why would it be illegal? What law is it breaking?
As a boss, treating 2 employees differently because one person flirts with you and the other one doesn’t? You’re not sure why it’s illegal? You’ve got to be kidding.
On a more serious note, check out your company’s HR course.
you didn’t answer the question, what law are you breaking?
I believe it’s called quid pro quo sexual harassment. There you go.
situation described doesn’t even come close to this
Yeah my response was to your question, not about the topic. In any case, there might be standards about the behavior being severe or pervasive, if you want more legal-speak.
This situation is ambiguous - although it was very cringeworthy at least for me - especially when considered on its own (and without knowing how the 2 individuals usually act and treat others).
Cringe, then yawn. I like it.
I’d probably say “ew”. In a gay way.
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I think my reaction would be to think: “well that was weird” and then forget about it.
People are weird and actuaries are known for awkward exchanges. 
I have plenty of friends where there is an implied TWSS between the two statements. I have no idea what the relationship between these two is so I’d probably giggle to myself at the juvenile joke.