We often associate morality clauses or “morals clauses” with public figures. An actor hired to star in a movie or an athlete signed to represent a line of sneakers likely has a morals clause in their contract stating that it can be terminated if they do or say something that harms their employer’s business.
People can blow up their reputations and those of anyone associated with them with a single tweet or viral video. As a business owner, you can include this type of clause in your executives’ or other employees’ contracts so that you can quickly and easily cut ties with them and minimize the damage to your company.
What is included in a morality clause?
The clause needs to specify what kind of behavior violates the clause. It can be anything that publicly embarrasses the company or only something unethical or even illegal. Those signing the contract – particularly those who know they bring significant value to the deal — can negotiate the terms of their morals clauses.
Generally, clauses state that the contract will be immediately voided and that the employer stops compensating them. The employee may have to waive any bonuses they’d otherwise be due. There may be fines involved.
Unknown people can become famous in minutes
Even people who aren’t in the public eye can become sudden and unwanted celebrities due to something they do that “goes viral.” With a simple, “Twitter, do your thing,” someone can quickly be identified and their employer will soon begin getting pressure to get rid of them.
For example, a woman who worked for a well-known investment firm was promptly placed on administrative leave and later terminated after a cellphone video of her threatening to call the police on a Black man watching birds in Central Park after he asked her to leash her dog sparked worldwide outrage. It wasn’t reported whether she had a morality clause in her contract. She unsuccessfully sued her former employer for their statement in the aftermath of the event that mentioned racism.
Careful screening and interviewing during the hiring process can certainly help employers reduce the risk of this kind of unwanted negative publicity. However, as a business owner, you can never fully anticipate what someone really thinks or what they’re capable of doing. A morality clause crafted and enforced with legal guidance can help you cut ties quickly and minimize the damage.