well if you have a good friend you will just know if you can trust them or not. Besides you wouldn't really be friends with them if you didnt trust them...
but if you do trust a person you feel the need to tell them everything and know they wont tell anyone else behind your back
Celebrate !
Punch her in the vagina.
If they broke a policy, you need to give them a warning. If they break the policy again, you can fire them.
Visit www.bullyonline.org and see if they are a (serial) bully would be a good start. Even if they are not, it will give you some good tips on how to deal with this person.
Dump him
coworker's paycheck
The most unwanted characters are those with a Narcissistic personality disorder, and the way to deal with them is to avoid them.
Get out of there! You can't change them, so I move on to more sane people.
If I am the supervisor I would set a meeting and discuss the issue at hand, pinpoint the weak areas of performance and provide a clear path on how to improve.
You probably should have figured this out before you got married. Best advise really would be to get counseling, because that is a problem which will lead to severe difficulty.
The best way to deal with a narcissistic mother-in-law is to "kill her with kindness." This method works on most people, by the way. Be as nice and polite as you can possibly be but don't engage her more than you absolutely have to. Remain calm and don't feed into her narcissism and neediness.
There have been accounts of narcissistic dogs so that is one example