Memo to self: include a clause in future start-up ventures allowing the co-founders to be kicked out of the company -- and possibly losing their ownership share -- if they engage in conduct detrimental to the company. Isn't that already standard practice though? Seems to me the co-founder having sex with an employee is a much larger liability that the other party. Remove the offending co-founder and the other party will likely go away (or change their behavior).

A secondary point: how much liability would the company face for a sexual harassment claim if the offending co-founder were removed upon the discovery of proof?

In the end, people are flawed creatures and co-founders should probably be vetted more thoroughly than a prospective mate.