Should Businesses Have Morality Clauses

In recent months, half a dozen celebrities have been in assorted media outlets for violating their contracts. “Good Morning America” hosts T.J. Holmes and Amy Robach were notoriously fired for having a public affair. When Will Smith gave Chris Rock “the slap,” the tabloids twittered about the Academy stripping him of his Oscar. Even CNN got into the fray, firing dour anchor Chris Cuomo for defending brother Andrew Cuomo against sexual harassment allegations.

In all these cases, the exact reasons for the excitement are unclear since they remain hidden behind the fog of litigation. But most legal scholars agree that the probable cause is a morality clause, sometimes called a morals clause, part of the employment contract or sponsorship rules, that allows a party to terminate the contract if the other party violates it.

In these cases, the cause for the termination (or, in Smith’s case, the possible cause for removal of the Academy Award) would be a violation of a morality clause.

What Is a Morality Clause?

Morality clauses have been part of the entertainment industry since at least the 1920s. Stemming from the days when actors and actresses signed multi-year contracts with a single studio, and gossip columnists like Hedda Hopper and Louella Parsons could ruin a career with a single catty column, morality clauses were intended to prevent movie stars from behaving in ways that would reflect badly on the studio, a production, or the industry at large.

The first “morals clause” written into a movie contract came about after the Roscoe “Fatty” Arbuckle scandal of 1920. Universal Studios inserted a clause into its contract which specifically provided that the actor or actress would not do anything to “shock, insult or offend the community or outrage public morals or decency, or tending to the prejudice of the Universal Film Manufacturing Company or the motion picture industry.”

Most morality clauses today are similar. The question still hinges on whether any specific action carried out by an individual can be said to “outrage public morals or decency.” Americans today like to pretend they are blasé and difficult to shock, but recent scandals suggest that is not always true.

Harvey Weinstein and Moral Turpitude

No one today doubts that Harvey Weinstein acted both immorally and criminally. Just as the Fatty Arbuckle scandal prompted Universal to create the first morals clause, the Harvey Weinstein debacle forced corporations to look at their contracts and see if their morality clauses needed some review.

Today, a morality clause may not be exclusively concerned with indecent behavior or immoral activity. Although it isn’t very nice, cheating on one’s spouse doesn’t outrage public morals today as it did in 1921. Proof of this is that, although Holmes and Robach were eventually dropped from GMA3, it was due to the media frenzy and on-set friction, not because ABC determined they had violated their contracts in any way. The public scrutiny simply made it too difficult for them to continue working. They have dropped their wrongful termination suit.

Some morality clauses, particularly those in top-tier entertainment, financial, and other corporations, have to do with a murky legal concept known as moral turpitude. Moral turpitude can be defined as dishonesty, baseness, vileness, and contrary to justice, honesty, and “good morals.” It encompasses everything from infractions to capital murder if the drafter of the contract desires.

Because moral turpitude can mean nearly anything, it serves as a useful placeholder in a binding contract to keep employees in line. Recent morality clauses have been used to terminate actors for racist and homophobic comments on Twitter and other social media and led to heavy fines and suspensions for sports stars who strayed too far on the party circuit.

Miss America and Spokesmodel Clauses

In 1984, Vanessa Williams, the first black Miss America in history, voluntarily resigned her crown 72 hours before the Miss America committee would have stripped it from her. Her crime? Having had nude photos taken two years before the contest, photos which Penthouse magazine was preparing to publish.

The Pageant, of course, claimed she violated their rules by embarrassing them even before she started, and it was irrelevant that the snaps had been taken before she entered the contest. In the end, of course, Williams became a successful actress, and Penthouse remains a 1980s footnote.

Contests from the Miss America Pageant to the local tire store dance-off have rules, and most have a morality clause or at least an anti-embarrassment clause. If the contest nets the winner a trip or appearance on behalf of the sponsoring company, then somewhere in the boilerplate contract, there will be a clause that states more or less:

“Winner(s) agree to comport themselves appropriately and not to engage in any illegal or inappropriate conduct which would harm Sponsor’s reputation or standing in [location] where Sponsor has sent Winner(s). Failure to adhere to this clause may result in forfeiture of Prize at Sponsor’s sole discretion.”

Winning a trip to an exotic location comes with many strings, and some people have been surprised to learn it may include not getting drunk on the beach.

Are Morality Clauses Constitutional?

When people are fired for things they say (even as heinous as racist Tweets) or minor things they do on their off time, fans often wonder if that is Constitutional. Doesn’t the law protect what we do and say in private?

It does, but morality clauses have nothing to do with the Constitution. A morality clause is part of employment law and contract law. The government cannot prevent you from saying whatever you want and, in most cases doing whatever you want, but your employer may put anything into a contract, and if you sign it, you’re bound by those terms.

For instance, if an employment clause contains language prohibiting “conduct which would harm employer’s standing or reputation,” then the employee is not allowed to do anything that might embarrass or harm the employer, even if the employee would otherwise be able to do those things.

The government cannot prevent someone from posting racist statements on their Facebook page, but their employer can fire them if those statements bring negative attention to the company.

Overly Vague and Unconstitutional Clauses

A morality clause must be specific enough to inform the employee of prohibited behavior. Although “standing or reputation” is usually sufficient, there should be some guidance as to what is meant so that termination does not come out of the blue.

In the courts, “morality” and “ethics” are generally judged by what is the norm in the community, and these norms tend to change over time, as Holmes and Robach learned. Firing a couple for an inter-office affair because of the infidelity would probably not be acceptable today, although doing so because of the inter-office turmoil might.

Employers cannot insert clauses that prevent employees from exercising their Constitutional rights. For instance, a morality clause that prohibits voting for certain candidates or supporting particular parties would not be legal. Clauses defining particular relationships as acceptable or normal would probably not pass legal muster in courtrooms today.

Average Employees and Morality Clauses

As more and more employers begin appending morality clauses into their contracts and more HR departments start scrutinizing social media platforms for unpleasant commentary, employees should know what to look for in their contracts and employment handbooks when they start a new job or when they upgrade their old one.

According to an analysis in Washington and Lee Law Revue, if morality clauses were applied to all Fortune 500 companies, about 17% of all workers would be subject to some form of workplace controls on and off the job. The workplace has not gotten that strict yet. Right now, morality clauses are usually applied only to entertainers, C-suite employees, and athletes and spokespeople, people in high-visibility positions.

Does the Clause Give Too Much Power to the Company?

Whether you are reviewing a new contract or going over an old one, there are some things to consider when going over a morality clause.

• Is the prohibited conduct specific? Overly broad or vague clauses can be subject to a constitutional challenge.
• Is the clause discriminatory on its face? Does it prohibit constitutionally protected conduct or discriminate against a protected class?
• Does it provide a means of appealing the decision, such as mediation or arbitration?
• Are penalties spelled out? What happens if the clause is violated?
• Does the clause state what must occur before the clause is considered violated?

Employees should not be afraid to ask questions about how the morality clause is monitored and enforced and what is considered a violation of the clause. The clause should not be used as a whip to keep employees toeing the company line. Wrongful termination is the outcome of many morality-clause violation cases.

For instance, in 2012, NFL player Rashard Mendenhall signed a deal with Hanes to represent them in a marketing deal. Mendenhall was active on Twitter and frequently commented on everything from religion to parenting. When then-President Barack Obama announced the death of Osama bin Laden, Mendenhall commented, in response to the outpouring of congratulatory Tweets, “What kind of person celebrates death?” Hanes subsequently terminated Mendenhall’s contract, citing the morality clause.

Mendenhall brought suit for breach of contract. The court denied Hanes’ motion for summary judgment, saying the company had not adequately shown Mendenhall had created a “public scandal” by his comments. The parties settled out of court.

If the contract allows the employer to unilaterally determine what is scandalous or harmful behavior and gives the employee no way to challenge the penalty except through legal action, then the contract is not fair, and the clause should not be accepted.

Does the Clause Restrict Behavior Not Associated With the Company?

In trademark law, trademark infringement is judged on how likely a consumer is to confuse the two marks or the two companies. Something similar should be considered when reviewing a morality clause. Does the clause restrict an individual or behavior not normally associated with the company?

Generally, the more visible the employee, the more acceptable a restrictive clause will be. Spokespeople and news anchors, the “face” of their product, can cause more harm to their companies than unknown secretaries and factory workers.

For instance, when Will Smith decided to defend the honor of his wife at the Academy Awards, nobody watching thought it was a blemish on the Academy Awards. His behavior was entirely a reflection of him. The Awards did not need to worry that his actions would embarrass them.

On the other hand, in today’s social-media-connected world, a single employee’s racist, sexist, or homophobic post can destroy a small business if the owner does not act swiftly to fire the thoughtless worker who posted it on the company page. In these situations, the news anchor whose drunken rampage was on Twitter may have an easier time than the anonymous waiter at the corner diner.

When You Are Hit With a Morality Clause Violation

The courts have held morality clauses to be enforceable. They are nearly always enforceable in “at-will” states, where an employer can terminate an employee without cause, but usually, your employer will try to use the violation of the morality clause to create an ironclad reason for your termination.

There are some ways to fight a morality clause termination. If you believe you’ve been terminated for violating a morality clause, the first thing you should do is get an employment attorney who understands what these clauses are about. Then you need to get to work.

• Demand specifics. As noted already, these clauses are often very vague. Ask what words or actions violated the clause, and in what way.
• Demand proof. The cause of the violation should not be second- or third-hand (“we have a copy of something someone re-Tweeted to us”). If you have done something that may have violated the clause, advise your attorney, and ask about the best route for disclosure.
• Ask for a neutral third-party mediator. Rather than get into a shouting match with your employer, demand a mediator or arbitrator in your case. Morality clauses often turn on interpretation, and in many cases there has been no meeting of the minds over what the clause meant. If your contract allows mediation or arbitration, ask for it.

As social media becomes the arbiter of morality, morality clauses are going to become more common. Protect yourself by learning as much about them as possible.