In 2000 a national sales manager started dating a member of his company's sales force. The company policy stated that it was the responsibility of the supervisor to tell management about an outside the workplace relationship. If it was appropriate management would reassign an employee so as to avoid conflict of interest. The supervisor told management that the two wished to stay with the company. The supervisor was told if they did not end the relationship one or both would be fired. Rather than ending it, the two went to a basketball game with tickets provided by a client. When the CEO found out he fired the supervisor.

The supervisor sued claiming his right to privacy had been invaded. The appeals court, however, found in favor of the company and "affirmed the right of employers to try to avoid sexual-harassment claims and even the appearance of a conflict of interest by having a dating policy."

Employers write dating agreements to protect themselves for many reasons; to ensure that proprietary information stays where it belongs, that employees' time is spent working and not flirting and writing amorous emails, and to protect themselves from sexual harassment lawsuits.

Defending one sexual harassment lawsuit can cost a quarter of a million dollars. Arlyne Diamond, owner of Diamond Associates, a management consultancy in Santa Clara, California, reports that a high profile case can cause a temporary 20 percent drop in productivity. If the case makes the papers it can cause a downturn of 30 percent in profits.

Lawyers estimate that only 10 to 20 percent of sexual harassment complaints involve executives. One of the most important criteria is not whether a company has a policy, but how it responds to complaints. To avoid any impropriety the company should treat all complaints, from line workers to senior management, with the same level of concern.

In 2002, 47 percent of harassment complaints brought to the EEOC were dropped because investigators could find "no reasonable cause." Part of the reason for the high dismissal rate was that companies acted promptly on internal complaints and responded accordingly. If companies jump in early and get issues resolved they can keep it from going to court.

Then there is the flip side - those companies who are considered progressive and take a very charitable view of intra - office dating. Southwest Airlines claims that "honorable intentions and common sense are the only tools they need as guides." Southwest reported that although they have had a handful of complaints nothing has ever gone to court.

Meredith Corp. is a publicly held media and marketing firm who also does not see a need to become involved with its employees private lives. Rather then a dating policy, they have a strict ethics and conduct code that addresses conflicts of interest or leaks of proprietary information. If they have employees who are dating, they deal with each case individually. The employees know that the company will help them should there be a conflict.