Hi Penny -- Ugh this is tricky, isn't it?  There are a lot of things to consider, of course - not the least of which is the nature of the complaint, any legal/safety/risk concerns involved, and what the employee and you have already tried to do to deal with the issue.  If it is a high risk issue that represents a significant safety, legal or financial risk for the employee or your organization, it will be important to get advice from your legal counsel.  If it doesn't appear to rise to that level, the next thing that comes to mind is if your organization has any policies, guidelines or processes in place to deal with this kind of thing -- harassment processes, employee relations complaints, issue resolution processes, etc.  If none of these apply, my suggestion is to document the complaint and have a conversation with the manager about it to get their perspective.  In the best of all worlds, the manager will want to rectify the problem immediately and repair the relationship with the employee.  Whatever the manager's reaction I would make sure there is a plan developed to correct the issue and document that, as well - including any needed follow up with the employee and the manager's own manager and time frame for revisiting the issue to see the results.  

I hope this is helpful -- good luck!