Do your employment agreements need a morals clause?

On Behalf of | Aug 16, 2023 | Contracts

If you’re starting a new business and in the process of bringing your core team on board and even those a rung or two below, you’re likely considering what kind of provisions to include in their employment contracts. One provision that’s becoming increasingly common is a “morals clause.”

These have been common for many years in the contracts of public figures like actors and athletes. That’s because they’re in the public eye, and one unfortunate comment or action can derail a project or cost a company millions of dollars in revenue.

These days, however, anyone can go viral with a controversial social media post or be caught on someone’s cellphone behaving badly. You likely remember the investment firm employee captured on video in Central Park calling the police on a Black man who had simply asked her to leash her dog. It didn’t take long for her – and her employer – to be identified. She was soon terminated, likely at least in part as a result of the considerable public pressure that the employer faced.

While her subsequent lawsuit against her former employer wasn’t successful, it’s not clear whether she had any kind of morals clause in her employment agreement or not. What is certain is that a morals clause in employment contracts can make it easier for businesses to terminate an employee whose words or actions cause reputational – and financial – harm. 

Crafting a morals clause

It’s important to be clear about what types of things are in violation of a morals clause. However, you may not want to be too specific. Likely, you want to include any activity that’s illegal or that harms the public perception of the business and its profitability. 

It’s crucial to craft these clauses carefully so that they don’t infringe on employees’ right to free speech while still protecting your business if an employee’s words and/or actions threaten to cause it harm. Having sound legal guidance as you do this is essential.