Oct. 8 (Bloomberg) -- Can we get a few things straight about sex in the office?

Nobody is flipping out if two people at work willingly consent to have an affair with no rules broken and no harm done to colleagues. It’s possible, and we know it happens all the time.

But let’s get real about the rank smell radiating from David Letterman and his Oct. 2 on-air confession. He had been extorted for $2 million by a CBS employee who threatened to publicize that Letterman “had sex with women who work for me on this show,” as the television-show host put it to his audience.

As chairman of the New York-based company that produces his show, Letterman is subject to Title VII of the Civil Rights Act of 1964, a law that makes discrimination illegal for companies with more than 15 employees. And his philandering with multiple employees has the odor (“creepy” stuff, he himself called it) of a situation ripe with potential for abuse.

None of the women he had sex with -- and the busy comedian hasn’t said how many that might be -- have gone public with complaints. Let’s consider, though, 10 items that Letterman’s main customer, CBS Corp., might put on its worry list when considering the perils of doing business with the block of kryptonite also known as David Letterman.

In Control

10. Letterman didn’t confess to viewers to get it off his chest. He did it because the information was going to come out anyway, since he’d gone to authorities to report the extortion. Announcing it on a show he’s in charge of provided him ultimate control over the story. Letterman’s fans, meanwhile, are gushing in blog chats over his forthrightness. Give me a break.

9. Some of Letterman’s recent ratings bump surely comes from morbid viewers who tune in with hopes of witnessing the next phase of a train wreck. Even scandal junkies can get squeamish and look the other way when the carnage gets ugly. There’s also the issue of the comedian’s material in the future. What will fans think next time he savages some dopey public figure who can’t keep it in his pants?

8. It’s a story with legs. Will the objects of Letterman’s affection go public with tales of coercion? What about the alleged extorter, Robert Joseph Halderman? His lawyer, Gerald Shargel, has been blabbing that it would be wrong “to think that David Letterman gave the entire story,” as he claimed on NBC’s “Today” show on Oct. 5.

Big Boss

7. The big boss is subject to higher expectations. Even if Letterman escapes accusations of coerced sex, discrimination pros say everything changes when it’s the company’s Numero Uno bedding the employees. There is “inherent coercion any time the person writing the checks makes a sexual advance,” says Jack Marshall, president of ProEthics Ltd., a consulting firm in Alexandria, Virginia.

6. The “Hey, he’s a comedian, cut him some slack” argument is rankling leaders at women’s organizations. “Just based on what Mr. Letterman himself says he was able to get away with all these years, CBS has created a toxic culture,” says Terry O’Neill, president of the National Organization for Women.

5. CBS policies may have been violated. Tom Keaney, a spokesman for Letterman’s production company, Worldwide Pants Inc., says Letterman didn’t violate its harassment policy. CBS has a Business Conduct Statement that says managers must tell Human Resources if they get involved in a romantic or sexual relationship with a subordinate. Does that apply to Letterman? CBS spokesman Chris Ender wouldn’t comment. But CBS has a policy for suppliers that prohibits harassment, and warns that violations can lead to canceling of contracts and legal action.

‘Joint Employer’

4. CBS could get dragged into a lawsuit if a court views it as a “joint employer” with Worldwide Pants. Letterman tapes his show at CBS’s Ed Sullivan Theatre, which underwent a $14 million renovation in 1993 in preparation for his arrival. And while Worldwide Pants may be the official employer of the women he dated, Letterman uses the CBS brand; the band on his program, for instance, is called the CBS Orchestra.

3. If Letterman’s company hasn’t been vigilant about following anti-discrimination laws, it will strengthen any case that might come along, says Cliff Palefsky, an employment lawyer at McGuinn, Hillsman & Palefsky in San Francisco. Any complaints that do get filed had better result in proper investigations, he added, or it will help make “a fantastic case” for any plaintiff.

2. The spotlight on CBS shows a dearth of women in powerful positions. With only two women among its 14 directors, CBS is a loser when it comes to putting women on its board.

1. It isn’t just Letterman’s former honeys in the office who might bring complaints. “There is a concept under the law of sexual favoritism being a form of sexual harassment,” says Cindia Cameron, organizing director at 9to5 National Association of Working Women. Morale can suffer “when those in romantic relationships have advantages that others don’t.” Stupid Office Romance Tricks can blow up in more ways than you might expect.

(Susan Antilla is a Bloomberg News columnist. The opinions expressed are her own.)

To contact the writer of this column: Susan Antilla in New York at santilla@bloomberg.net

Last Updated: October 7, 2009 21:00 EDT