There are no ironclad guarantees that employers can protect themselves from liability as a result of workplace romance--an issue dominating recent World Bank news--but experts say companies can take steps to minimize that risk.

The steps include policies on conflict of interest and sexual harassment, procedures to respond to complaints, and training for employees and supervisors.

There has been considerable focus on the issue given the controversy surrounding World Bank President Paul D. Wolfowitz, who arranged a salary hike and supported a promotion for his companion. Last week, having secured from the bank board a statement that he did act ethically, he resigned effective June 30.

Observers say attempting to ban workplace romances altogether is unrealistic. For instance, about 40% of employees report being involved in a workplace romance at some point in their careers, according to the 2006 Workplace Romance survey by the Alexandria, Va.-based Society for Human Resource Management and the New York-based Wall Street Journal's CareerJournal.com Web site.

"It's just human nature. It'll happen," said Diana L. Hoover, an attorney with Mayer, Brown, Rowe & Maw L.L.P. in Houston.

But employers can face charges of sexual discrimination, harassment or creating a hostile work environment in cases in which a workplace romance has either gone sour or a fellow employee's romantic interest is unwelcome, observers say.

Liability can also affect people not directly involved in the relationship. In 2005, for instance, the California Supreme Court held in Edna Miller vs. Department of Corrections that employees can sue for sexual harassment when their supervisor favors other workers with whom the manager has engaged in consensual sexual activities (BI, July 25, 2005).

Office romance is an uncomfortable area for employers, observers say.

Elizabeth M. Marsh, an attorney with Thompson, Coe, Cousins & Irons L.L.P. in Austin, Texas, said, "An employer has to balance employees' privacy rights with upholding the employment laws in the workplace."

No employer, for instance, wants to ask, "How often did two vps run away to Vegas, and did they have separate rooms or did they room together when they were there on their own time," said Teresa Tracy, an attorney with Baker & Hostetler L.L.P. in Los Angeles. "It really gets complicated" and is an area where most employers "would fear to tread."

For example, New York and California have laws that bar employers from trying to manage coworker behavior outside the workplace, said Teresa Butler Stivarius, an attorney with Epstein Becker & Green P.C. in Atlanta.

Observers say as long as two workers in an equal relationship are discreet and professional, few if any problems are likely to arise.

The most problematic relationships are those between supervisors and subordinates.

"I think managers really open themselves up to being second-guessed the minute they have a relationship, even if they try to avoid the appearance of impropriety," said Paul C. Buchanan, an attorney with Stoel Rives L.L.P. in Portland, Ore. "There's always going to be the perception, at least, that there's a conflict of interest there."

According to a SHRM survey, more than 70% of organizations reported having neither written nor verbal policies that address workplace romance. Of those companies that did have an office romance policy, only 9% prohibited dating.

To avoid problems, employers should have one or more policies that cover sexual harassment that prohibit supervisor-subordinate relationships and cover the possibility they may occur anyway, some observers say.

Employers may introduce a conflict-of-interest policy, for instance, that requires people who are in a reporting relationship with one another to disclose it, said Mr. Buchanan. If they don't, "that in and of itself can be grounds for discipline and potentially grounds for termination," he said.

One possible approach is to introduce so-called "love contracts," which establish how the participants should conduct themselves once the relationship is revealed.

Ricki Roer, an attorney with Wilson Elser Moskowitz Edelman & Dicker L.L.P. in New York said, "We strongly recommend that employers specifically retain the right to transfer employees who are engaged in a romantic relationship so neither is reporting directly to the other and they are not involved in decisions involving promotions, raises or other material aspects of their relationship."

Nonfraternization policies per se, though, are a bad idea, said Jim Kuns, a consultant with the Los Angeles-based Employers Group, which provides human resource consulting services. "The reality of the world is, people spend most of their waking hours at work" and "you can't help that they meet, they fall in love, and by having strict nonfraternization policies you just encourage people to go underground" and lie.

"You can never completely protect your company from the prospects that people are going to be attracted to one another" and that problems could arise that may spill over into the workplace, said Ms. Stivarius.

"The best thing you can do is put everybody on notice (as to) what your policies are and what's going to happen" if somebody is engaging in unwelcome behavior, she said.