I believe it is understood that if you, in your personal life, do something that is embarrassing to your employer AND can damage the image of the employer that those things are grounds for suspension and/or firing. I base this on a case recently where a husband and wife, both nurses at the same hospital here in Phoenix, ran a porn site with themselves as the stars in their off time. Though not illegal, they were dismissed. In their suit that followed, they lost because it was found that the actions outside of their employment were harmful to the image and operations of the hospital.
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