2007|Molly Selvin | Times Staff Writer

With many workers having an office valentine -- and even canoodling on the job -- some employers don't want to be liable if the romance fizzles.

They are asking workers, mostly senior executives, to sign "love contracts" that shield employers from liability if intimacy later congeals into a sexual harassment lawsuit or some other discord. The contracts, most common in the entertainment industry, also act as a formal way for a couple to disclose a relationship in case their dalliance could affect the bottom line or generate negative publicity.

Such a contract might have been useful for former Boeing Co. Chief Executive Harry Stonecipher, whose extramarital affair with a mid-level female executive rocked the aerospace company in 2005 and led to his ouster.

"If Stonecipher had been able to say, 'Wait a minute, we disclosed this relationship four years ago,' there might have been a different reaction at the board of directors level," said San Francisco attorney Garry Mathiason, who said his firm has drafted 1,000 of the several thousand love contracts existing today.

Such a contract was used in connection with the proposed sale of a Southland manufacturing firm, said Monica Ballard, president of Parallax Education, a Santa Monica-based consulting firm. The manufacturing company's president and vice president of sales, each married, were having an affair.

The CEO of the manufacturing firm had them sign a love contract so he could disclose the relationship to the buyer. The sale fell through, Ballard said, but for other reasons. She declined to reveal the name of the company.

With Cupid's quivers making office romances more numerous, lawyers and mediators say love contracts could become more common. A recent survey found that 43% of U.S. workers admit to having dated a co-worker, and many of those relationships lead to marriage.

Lovers try to keep many of these relationships secret. But when a relationship becomes known or when an executive decides to reveal it, the couple might then be asked to sign a love contract declaring their affection to be "voluntary" and "consensual." The voluntary nature of the contract shields employers from liability, lawyers say, if the affair goes sour.

"It helps to put some paper around it, like a prenuptial agreement," Mathiason said.

"Consensual relationship agreements," the legal name for the love contracts, first emerged about eight years ago in the wake of former President Clinton's dalliance with then-White House intern Monica Lewinsky, Mathiason said. Corporate counsels grew fearful that an affair involving one of their executives could end in a big-bucks liability payout. Mathiason, whose firm represents employers, said many panicked clients asked him, "Whoa, what in the world do we do?"

Lawyers and consultants interviewed for this story declined to disclose which companies have requested these contracts, citing confidentiality.

A typical contract may state, "I know that this may seem silly or unnecessary to you, but ... it is very important to me ... that you be fully comfortable that our relationship is at all times voluntary and welcome."

The lovebirds usually acknowledge they have read the company's sexual harassment policy and that they are free to break up without adverse effects on their jobs. The signed original is usually filed with the company's human resources department.

The love contracts haven't been tested in court, Mathiason said, but some disgruntled employees who have signed them later tried to recast a past affair as nonconsensual. Retrieving the contract ended talk of litigation, he said.

"This is what the world of litigation has brought us," he added.

molly.selvin@latimes.com

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