Legal Question in Employment Law in California

I assume you meant to say you started "dating" one of your employee's sister. If so, no, there is no law which prohibits dating employee relatives. Your company may have a non-fraternization policy which prohibits dating subordinate employees. It is doubtful such a policy would extend to relatives of employees but you should check. Whether it is wise to do so is another matter. Our laws cannot address all human behavior but sometimes we are left to our sound judgment to get us through life. Only you can decide if this budding relationship may complicate things at work.