It’s that time of year when nurses and doctors show up in non-medical offices and not to perform annual physicals.  Or maybe your office will have a Jedi, elf, vampire, pirate, superhero or one of hundreds of other popular movie characters or monsters.  Do you have a policy about costumes in the workplace? Do you waive your dress code simply because it is Halloween?
There are a number of well known examples of the slight but real danger of costumes in the workplace in the area of sexual harassment.  There is the example of Mrs. Devane, a salesperson at Sears who was awarded $750,000.00 from her employer for sexual harassment for actions which included a manager unbuckling his pants, motioning to his groin and telling her while she was dressed in a doctor costume, “Here, Doctor.  It hurts here.”  Other cases have settled out of court but telling a woman, even in a cat costume, that you like her tail will be considered sexual harassment.  

Of course, an employee may defeat their own claim of an offensive work environment by wearing an overly sexually explicit costume such as “a see-through Empire State Building.”  This type of costume can demonstrate that the employee is not really offended by this type of behavior.
The courts have had to address other costume situations such as the man simulating sex with a sheep and public officials or others in “black face.”  As a practice pointer, although it costs your company nothing to allow costumes in the workplace, if you do allow costumes, make certain that there are applicable rules in place and that someone actually polices the costumes.  Anything in questionable taste must be dealt with by either removal of the costume or the employee being sent home.  Remember that sexual harassment is in the eyes of the receiver not the intent of the offender.  Your normal dress code should apply with very limited exceptions.