He should have been fired the day that surfaced. If someone who worked for me ever did something like that, they'd be out the door pronto. It speaks volumes that he wasn't, to the point which I am irrationally tempted to doubt the veracity of her claims.
Don't proposition anyone in your reporting chain. Don't flirt with them. Don't do anything with them. It's really not that complicated. If you are attracted to someone who works for you (it happens), do the adult thing and ignore it.