http://www.cnn.com/2012/12/22/us/iow...ker/index.html
At first glance, I found this to be outrageous that she got fired and lost the subsequent court case.
Then I read more about the situation, and it looks like the right ruling for a few reasons.
At first this appeared to just be a matter of a horny dude firing his hot female employee because his wife was jealous. Whether that should be allowed is up for debate, and I can see both sides of it.
However, in this case, the two were exchanging text messages (outside of work) and engaging in banter about her sex life.
She was so complicit in the situation that, despite many inappropriate comments by her boss, she did NOT sue for sexual harassment, which normally would have been a much easier case to win. Instead she sued only for gender discrimination. This shows that she engaged in enough voluntary flirtation and inappropriate conversation on her own that there was no sexual harassment at all.
In my opinion, that changes everything. If a woman engages in sexual banter with her boss (including outside-of-work texts), and then his wife finds out about it and demands he fire her, that should definitely be allowed. She voluntarily engaged in that behavior and the risks that came with it (that is, losing her job if the wife found out).
The court decision was also correct because it was simply about gender discrimination. Was this a case where she was fired simply because she was a woman? No. She was fired because her boss' attraction to her (and her subsequent personal relationship with him) became a distraction at work. It is unlikely he would have fired an old/ugly woman under the same circumstances, so it wasn't about gender.
It does raise an interesting side question as to whether or not it should be legal to fire someone simply because you find them too attractive to work with them -- or if your spouse is too jealous. On one hand, the employee has done nothing wrong (not in this case, but in the case of a worker who does not flirt back) and perhaps should have their rights protected. On the other hand, a business owner shouldn't be forced to keep employees he doesn't want (or who are unintentionally creating a problem either at work or at home), so I can understand the argument why this should be allowed.
However, in this case, I think the firing was legal, though admittedly it's kind of shitty for the woman, since her boss was just as much responsible (if not more) for the entire situation.