Spake was working at the Hewlett Road VTNZ testing station in Tauranga when trouble started with station manager Keith Johnston. Around August 2010, he walked past her desk and touched her ponytail. He said the pulling was done in jest. The ERA also heard that Johnston pinched Spake's back.
VTNZ Bay of Plenty manager Gavin McNaught told Johnston the hair-touching was inappropriate and not to be repeated.
But in March last year, Johnston called Spake into his office, closed the door, and raised the touching incident. Johnston told the ERA he initiated this meeting to apologise to Spake - a claim the authority found unbelievable.
Instead, the ERA said Johnston was concerned about office gossip ruining his reputation. He then made a rude gesture, saying: "It's not like I grabbed your ..."
The situation was inflamed only a week later while she was on the phone to a friend, planning a cowgirl-themed hen party. Johnston said: "You don't need a costume Kate, you can go along mooing ... You know, like a cow. Then you can get your udders out."
Spake increasingly suffered from stress, anxiety and sleep deprivation. She lodged an internal complaint, which the authority said VTNZ failed to adequately address.
"I should have been able to rely on VTNZ to have dealt with Mr Johnston's inappropriate behaviour but because of a situation with a former colleague and her dismissal, and the boss in question being moved sideways, I had no trust in the HR department," she wrote.
Spake had taken sick leave on the advice of doctors, but VTNZ demanded she return to work. When she refused, she was sacked.
Johnston said this week that he knew nothing about the ERA determination and wouldn't be able to comment.
Advocate Rachel Ralston said Spake's ERA finding was a victory for harassed women who endured chauvinism.
She said Spake had stood up for her rights against overwhelming odds.
Tauranga lawyer Warwick Reid added: "Cases of reimbursement for economic loss as a result of psychological injury are exceedingly rare in New Zealand, especially in the private sector."
VTNZ has until March 2 to appeal the decision.