Bullying and sexual harassment are HARD topics, and dealing with the employee in question is especially challenging.
The laws about “hostile work environment” vary from place to place and the policies vary from company to company. So, in managing this type of challenging employee, you’ll need to rely heavily on your Human Resources folks.
That said, I include tips and ideas and support on managing a bully or a sexual harasser in this video – the sixth in the playlist on how to manage challenging employees.