Evelyn spends most of the game in negotiations with Thaddeus at city hall. If you try to talk to Thaddeus when his and Evelyn's portraits are next to each other on the town map, you see them kissing. You're given the choice of interrupting or not. If you don't, but you do look in on them again, then you can see them engaged in oral, then anal. Turns out Evelyn has a very innovative way of enhancing her negotiating position.
If you interrupt, then that's the end of it. Alternatively, you can just not ever try to talk to Thaddeus when his portrait and Evelyn's are adjacent... but interrupting makes it *much* easier to romance Evelyn.
As long as Thaddeus is getting some action during the negotiations, your character gets some extra money every Friday from Evelyn, which helps in the early game and becomes irrelevant later on. Because of the weekly money, I tend to not look in on them for the first few weeks of the game. Then I interrupt them.
Note that you cannot look in on them at all until after the first week of the game (ie, not before day 8).