David Letterman has now publicly discussed on the air his extra-marital affairs with female employees twice, and the case highlights two important, but often misunderstood, areas of the law in California-extortion and sexual harassment.
It is not against the law for an employer to have sex with an employee. There are companies that have policies against such encounters, or even policies against employees having romantic relationships with other employees, but it would be up to the company to decide if any type of action should be taken. However, it is not against the law for an employer to have a relationship with an employee.
However, what can often become actionable, and wind up costing someone like Letterman, or NBC, a great deal of money is where an employer, or person in a position of power and influence, uses his position to coerce an employee into having a relationship. The reason that it makes sense for a company to discourage romantic relationships between its employees, or between supervisors and the supervised, is that there is not always a clear line between what is coerced and what is not coerced. An employer may honestly think that his young and attractive employee is actually interested in him, but, from the employee's point of view, the employee may simply be scared, and might think that turning the employer down will cause her to lose the job she needs to support her family.
Hence, even if the romantic liaisons were totally consensual, Letterman has placed his company in jeopardy of potential civil actions, and, as a result, it may not be just Letterman's wife who politely but firmly asks him to avoid such encounters in the future.
Extortion is not an easy subject either. Many people think of extortion as being simply, "give me money, or I will beat you up." That is extortion, but other conduct can also constitute extortion. The California Penal Code defines extortion as "...obtaining property from another, with his consent...induced by a wrongful use of force or fear..."
But the way that "fear" is defined can lead to extortion charges where most people may not think that it would. "Fear", according to California law, may be induced by a threat not only to do an unlawful injury to someone, but also the threat to accuse the extortion victim, or any relative of his, or member of his family, of any crime, or, it may also be a threat to expose the extortion victim, or to "impute to him" any deformity, disgrace or crime."
Therefore, even if a person is not a public person, such as David Letterman, he can be a victim of extortion once a person merely obtains money in exchange for an agreement not to write a letter to the editor that the extortion victim has done something embarrassing or disgraceful.
In short, the Letterman case is a very useful lesson in the areas of sexual harassment and extortion. It is best to try to avoid both areas of the law.