It used to be that “morals clauses” were for well-known people like actors, newscasters, athletes or others whose atrocious behavior in their personal life could potentially cost their employer millions of dollars in lost income. These days, the Internet can make anyone internationally known – for better or worse – within hours or less.
Certainly, a homophobic tweet or post by a company’s CEO can be more detrimental to a company than a video of someone in their accounting department calling the police on a child they think doesn’t “belong” in their neighborhood. The company, however, may well be expected to address either issue – and lose business if they don’t do so to people’s satisfaction.
As an employer, can you legally include a morals clause of some type in your employment contracts? You can, but you need to be sure they’re properly worded and consistently enforced. You don’t want to be policing your employees’ (even your partners’ and executives’) behavior when they’re just out there living their lives. However, if they do something on their own time that brings disgrace and financial harm to the company, you need to have a right to act.
What should be included in a morals clause?
The best way to begin may be to think about what kind of behavior or associations would be considered unacceptable to your company – and your customers. Rather than listing specific violations, you might simply say that any activity that causes financial harm to the company can be cause for termination.
It’s crucial to list potential consequences for violating the cause. In addition to termination (possibly without severance), you may want to give yourself the right to seek compensatory damages.
Many businesses include these clauses only in partner or executive contracts. However, as we noted, any employee can “go viral,” and it doesn’t take long for online sleuths to find out who their employer is. You likely recall the incident from several years ago when a white woman was filmed calling the police on a black man watching birds who asked her to leash her dog in the park. Within days, she was fired by her employer – a well-known investment firm. She sued them, but lost the suit.
With sound legal guidance, you can craft a morals clause (and other terms of employment) that fit your needs and are enforceable without infringing on your employees’ rights.