Apple Watch OS 3 Causes iMac to Log off

I have Mac OS 10.12, iOS 10, Watch OS 3, and have had my iMac log off spontaneously. This is odd in that it is set to be always logged on. It is not set to open with Watch or log off with xx minutes of inactivity. The only constant is it only happens if I am wearing my Apple Watch. It never happened with OS 10.11, Watch OS 2 or iOS 9. I now have to remove my Watch if I am using my iMac.

Has anyone else noticed this problem?