Morality clauses began in the entertainment industry over a century ago to help keep performers from behaving badly and committing criminal acts that would bring embarrassment – and financial harm to studios and other companies with whom they were associated. They eventually spread to professional athletes and other public figures.
These clauses are now standard in virtually all contracts of public figures – even endorsement deals. No one wants an athlete who’s advertising their sneakers or an actor who’s the “face” of a luxury watch out there spouting racist, anti-Semitic or homophobic opinions or being arrested for domestic violence or other criminal offenses. A morality clause allows a company to quickly cut ties with them.
Executives in many industries often have a morality clause in their contracts as well, since they’re closely associated with their employer. Anything they do publicly – or that becomes public – can harm that company.
The effect of social media
Morality clauses are now more common for people at all levels of an organization. That’s largely due to social media. We’ve all seen instances of bad behavior go viral, with “Twitter sleuths” determining who the person works for and demanding their firing within hours and companies forced to come out quickly to assure the public that the words and/or actions of this employee don’t represent their values. However, terminating them can be tricky without a morality clause.
Employers generally can phrase their morality clauses however they want – as long as they’re clear, specific and invoked fairly. The key, however, is that for behavior outside of work to be grounds for termination, the company must be able to show that it harmed (or could harm) it financially because it goes against the company’s values and/or generally accepted values.
As one business law professor notes, any employee can potentially be held to the terms of a morality clause because they have “a fiduciary responsibility to be a representative or steward of the values of that organization…[and] displaying yourself to be contrary to that is problematic.”
This doesn’t mean that every less-than-upstanding thing you do in your private life – even if it ends up on social media or in the press – is grounds for termination if you’ve signed a morality clause. Courts typically give employees the benefit of the doubt if there’s any question of whether they could have foreseen harm to their employer or if their employer was actually harmed. If you were terminated for violating a morality clause, it’s important to have legal guidance to protect your rights.