Your coworkers were terrified of offending you, and this was evidence of their privilege?

They weren’t terrified; they were expressing contempt at being asked by management to extend a minimal level of respect, knowing fully that they wouldn’t face any averse actions for doing so. They were stating the claim openly in the office, often as a follow-up to jokes that they knew crossed the line, e.g. “…but we can’t say that in the office anymore as it’s not okay to women.” It was nothing more than a joke to them.