The Perils of Workplace Relationships

James R. Becker, Jr.

November 4, 2019

McDonald's recently announced the termination of its CEO, Steve Easterbrook.  This move highlights one of the real difficulties that both companies and individual employees face today.

By most accounts, Mr. Easterbrook, was doing a good job for McDonald's.  Sales were doing well, McDonald's was being competitive in a market where it was thought to be struggling and it had moved ahead on many of the measures to which future growth would be tied.  McDonald's was one of the companies on the leading edge of third party meal deliveries and its technoligical advancements have been at the forefront of a lot of similar changes among its competitors.  Despite all of this, however, when word of a consensual relationship he had with an employee came to light his employment was terminated.

So what caused this precipitous fall?  The first factor that will leap out to most lawyers is the impact of Title VII of the Civil Rights Act of 1964 ("Title VII").  Title VII creates a liability risk for an employer if an employee comes forward with a claim of sexual harassment.  When the harasser is the CEO, that risk is multiplied because it can be harder for the company to avoid liability utilizing the "safe harbor" which Title VII creates for these types of claims.  The second risk is the sort of bad press this sort of relationship can generate if it turns sour.  The #metoo movement, although quieter at this moment, is still very much alive in the world.  Finally, it's not like McDonald's has completely clean sheets when it comes to issues of workplace harassment.  When the law is against you and the press will likely pull a Venom on you the outcome is not hard to guess.

Weighed against this is a normal confusion.  The relationship was reportedly consensual so how can it be a risk?  Lots of people have workplace relationships without getting fired.  In fact, many relationships which start in the workplace lead to stable marriages (my own did).  These things are undeniably true.  However, for Mr. Easterbrook there are factors that are just different.  First, he was the CEO.  This means that there is no conceivable way the person with whom he had the relationship was a peer.  This imbalance in power is exactly what the law seeks to address.  Next, he had to realize the risk he was creating for his multi-billion, multi-national corporation.  He recognized the risk and went ahead anyway.  For the $15m he reportedly earned last year, a company expects its leadership to not put it at risk.

Mr. Easterbrook will probably be financially okay.  However, this is an issue that can impact a lot of lower level managers who don't have a gigantic salary or any type of severance package upon which they can rely if things go awry.  Although workplace relationships can be great, they also have peril and the people who engage in them need to recognize the risk.