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Articles from 2020 In February


Contrarian thinking can put us on right track

Calculator and worksheet

It makes business more interesting when there are a few contrarians around. A Jeff Bezos, a Steve Jobs, or an Elon Musk, those who challenge commonly accepted assumptions. They stir our placid mental waters to get the creative juices flowing.

As it turns out, the start of a new decade is a good time for a little contrarian thought— for looking at things differently. In fact, it may be helpful since we’re entering a period that will present us with far-reaching changes and daunting challenges. In other words, a time when we can benefit from getting tougher with ourselves.

Here are four contrarian thoughts about taken-for-granted ideas that may be tried but, as it turns out, not necessarily true:

1. Keep your head down and go with the flow. Never raise your hand. Don’t do anything to call attention to yourself. Keep a low profile. Go along to get along. Whatever else may be said about the need for new ideas, these remain the mantras for success. Those who dare to wander off the path do so at their own peril.

All of it may have worked when the goal was having managers lead organizations. Their mission was to make sure things ran like well-oiled machines. It’s no surprise that surveys indicate that a high percentage of employees (one puts it as high as 83%) are bored, want new challenges and are actively looking for new jobs.

Today, the term manager is fading and being replaced by a leader, someone who is charged with the responsibility of assuring an enterprise meets challenges by helping people succeed.

2. Everything’s going down the drain In spite of an abundance of bad news and unspeakable horrors, nothing seems to stop us from hitching our wagons to a star, as the saying goes. Even though we’re faced with mountainous problems, nothing seems to curtail optimism, that tomorrow will be a better day.

To be sure, there are good reasons why the idea of progress holds sway over us. Indicators over the last two centuries paint a bright picture of the future—improved health, longer lives, technological advancements, a better educated citizenry, income growth, and dozens more.

All this is wonderful, except it’s not always the way it plays out in our individual lives: loved ones die, promises are broken, jobs are lost, and dreams don’t come true even when we work hard. As someone has said, “Bad things happen to good people.” They do, so It’s easy to be bitter, angry, and just plain negative.

Not long ago, I spoke with a man receiving palliative care after surgery for stage 4 pancreatic cancer, which was discovered weeks after his long-anticipated retirement. To keep busy following surgery, he took a part-time job. After a few minutes on the phone, he told me he needed to get ready for work, and added, “I love it!” That’s when I came to understand the awesomeness of resilience and optimism.

3. Don ‘t sweat the small stuff This is good advice since our lives seem to be plagued with endless amounts of irritating, time-consuming, and inexcusable stuff that drives us crazy. This is why it’s helpful to take a “water off a duck’s back” approach as a way to keep our sanity.

But (and here it comes), not about everything. In a client memo, an attorney used “onerous” (it means burdensome) instead of “onus” (it means responsibility or duty), Small stuff? Just a mistake. Perhaps, but when you’re preparing a legal document that impacts someone’s life, it can be a big deal.

This is why a “Don’t worry about it” attitude simply won’t cut it in a business environment, one that requires (and rewards) accuracy, clarity, and focus. Vocabulary may not save the world, but it may save your next sale, deal, or even your job.

4. I’m a good judge of people. Most of us take pride in being good at figuring out others. If asked, we would probably say, “I sure like to think I’m a good judge of character.” But, if you’re like me, it’s easy to forget about the times you were wrong about someone when it came to telling the truth. Then, we wonder why we missed it. But it still doesn’t stop us from thinking we’re a pretty good judge of people.

This is more than a personal issue, since it has implications in business for hiring, selecting people for promotions, and evaluating written communications and presentations, as well as working with consultants, vendors, and co-workers.

Yet, I struggled with why it’s so hard to know when someone is lying. I found the answer when reading Malcolm Gladwell’s book, Talking to Strangers. He discussed the “Theory of Truth Default,” a concept developed by communications researcher Timothy R. Levine, Ph.D. We’ve all criticized others for failing to spot a liar, even though there were plenty of reasons or “red flags” to alert us to a problem. But, as Gladwell says, we should be asking something else “The right question is: were there enough red flags to push you over the threshold of belief? If there weren’t, then by defaulting to truth, you were only being human.”

Here’s an example. A board of realtors hired a marketing consultant to help with announcing the hiring of a new president, who was to arrive shortly from another state. Even though at the last minute, several executive board members expressed concerns about the individual’s qualifications at a meeting.

Sensing the situation, the consultant asked if he could be of help. They agreed. Within 36 hours, he turned up sufficient negative information to push the executive committee over the edge of belief. The employment offer was withdrawn, avoiding a potentially disruptive situation. 

Levine holds that defaulting to truth is human, which can be the easy way out. So, when we have doubts, it’s not time to remain silent but to dig deeper.

While some contrarian thinking can be damaging, it can also be helpful in clarifying thinking and making better decisions.

Equine muscle disease study launched

University of Minnesota U Minnesota brown horse.jpg

A team of researchers at the University of Minnesota College of Veterinary Medicine launched a study investigating the genetic and management factors influencing muscle disease in horses.

The scientists are also looking to determine if diet or exercise impact muscle disease expression, the college said in its announcement.

Results from this study will help veterinarians, researchers and horse owners develop treatment strategies to combat the wide-spread problem. This study is both the largest study into muscle disease in horses and the largest crowd-sourced study in the college’s history, the announcement said.

“Muscle diseases are some of the most common health issues horses face, with more than 250,000 horses in the U.S. afflicted each year,” said Dr. Molly McCue, professor in the department of veterinary population medicine, associate dean of research at the college and principal investigator on the study. Horses with muscle disease often exhibit muscle pain, stiffness and a reluctance to move.

The research team hopes to leverage its long-standing expertise in genetic and muscle disease research to both identify which specific genetic mutations predispose a horse to muscle disease and to advance therapies.

“We are turning to our expansive network of cases to help us respond to this far-reaching challenge in equine veterinary medicine,” McCue said.

Submitting a horse with suspected or diagnosed muscle disease to this study is a four-part process involving the supplementary submission of a horse residing on the same property without a suspected or diagnosed muscle disease to act as the control, the college said. All information regarding submitting a horse to this study and details behind the study can be found on the study’s website. Study updates will be posted on the Facebook page of the Equine Genetics & Genomics Laboratory.

This study is funded, in part, by a grant from Morris Animal Foundation as well as support from private donors.

Apps that track expenses

Photo: Lenovo Often companies push out new products ahead of anything Apple does With Apple39s World Wide Development Conference coming next week the folks at Lenovo are rolling out a new smart phone  the Phab2 Pro Yes we forgot too but Lenovo bought Motorola from Google so they39re in the smart phone business Lenovo is the Chinese company that purchased the personal computer division of IBM years agohellipby we digressThe Phab2 phone comes with Project Tango  a new way to use your smart phone to d

Hate stuffing bags with paper receipts and jotting indecipherable notes in journals? Try using these electronic expense trackers that are as close as your smart phone.

Receipt-bank.com. Reads key details from receipts when you snap them with your smart phone. Store data online or export it to your computer. Pricing starts at $15.00 monthly.

Expensify.com. Automates expense accounting from receipt scanning through final reports. Pricing starts at $5.00 per month.

mileIQ.com. Runs in the background to track mileage. Creates a comprehensive travel record. Basic version offers 40 free drives each month.

Source: Flemming Business Services, Great Falls, MT

Trade show tax deductions

Jirapong Manustrong / Getty Images Business accounting concept, Business man using calculator with computer laptop, budget and loan paper in office.
If you raised cattle for breeding purposes and then sold them after they reached 24 months of age, the gain qualifies for lower tax rates. If you’re contemplating selling an asset where the gain would qualify as capital gain, then it would be prudent to check the amount of time you have owned the asset to make sure the required holding period is met.

If you attend trade shows on a regular basis, you’ve probably noticed that travel costs keep going up. Sending several people to an event can result in a serious hit to your bottom line.

Luckily, Uncle Sam allows you to soften the financial blow by deducting your travel expenses on your income tax return for any legitimate show. And what qualifies as legitimate? The answer is basically that the event must relate directly to your business.

“As long as you are expecting to generate business from the trade show, then expenses for attending are legitimate deductions,” says Richard R. Rhodes, an enrolled agent with Hinckley Tax Service, Medina, Ohio (hinckleytaxservice.com). “Even if you do not generate revenue directly from the event, you might be anticipating doing business in the future with someone you have networked with.”

Supporting material

You can take specific steps to establish that your trip is a legitimate one for tax purposes. “The IRS wants to know the intent behind your travel,” says Suzette Flemming, president of Flemming Business Services, a financial management company based in Great Falls, MT (flemmingbusinessservices.com). “Take notes that support the business nature of your trip. Whom did you see? What subjects did you discuss? How did activities during your trip support your operations?”

Retain any materials such as show badges or seminar workbooks that help prove you were actually at the event, says Flemming. Other helpful materials would be conference agendas with business-oriented sessions, a list of exhibitors who serve your organization, a catalog of relevant seminars (mark the ones you attended) and business cards and vendor brochures.

What to deduct

Here is an important caveat: The ideas in this article are intended to provide you with initial guidance. You should always confer with qualified legal and accounting professionals to make sure you deduct expenses properly.

So what are some deductible expenses? Actual transportation costs are the most obvious. They can include travel by airplane, train, bus or automobile. Taxi or hired car travel during the trade show visit is also deductible. So are baggage costs, tips and what the IRS calls “ordinary and necessary expenses related to your business travel.” These might include rental fees for computers or other equipment.

The Internal Revenue Service provides extensive guidance on the deduction of expenses in its publication Travel, Gift and Car Expenses. Visit www.irs.gov and search for “463.” For a complete list of deductible items in that publication see Table 1-1 on page 5. Additional information is available in another IRS document entitled Business Travel Expenses. Search the same site for “511.”

There are two special cases worth mentioning. First, meals are only 50 percent deductible. And their costs are not deductible at all if the trade show is close to home.  On the other hand, if your travel requires an overnight stay then the 50 percent deductibility would be allowable. The IRS puts it this way in its publication Travel, Gift and Car Expenses: “You can deduct the cost of meals if it is necessary for you to stop for substantial sleep or rest to properly perform your duties while traveling away from home on business.”

Second, the 2017 Tax Cuts and Jobs Act (TCJA) eliminated the deductibility of entertainment—an expense commonly encountered by businesspeople attending trade shows.

“Loss of the entertainment deduction has hit many businesses pretty hard,” says Flemming. “Some are rethinking how they court clients.” How about your own business: Should you still entertain customers even though you cannot deduct the bill? “You need to look at your return on investment,” says Flemming. “Does the expense result in more business because it encourages customers to return?”

Careful records

Despite the elimination of the entertainment deduction, there are still many legitimate deductions available to business travelers. And while they certainly soften travel’s bottom line impact, keep in mind that the system only works if you record and retain the requisite backup documentation. “Travel expenses, especially those for meals, are very often low hanging fruit for auditors,” says Rhodes. “That’s because many people fail to keep adequate records.”

If your paperwork does not support your deductions, they can be taken away. In addition to the increased taxes that will result, there may also be penalties and interest payments.

So how can you track your expenses in a way that will satisfy the authorities? The tried and true medium is paper—and many people still keep folders bulging with receipts. But with the arrival of the digital age, things can be a bit easier—at least for anyone comfortable with technology.

“Smart phone apps are especially valuable for keeping receipts of your meals,” says David Cawley, Partner and Certified Valuation Analyst at Fraim, Cawley & Company, CPAs, Roanoke, VA (fraimcpa.com). “You can just take pictures of your receipts and store them in a database.” Alternatively, you can have vendors email receipts to your smart phone. Then file the emails in a folder which is easier to access—and to back up—than faded paper files. (For computer programs that can help see the sidebar, “Apps That Track Expenses.”)

One more thing: Once you have your records in hand, hang onto them. “The IRS can go back three years when auditing your returns,” says Flemming. “If they find anything they can go even further back than that. So we recommend keeping documentation for seven years, which is as far back as the IRS can go.”

When it comes to state law, Flemming cautions, the rules can be more onerous. Montana, for example, can go back 10 years. “Find out what the rules are in your own state, because each one is different.”

Bonus tip: “Consider charging all of your business expenses on a dedicated credit card,” says Cawley. “Then you’ll have a permanent record of where you went and how much you spent.” And that credit card’s statements will provide an easily accessible journal of your business activities.

Per diem rates

Does collecting meal receipts—digital or otherwise—seem like a hassle? Ask your accountant if you are eligible to utilize “per diem” rates—daily cash amounts that are set by the government.

“Each year the IRS comes out with a per diem rate for each geographic area,” says Cawley. “The rule is that you can either deduct your actual expenses in terms of meals and incidentals or just use the per diem rate, based on how many days you are there. You should track both in tandem, then use whichever number is higher. This can be really handy in high per diem cities.”

The per diem option is often overlooked by business travelers. “Many people will deliberately keep their meal expenses low, because they are on a budget,” says Cawley. “But then they forget that they have a right under the IRS code to take the higher per diem rate. As a result they end up not getting their higher deduction.”

One more thing: Are you planning to use your personal car to travel to the show? If so, you face another decision: Whether to use the standard mileage rate or keep track of your actual expenses. The decision will lie in how good a record keeper you are and how much hassle you want to put up with. Sometimes the standard deduction is the easier option.

Personal time

What if you spend some vacation or personal time during your trip? How does that affect the deductibility of your expenses? An excerpt from IRS document 463 provides some clarification: “You can deduct all of your travel expenses if your trip was entirely business-related. If your trip was primarily for business and, while at your business destination, you extended your stay for a vacation, made a personal side trip, or had other personal activities, you can deduct only your business-related travel expenses.”

It’s important to keep careful records about your journey, allocating correctly between business and personal time. “My overall tip is to be truthful,” says Catherine Raker, an accountant with Cendrowski Corporate Advisors, Chicago (cca-advisors.com). “If it’s really a personal trip and you do some business-related activities don’t write the whole trip off as a business expense.”

Expenses that are shared for business and vacation can fall into a grey area, according to Cawley. “Your airline fare might be disallowed if you spend two days of your trip on business and five days on vacation. On the other hand, your hotel bill for the specific two business days, and other direct expenses for the business portion of your trip, would still be deductible.”

Personal time often means the presence of a spouse—and expenses related to that individual’s travel can complicate record keeping. Ordinarily such expenses must be separated from those of the business traveler and may not be deducted. There is one exception: “If you are traveling with your spouse who is participating for a genuine business reason in the event, then that individual’s expenses are covered,” says Flemming.

Keeping track

Trade shows can be valuable resources for your business. By bringing together vendors and buyers in one place, they facilitate more buying activity and higher profits. Taking the time to document your activity when you travel to a show can help alleviate the costly impact travel and hotel expenses can have on your bottom line.

“It can be hard to keep careful records when you are busy, but those records do help come income tax time,” says Cawley. “Tracking your travel expenses when you attend a trade show can really pay off.”

Hemp for horses? Tarleton researcher investigating benefits

Hemp for horses? Tarleton researcher investigating benefits

Hay may be for horses, but — now more than ever — so is hemp.

Using CBD to treat horses with arthritis or anxiety has become mainstream since the 2018 Farm Bill legalized industrial hemp. But does it work?

Researchers at Tarleton State University’s Equine Center are looking into that right now in a unique study that has the attention of horse owners around the world.

“I have just been overwhelmed by the level of interest in this study,” said Dr. Kimberly Guay, who is overseeing the research. “By now, horse owners have all heard the hype about the potential benefits of CBD oil. Here at Tarleton, we are working to give them the reliable data that’s just not there yet.”

See a video about Guay’s study: http://www.youtube.com/user/tamusystem?sub_confirmation=1

Guay’s study seeks to quantify how CBD affects inflammation, stress and stereotypical negative behaviors in horses.

Guay and her student researchers from Tarleton’s equine science classes give horses in the trial different kinds of CBD, such as oil or pellets. Then they measure the physiological effects of the non-psychoactive substance on the horses’ heartrate and cortisol levels. They also observe the horses after dosing them with CBD to note its effect on any common obsessive compulsive behaviors common to horses that spend time in a stall or trailer, such as cribbing, which is when a horse bites on a fence or gate.

“We are also tracking how long CBD stays in the horse’s system,” Guay said. “Many people who compete with their horses are interested in using CBD products to reduce stress and inflammation, but many event organizers are still working through their CBD restrictions for horses in competition.”

Horse owners eagerly await the results, which Guay said she expects to publish sometime in 2021.

“Tarleton Texans know how to sort out the facts from the hype,” said John Sharp, chancellor of The Texas A&M University System. “This practical, fact-based research is the exactly the kind of thing folks know they can count on from The Texas A&M University System.”

Learning from what we do every day

Kent County Recycling Center

Most workers seem to figure out how to do their job. Some have been in similar positions, while others “learn by doing.” One way or another, they get into “the swing of it.” There may be rough spots, but eventually it smooths out quite well.

While that’s a good feeling, it can also be a problem. We have what’s needed to do the job, but mentally we stop learning. We do our work without much thought; we perform as if we’re driving a car. A job becomes second nature.

The challenge today is to learn from what we do every day. Simply put, it’s about improving the job, making it more efficient, creative, productive, and valuable, both for ourselves and the company.  

Those who improve the most are those who learn from what they do every day.

Study tackles sudden horse deaths by aiming at heartbeat

Shutterstock shutterstock_132371912.jpg

Despite their athleticism, roughly 50% of healthy racing equine Thoroughbreds experience cardiac arrhythmias — irregular heartbeats — when exercising, according to the University of Minnesota College of Veterinary Medicine. Also, 19% of horse deaths on the racetrack are considered sudden, but only 53% of those sudden death cases receive a diagnosis. Racehorses are specifically bred to have larger, structurally sound hearts, yet nearly half of them still experience arrhythmias.

Since atrial fibrillation — a type of arrhythmia — is untraceable in deceased horses, researchers at the University of Minnesota College of Veterinary Medicine hypothesize that atrial fibrillation is the underlying cause of death for many of these horses with no visible cause of death. On March 2, the team is traveling to the Santa Anita racetrack in Los Angeles, Cal., to present their research on sudden cardiac-related deaths in racehorses.

“There are genetic mutations in horses that, when they occur in the same place in humans, cause irregular heartbeats,” said Molly McCue, associate dean of research in the college and principal investigator on a forthcoming paper on the subject. McCue is collaborating with doctoral candidate Sian Durward-Akhurst to potentially solve the sudden cardiac-related death issue for horses on the racetrack by investigating similarities and differences between how human athletes and racehorses experience cardiac arrhythmia.

“Our early research suggests that arrhythmias are tolerated better in horses,” McCue said. “Understanding why that is the case is important for horses. It is also important because if we can understand why horses tolerate it, it could point to therapies for humans.”

Athletic horses die of cardiac dysfunction less regularly than human athletes, but horses develop cardiac arrhythmias more frequently than human athletes do, the researcher said. Horses typically survive arrhythmias of greater magnitude than humans can survive. The team doesn’t know how many forms of atrial fibrillation there are in horses, but there are multiple in humans. Some are caused by abnormal heart structure, but there are also some that develop without any pre-existing structural abnormalities.

Since arrhythmias are more prevalent among human athletes with larger (but healthy) hearts versus smaller hearts — and because racehorses are specifically bred to have larger hearts — the researchers said they suspect that horses with larger healthy hearts are also more likely to experience atrial fibrillation than their counterparts with smaller hearts. The scientists are on the hunt for ways to effectively measure heart size in athletic horses and will use ultrasound to eliminate horses with any cardiac abnormalities from the study.

Physicians can assess human athletes’ electrocardiogram to determine when they should retire. McCue and Durward-Akhurst are trying to develop similar testing in racehorses to help them retire before they develop a catastrophic arrhythmia. Understanding the mutations could help veterinarians anticipate problems, treatment and prognosis for a racing career’s longevity and risk of sudden death.

“We have also already found mutations that could be causing atrial fibrillation,” Durward-Akhurst said. “Our most recently funded projects will allow us to prove which of those potential culprits are causing it and other cardiac arrhythmias.”

The research by Durward-Akhurst and McCue has been funded by the University of Minnesota College of Veterinary Medicine, American Association of Equine Practitioners, American Quarterhorse Foundation, Morris Animal Foundation and U.S. Department of Agriculture's National Institute of Food & Agriculture.

First therapy for severe equine asthma approved

First therapy for severe equine asthma approved

Horses with severe equine asthma struggle to breath, even at rest. This week, the European Commission granted marketing authorization to Boehringer Ingelheim for the new Aservo EquiHaler - and horses that suffer from severe equine asthma can now benefit from this new therapy.

While inhaled therapies for the treatment of asthma are common in human health, the approval of the Aservo EquiHaler marks an industry first in equine medicine, as until now, there has been no approved inhalant therapy licensed for use in horses with severe equine asthma.

The Aservo EquiHaler represents the culmination of over a decade of collaboration between Boehringer Ingelheim’s human pharma and animal health R&D groups. The Respimat inhaler used in human respiratory disease is differentiated by the unique Soft Mist Technology, which was integrated into the new Aservo EquiHaler, allowing medication to be inhaled, deep into the lung. “The inhaler is a prime example of leveraging innovation efforts of both our businesses. This has been a strength in the past and we will expand this in the near future to further increase the delivery of innovative solutions for our patients and customers,” said Eric Haaksma, Head of R&D, Boehringer Ingelheim Animal Health Business Unit. 

The newly approved inhaler is designed specifically for use in horses. It includes an ergonomic handle and dosing lever for ease of user handling, and a nostril adaptor that fits gently inside the nostril of the horse, allowing them to easily inhale the medicated mist. The active ingredient in the Aservo EquiHaler is the prodrug ciclesonide, which is a corticosteroid that is activated directly in the lung, reducing lower airway inflammation associated with severe equine asthma.

“Treating severe equine asthma can be challenging for veterinarians and horse owners, who struggle to find safe and effective ways to help horses breath,” said Erich Schoett, Global Business Head of Equine for the Boehringer Ingelheim Animal Health Business Unit. “Bringing a new, safe and effective treatment to the market is something that we can really be proud of. It is a strong indicator of the commitment that Boehringer Ingelheim has to the health and welfare of horses, and to the investment that we make into continuing to advance therapies through collaboration and innovation.”

The Aservo EquiHaler is expected to be available for veterinarians in the EU in 2020.

Boehringer Ingelheim is the second largest animal health business in the world, with net sales of almost 4 billion euros in 2018 and presence in more than 150 markets.

Workplace dating: Pitfalls and policies

policy

The department manager—let’s call her Susan—had arrived at the human resources office with a complaint. “I haven’t yet received my performance review. It’s past due.”

The HR director looked up in surprise. “I thought they all went out a long time ago. I’ll look into it.”

Shortly thereafter, Susan’s supervisor was explaining himself to the HR director. “I can’t review her. She and I were dating and the relationship ended. I have to tell you honestly that my review would not be a good one, and she would say the bad review is because she ended the relationship. And by the way, she did not end it. I did.”

The man was terminated because his employer had a strict no-dating policy for supervisors and subordinates. His relationship had interfered with his performance.

But what happened to Susan?

Later in this story we’ll find out. For now, though, let’s consider how Susan’s story illuminates an issue that has moved to the front burner for employers large and small: Workplace dating policies.

Romance in the workplace

The growing attention to effective office fraternization policies stems from a deeper trend: More people are looking at the workplace as a legitimate source for dating partners.

 “Workplace fraternization is becoming a bigger issue with younger people who are spending more time at their place of employment, giving them more opportunity to develop relationships with coworkers who share their interests and education and background,” says Gary Phelan, shareholder of Mitchell & Sheahan, P.C., Stratford, Conn. “The boundaries between personal and work life are blurring and even disappearing, thanks not only to cultural trends but also to social media which allow people to engage more easily with one another.”

With the increase in fraternization has come a corresponding uptick in managerial disruptions and legal headaches—developments which in turn are motivating employers to toughen up their workplace dating guidelines. “Companies are starting to enforce zero tolerance policies, cracking down harshly on individuals whose conduct may constitute sexual harassment,” says Robert J. Nobile, Partner at Seyfarth Shaw LLP, New York, N.Y. “Conduct which in the past might not have resulted in termination may well do so today.”

One long arm of the law is pushing employers to take action. “Ever since the ‘Me Too’ movement began, many states and municipalities have started cracking down with tougher legislation related to sexual harassment in the workplace,” says Nobile. “They are requiring employers to conduct annual training on what constitutes sexual harassment, to post notices detailing how employees should report incidents of harassment and to have employees sign documents acknowledging an understanding of their rights. Some states even require employers to inform workers of the types of damages they can pursue if they are harassed.”

These developments are occurring beyond the sphere of traditional relationships. “Years ago these issues were confined to male and female partners,” says Nobile. “Today the same issues arise with same sex couples, and the same approaches have to be taken.”

Bosses and subordinates

Employers are turning most of their attention to romantic relationships that occur within a chain of command. That’s because dating between supervisors and subordinates has the most obvious potential to spark conflicts of interest, charges of favoritism and lawsuits for sexual harassment. Companies such as McDonald’s, Intel and BlackRock have recently dismissed executives for conducting consensual relationships with individuals in their chain of command.

While a relationship between a manager and a subordinate can go well over the long term, the practical reality is that it may end very badly. “Most people keep their emotions off the job and maturely handle breakups,” says Bob Gregg, co-chair of the employment practice law group at Boardman and Clark LLC, Madison, Wis. “Some do not, and the aftermath can result in litigation. Continuing advances from a supervisor, while at one time may have been mutual and welcome, may become unwelcome sexual harassment. The company can be liable for failure to address and stop these aftermath behaviors.” In fact, a substantial number of sexual harassment cases have resulted from what was at one time consensual relationships.

Employers must take all these possibilities into consideration. But what, exactly, is the best policy? A blanket prohibition on all such relationships? Or a gentler approach requiring reporting and accommodation?

The first option would seem to offer the greatest protection to the employer. After all, consistently terminating the supervisors in such situations would seem to remove the relationships as potential irritants in the workplace. But the picture is a little murkier than it seems.  

“You can say on paper that you prohibit dating with anyone in a chain of command,” says Nobile. “The reality is that romantic relationships will develop anyhow.” When they do, of course, the partners conduct themselves under a cloak of secrecy which can make matters worse. When company management has no way of monitoring a relationship, bad things can happen.

“If two people are dating and all of a sudden there is an issue and the relationship ends, then you end up with a possible problem right smack in the middle of the work environment,” says Nobile. “What happens if one of the parties harasses the other and there is a discrimination charge? It might be too late to do anything about it.”

Reporting relationships

If you can’t stop people from fraternizing you can take steps to protect your organization. “What I think is a better policy is to require disclosure when a workplace relationship develops,” says Phelan. “That way it’s out in the open and there can be a discussion with both parties to make sure the relationship is clearly between two consenting adults and is not a product of any sort of unwelcome conduct.”

A policy can state that if anyone in a supervisory role dates a subordinate, both parties are obligated to bring the relationship to the attention of a designated individual. This is may be someone in the human resources department who can monitor the relationship to obviate any favoritism in which the subordinate receives inflated performance reviews or more attractive assignments, and also to assure no sexual harassment occurs down the road if the relationship should end. Additionally, one of the individuals might be transferred to another department so there is no longer direct reporting. The smaller the organization the more limited the number of departments, and the more difficult this is.

It’s wise to have employees explicitly acknowledge their understanding of the fraternization policies. “While enforcement of a strict policy against manager-subordinate dating is the best approach, rules against falling in love are not always effective,” says James J. McDonald, Jr., managing partner at the Irvine, Calif., office of Fisher & Phillips. “If an employer does not want to lose one or both employees involved in a relationship, I recommend having the involved parties sign a ‘love contract.’” Such contracts state that the relationship is consensual, that the involved parties acknowledge they are required to act professionally at all times in the workplace, and that in the event the relationship ends they have the duty to disclose that fact to the company.

Coworker dating

How about those relationships which develop outside of a chain of command? At first glance they might appear benign. In some cases, however, they can create serious problems. “If two people working in the same department are being overly friendly with one another they may have a negative effect on the work of other employees,” says Nobile. “That effect might be so severe as to constitute an atmosphere which the law would recognize as one of sexual harassment. You might also have the issue of favoritism if one employee helps the other more than others. Either way, the result is a business environment that is not healthy.”

Much depends on the people involved, adds Nobile. “Some people continue to act professionally while they are dating and may even have a relationship that goes on for years without coworkers knowing about it. If they behave professionally then there are no issues. If they don’t it can be unsettling.”

Some employers have instituted policies prohibiting all dating between coworkers. Again, however, there are problems regarding enforceability, secrecy and the potential loss of talented staff members.

The fact is that such restrictive policies have actually diminished recently. “Policies prohibiting coworker fraternization were at one time more common than they are now,” says Phelan. “Employers found they didn’t work, for two reasons. First, they were difficult or impossible to police, since people would engage in relationships secretly. Second, there was a problem in applying a ‘one size fits all’ policy to various degrees of fraternization. At one extreme you have people who go out on a single date; at the other you have people who have relationships that last years.”

Company management may decide to require the reporting of romantic involvements among coworkers. “I would recommend speaking to both of them, to make sure the relationship is clearly between two consenting adults,” says Phelan. “You want to make sure it is not a product of any sort of unwelcome conduct, and is not the means to a quid pro quo benefit that can result in a sexual harassment claim down the road.”

In such cases the human resources department can explain the firm’s harassment policy to both parties. “Put the conversation in writing and have each party sign the document as a record of the discussion,” says Phelan. “If one party later claims they were sexually harassed there is at least some evidence that they were asked about the topic and they said that was not the case.”

One more thing: Problems can also arise when employees date individuals not employed by the business but who serve it in some way. “Relationships with outside parties such as consultants or vendors can throw a monkey wrench into your operations as well,” says Nobile. “Suppose someone in your purchasing department starts a relationship with someone who supplies your business with goods. Conflicts of interest can arise.”

The possibility also exists that an employee pursuing a romantic relationship with an outside party can spark a harassment lawsuit. Indeed, many state and local sexual harassment laws passed in the wake of the ‘Me Too’ movement protect independent contractors, consultants and other third party individuals. “You have to be careful about all of these contingencies,” says Nobile. “Employers need a bigger pair of eyes these days to see what is going on.”

In all of the variety of workplace dating, written policies can help the employer in two ways. First, they establish clear behavior guidelines. Second, they can help defend against charges of invasion of privacy when relationships are investigated. “Having a workplace romance policy, just as having one for anti-harassment, requires monitoring and investigation,” says Gregg. “This can be a more sensitive topic than monitoring and investigating the usual work rule compliance or violation issues.  Careless or improper process can result in liability for invasion of privacy, defamation, discrimination, violation of constitutional rights, and more.”

A clear written policy can at least establish management's rights to monitor and investigate workplace romantic involvement.  “A policy decreases anyone's expectation of privacy regarding relationships arising from the workplace,” says Gregg. “So there is an established foundation for addressing any concerns, and employees should not be surprised if their relationships are questioned.”

Expensive resolutions

Let’s return to Susan, the female manager whose story opened this article. What happened? The employer assigned another manager to review Susan’s work, which was found wanting. Even so, the employer’s attorney counseled against firing the woman. “She will say she had ended the relationship and that her firing was retaliation,” he explained. Instead, the company assigned Susan to a new supervisor and delayed her performance review for six months. She was informed that if her six-month review found good performance she would receive a retroactive pay increase.

As it happens, the review found she was not working out so the company negotiated an exit package rather than risk a harassment lawsuit. “In essence, they bought her out,” says Nobile.

Susan’s story shows that a strict no-dating policy with termination can lead to liability. And it throws into stark relief the need for diligence in developing and enforcing efficient and realistic office fraternization policies. “This expensive solution could have been avoided if the relationship between Susan and her supervisor had been reported up front,” says Nobile. “The employer could have taken adequate steps to assure a sexual harassment charge could not be brought.”

And Nobile’s advice for management level people looking to start a relationship at work? “The best practice is to just say no.”