Sexual favoritism, family feuds, harassment complaints — this case may sound like a soap opera, but it also holds a valuable lesson for HR.

Here are the details of the case:

Gail Kelly began working as HR manager for her family business, Howard I. Shapiro & Associates Consulting Engineers, in 1981.

Fast forward to November 2008, when Kelly discovered that her brother Lawrence, one of the VPs of the firm, was having an illicit affair with a subordinate.

Kelly tried to convince her brother to put a stop to the relationship, saying it would have a detrimental effect on the company and presented a conflict of interest. Lawrence refused.

As a result, Kelly claimed the sexual favoritism in the office reached a point where Kelly’s duties and responsibilities “were substantially reduced” and Lawrence’s love interest basically was able to do whatever she wanted.

That resulted in the subordinate taking unlimited vacation time, leaving the office early and taking days off without notifying HR — all violations of company policy.

Kelly continued to complain to her brother and other family members about what she perceived as sexual favoritism. Kelly also said other female employees complained about the “unfair and obvious favoritism” shown toward Lawrence’s lady friend, though Kelly never brought those complaints to her brothers.

Eventually, Kelly claims she “was left with no option other than to leave the company after 28 years.”

Be careful

Kelly sued her own family business, claiming hostile work environment.

But the court didn’t see things her way.

First, the court said that sexual bias didn’t occur when Lawrence’s love interest violated company policy because it didn’t represent “widespread sexual favoritism” — instead, it was favoritism toward just one person.

Second, Kelly didn’t suffer in the goings-on specifically because of her gender. For those reasons, her discrimination claim failed.

Attorneys at Goldberg & Segalla have a cautious takeaway for employers:

“Notwithstanding the dismissal of Ms. Kelly’s claims, the decision does not mean that employers will never have to worry about such a claim. Rather, the court held just the opposite: ‘It is certainly possible to imagine how a plaintiff’s protests about a ‘paramour preference’ scenario could amount to protected activity.’ Other courts have in fact held that when sexual favoritism is sufficiently widespread it may create an actionable hostile work environment for those not involved in any such relationships.”

And Brooke Colaizzi, writing for Sherman & Howard, had another angle on what the ruling means for HR:

“Not all unequal treatment in the workplace is illegal, and not all complaints about unequal treatment are legally protected. This family feud is a good example.”

The case is Kelly v. Shapiro & Associate Consulting Engineers.

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