Companies’ Anti-Fraternization Policies: Key Considerations

The Harvard Law School Forum on Corporate Governance and Financial Regulation 2020-01-26

Posted by Arthur H. Kohn, Jennifer Kennedy Park, and Armine Sanamyan, Cleary Gottlieb Steen & Hamilton LLP, on Sunday, January 26, 2020
Editor's Note: Arthur H. Kohn and Jennifer Kennedy Park are partners, and Armine Sanamyan is an associate at Cleary Gottlieb Steen & Hamilton LLP. This post is based on their Cleary memorandum.

In recent years, numerous senior executives have resigned or been terminated for engaging in undisclosed consensual relationships with subordinates. [1] Such relationships are gaining particular attention in the wake of the heightened scrutiny around workplace behavior, because they raise concerns relating to, among other things, potential power imbalances and conflicts of interest in the workplace. Thus, it is increasingly important for companies to consider whether to institute policies governing close personal relationships, and what those policies might look like. We address a few key considerations to guide those decisions.

Should My Company Have an Anti-Fraternization Policy?

The percentage of companies that have instituted policies regarding close personal relationships in the workplace is decidedly on the rise. [2] Some companies have policies governing close personal relationships between all employees, while others’ policies are limited to relationships between supervisors and subordinates. These latter types of policies are the focus of this posting (and we will refer to them, in short, as “anti-fraternization” policies). As of last year, over half of surveyed HR executives reported that their companies have formal, written policies regarding close personal relationships between employees, and 78% reported that their companies discourage such relationships between subordinates and supervisors. [3]