How to Deal With Rumors in the Workplace

Don't allow rumors about women sleeping with the boss

Let’s start with a basic rule of thumb: Don’t allow rumors about anyone sleeping with anyone else in your business to go unaddressed. 

Though this issue tends to affect one gender more than the other, the problems caused by gossip can certainly cut both ways.

In this article, we address rumors and the damage they can do to both your moral and legal standing. Here at CEDR, we help members through a variety of situations that include the following scenario. And if you are thinking about employing a “no gossiping” policy to prevent issues, think again. Read to the end to find out why.  

Rumor Has It…

What would you do if you heard a rumor that someone in your business receives favorable treatment because she’s sleeping with the boss? 

Imagine it’s your newly-promoted team lead. She’s been a shining star since she was hired, but now another employee has started a rumor that her success is a direct result of a “special” relationship with the business owner. Something has to be done—but what?

A recent court case we’ve been following is a great example of everything NOT to do. 

Malicious rumors and workplace gossip can be hard to control, but failing to take sufficient action to address them can also lead to liability. Here’s a synopsis of what happened:

The Case

Two employees — one male, one female — were hired in the same month as warehouse clerks. The female employee was promoted consistently over the next 15 months, ultimately becoming the male employee’s supervisor. 

Two weeks after the female employee’s final promotion, the male employee started a rumor that she was sleeping with a high-level manager. The other men in the warehouse quickly spread the story and became openly hostile toward her. A chain reaction of missteps and poor company decisions followed:

  • No major action was taken as the rumor spread for over six weeks.
  • A mandatory meeting was held to discuss the rumor. The male manager accused was permitted to attend; the accused female employee was barred from entry.
  • Blame was cast on the accused female and she was treated with hostility by upper management for creating the problem.
  • The accused female employee filed a complaint with the company’s HR department. Nothing seems to have come of that complaint.
  • The male employee who had started the rumor also filed an HR complaint saying the female employee was causing a hostile work environment for him. She was ordered to avoid him, but he was unrestricted and continued mocking her and distracting her subordinates.
  • The female employee was called in for a final meeting, during which she was provided with two written warnings before being terminated.

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What Went Wrong and What Should Have Taken Place?

This case (which is detailed in this post on the legal blog aggregation site, Lexology) provides a glimpse at what some might call a perfect storm of HR mismanagement. Here is a brief rundown of what should have happened in this case:

Nip Rumors, Gossipping, and Slander in the Bud

First and foremost, your employees need to know that it’s never OK to make the workplace uncomfortable for anyone. Period. 

In this case, an unsavory rumor was perpetuated within the workplace for more than a month, though it was not addressed by the company until things had already started to get out of hand.

If you hear a rumor being circulated openly in your workplace, shut it down immediately.

Address Complaints Promptly and Thoroughly

The fact that this rumor was allowed to swirl for multiple weeks before it was addressed by HR or management comes across as complacency on the part of the company’s HR department. 

And the fact that it was perpetuated by the men in the office, including upper management, shows that the leadership team was complicit in the female employee’s mistreatment.

When rumors that could potentially create a hostile work environment begin circulating it may be appropriate to institute disciplinary procedures and/or an investigation right off the bat, before the issue is ever brought forward in the form of a formal complaint.

Treat Involved Employees Consistently

Ultimately, the female employee in question was held accountable for the hostile work environment created by this rumor despite the fact that 1) another male manager was also involved in the rumor and 2) another male employee had started the rumor in the first place. 

None of the male employees involved in the situation were reprimanded for their conduct in the case, nor was the female employee even allowed to participate in relevant deliberations and investigations, even though she filed the original complaint with HR. This sends a clear signal that the company was partial to the male employees’ version of the story — in fact, the company failed to even consider the female employee’s version of events.

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Handle Sensitive HR Issues Confidentially

When conducting an investigation into a formal HR complaint made by an employee, interviews should be held with all involved parties and witnesses separately and privately. 

Steps should be taken to get to the root of the problem and to take appropriate action, and the entire process should be thoroughly documented for the protection of your business and any potential victims. Holding a meeting about the issue is NOT appropriate, especially if the person in question is flat out excluded from that meeting.

The Result

It should come as no surprise that the female employee filed discrimination and retaliation claims against her former employer. 

Though her case has faced some trouble because her original discrimination-related claims were less specific than her initial lawsuit, the U.S. Court of Appeals for the Fourth Circuit held that the protections offered to victims of sex discrimination under Title VII of the Civil Rights Act could apply to false rumors such as this one.

Specifically, the court noted that this rumor seemed to be based on an “old and deeply rooted” notion that women (not men) use sex as a means of achieving professional success. Her lawsuit is going forward.

The easiest way to manage a wildfire is to prevent it from starting. 

You can’t simply lean on an over-broad policy like “no gossiping” — that’s unlawful according to the National Labor Relations Board (NLRB) because it could dissuade your employees from types of protected speech, like discussing workplace conditions (Click to learn more about the NLRB’s crazy rules on “no gossiping” policies). But you can step in to address (specific or general) situations involving harmful rumors and those who perpetrate them.

When dealing with sensitive HR issues at your business, avoid the temptation to sweep it under the rug in hopes that it will take care of itself. Doing so could actually put your business at risk of a lawsuit.

Rather, it’s important to take all claims seriously, to investigate them promptly and confidentially, and to do your due diligence to reach a fair and appropriate resolution, whatever that may be.

While the case detailed in this post was in no way a consensual relationship (nor was it even a relationship at all), you may now be wondering what to do about relationships in the workplace, in general. Well, we have experience solving that problem, too! Click to read “How to Deal with Employees Dating in the Office.”


Aug 21, 2019

Friendly Disclaimer: This information is general in nature and is not intended to provide legal advice or replace individual guidance about a specific issue with an attorney or HR expert. The information on this page is general human resources guidance that is believed to be current as of the date of publication. Note that CEDR is not a law firm, and as the law is always changing, you should consult with a qualified attorney or HR expert who is familiar with all of the facts of your situation before making a decision about any human resources or employment law matter.
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