updated 7/18/2005 8:04:48 PM ET 2005-07-19T00:04:48

A manager who has affairs with subordinates can create a work climate that constitutes sexual harassment even for uninvolved employees, the California Supreme Court ruled Monday.

Phil Horowitz, of the California Employment Lawyers Association, who submitted a brief to the court in support of a lawsuit filed by two women, called the decision "groundbreaking."

"It's the first major decision saying women can sue if they are treated worse because they're not the paramour of the supervisor," Horowitz said.

Nathan Barankin, a spokesman for the Attorney General's office, said the decision is a warning to business owners.

"It tells employers that having an anti-nepotism policy is not enough. You need to do more to make sure that you have a hostility-free work environment even when employees are having consensual sexual relationships," Barankin said.

The case involves former employees at the Valley State Prison for Women in Chowchilla who complained about then-warden Lewis Kuykendall, who was sexually involved with at least three women at the same time.

The plaintiffs, Edna Miller and Frances Mackey, sued the Department of Corrections for sexual harassment in 1999.

A lower court ruled against the women, saying they "were not themselves subjected to sexual advances and were not treated any differently than male employees." The state Supreme Court overturned that decision Monday.

An isolated instance of favoritism would not ordinarily constitute sexual harassment, Chief Justice Ronald M. George wrote in the unanimous decision.

But when it is so widespread that "the demeaning message is conveyed to female employees that they are viewed by management as 'sexual playthings' or that the way required for women to get ahead in the workplace is by engaging in sexual conduct," it constitutes harassment, he wrote.

Both women subsequently left their jobs, and Mackey died in 2003. An Internal Affairs investigation in 1998 resulted in Kuykendall's retirement.

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