The law, of course, is clear:  in order for such a relationship to constitute sexual harassment, it must be “unwelcome” by one of the participants.  In the context of a relationship between an executive and a subordinate, the analysis usually revolves around whether the relationship was truly consensual, or whether subordinate felt coerced or pressured to either start or continue the relationship.   That is where things start to get messy; especially when the executive is also the CEO or owner of the company.

Conventional wisdom is that its bad practice to permit employees in a direct reporting relationship to maintain an intimate relationship.  Good companies have policies requiring employees to disclose such relationships, and the subordinate is often transferred to a different position or manager.  Some companies (like the fictional Dunder Mifflin on “The Office”) require the employees to sign a “Consensual Relationship” agreement; I have never felt that such an agreement would provide much protection in the event of a lawsuit alleging coercion.    Ultimately, companies need to have well-constructed policies addressing such situations, and then enforce them consistently.  And hope that their employees comply . . .