LOS ANGELES – A sexual and age harassment complaint filed against Larry Flynt by an employee who claims her work was disrupted by hearing the Hustler publisher having sex with prostitutes in his office must be decided in binding arbitration.

A three-justice panel of the 2nd District Court of Appeal Thursday reversed rulings in November 2006 and January 2007 by Los Angeles Superior Court Judge Judith C. Chirlin that Cheryl Oldham’s lawsuit could go forward.

Chirlin found that Oldham was not bound by an arbitration agreement in her employee handbook because it was unfairly weighted toward Flynt.

Oldham began working for Flynt in 1999. Her lawsuit states that she had a prestigious job supporting high-ranking Flynt corporate executives.

“The acknowledgment (Oldham) signed after receiving the 1999 employee handbook made it clear that waiver of arbitration required the consent of (Oldham) and (Flynt),” Justice Frank Y. Jackson wrote in authoring the 10- page, unanimous decision.

In her lawsuit, Oldham alleges she was retaliated against for helping another female employee in a similar claim against Flynt. Oldham maintains that when Flynt found out she was helping the other employee, he called her into his office and asked her to testify that he did not harass anyone and that she never heard sex noises from his office, but she refused.

Later, Oldham was summoned into another meeting with Flynt, where she alleges she was told, “you’re overweight, unattractive, over 50 and probably unable to find another job. So, why would you do this to me?”

According to her lawsuit, Flynt was called to testify at an arbitration hearing in the other woman’s case, where he allegedly said, “I can’t stand the sight of Cher (Oldham), and I wanted to fire her. But I was advised I couldn’t fire her.”

Oldham’s decision to help the other woman caused her to be demoted to the position of receptionist at his video company to perform menial tasks, such as labeling Federal Express envelopes, according to her court papers.

Shortly after Oldham was hired, Flynt’s assistant at the time told her that their boss often had prostitutes in his office and that his wife worked in the same building, the lawsuit states.

Oldham claims the assistant told her that if Flynt’s wife ever attempted to get into her husband’s office while he was with a prostitute, she should “divert and distract Mrs. Flynt at all costs until Flynt could get the prostitutes out of the building.”

The prostitutes “made loud, obnoxious and repeated noises of sexual gratification that disrupted the office and (Oldham’s) ability to perform the essential functions of her job,” her lawsuit alleges.

When Oldham took her complaints to Flynt’s human resources department, the director told her, “I don’t want to know anything. I don’t want to hear it. I know nothing,” according to the lawsuit.

When Flynt’s assistant was on vacation, Oldham had to handle all of his telephone calls and appointments, including the scheduling of appointments with prostitutes, the suit alleges.

Oldham’s experiences working for Flynt left her “sick, sore, lame and disabled,” according to her lawsuit.