Manager-subordinate relationship

I live in NJ and work in Pennsylvania for a large corporation based in California. My manager and I recently became involved in an affair. His wife found out and is threatening to call our company and get us both fired. What is the best course of action? I am trying to get a transfer within the company, but due to the economy, all internal recs have been frozen.

I don't know that there really is any best course of action. Presuming that you are an at-will employee then the employer can terminate you at any time, with or without a reason. There really is no legal grounds to prevent the injured wife from calling the company and askig for heads to roll. Also, there is nothing legally to do to prevent the company from taking her call, firing you two or one of you, doing nothing, promoting you two or one of you, etc.