Morals Clauses in Contracts: What You Need To Know

What is a Morals Clause?

Written by Olivia Loftin

What is a Morals Clause?

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A morals clause generally grants employers the exclusive right to end a contract in the event an employee engages in behavior that may be harmful to the employer’s image.  Morals clauses are commonly found in employment agreements between companies and high-level executives, or throughout the entertainment industry in many different contexts (e.g., contracts between advertisers, television networks, motion picture studios or endorsees and talent).  A morals clause serves to protect a company’s investment by (1) deterring talent from engaging in bad behavior, and (2) allowing companies to separate themselves from talent engaged in bad behavior as quickly as possible (and sometimes allowing for return of their investment).  Additionally, morals clauses have become a common provision in publishing contracts for authors and illustrators.

HOW LONG HAVE COMPANIES USED MORALS CLAUSES?

The first morals clause dates back to 1921.  Universal Pictures began inserting moral clauses into their talent agreements after Roscoe “Fatty” Arbuckle – an actor signed to a rival studio – was subject to controversy.

Arbuckle was a popular comedic actor and had just signed a three-year deal with Paramount Studios.  In the Summer of 1921, Arbuckle hosted a party in his San Francisco hotel room.  Following the party, Virginia Rappe, a 26-year-old actress, was found seriously injured in Arbuckle’s room, and died several days later.  Arbuckle was accused of rape and manslaughter.  Although Arbuckle was eventually acquitted of the charges, Arbuckle’s reputation never recovered.  In direct response to this incident, attorneys who represented Universal Pictures stated, “[t]o protect our clients we have advised them to have a morality inserted in all contracts.”  Universal then began inserting the morals clauses into their agreements.

ARE MORALS CLAUSES ENFORCEABLE? 

Morals clauses are generally enforceable.  With today’s viral news culture, morals clauses have been enforced against many high-profile personalities.  For example, when news of Josh Duggar’s criminal sexual past came to light in May 2015, TLC suspended, and eventually cancelled, its highest rated show, “19 Kids and Counting.”  Similarly, athlete Adrian Peterson has been fighting his way back into the NFL ever since the league issued an indefinite suspension in November of 2014.  The once-heralded running back on the Minnesota Vikings entered a plea of no contest for misdemeanor reckless assault for allegedly hitting his young son with a tree branch.  Not only was Peterson released from the Vikings, but Wheaties, a former sponsor, removed all content related to Peterson from its website.

Other examples include the cancellation of Paula Deen’s cooking show after she made derogatory racial remarks, and the Livestrong Foundation severing ties with founder Lance Armstrong after it was discovered he used performance-enhancing drugs.  These public instances of enforcement highlight both the severe consequences for talent, as well as the importance of having a morality clause from a company’s perspective.  Where individuals have the potential to impact a company’s reputation and revenue stream, a company will seek protection against the impact of that person’s poor behavior.

More recently, after being subject to widespread condemnation following controversial statements, several companies, including Adidas and Balenciaga, severed ties with rapper Kanye West.  Although the language of these contracts remains private, celebrity endorsement deals almost always include some version of a morals clause.  It is likely that the companies that terminated deals with Kanye did so by exercising their rights in a morals clause included in Kanye’s agreements.

WHAT SHOULD TALENT KNOW ABOUT MORALS CLAUSES?

What a company considers immoral may vary on a case-by-case basis.  Generally, prohibited behavior can include illegal activity, sexual misconduct, controversial statements or any action that may threaten to injure the image or reputation of the hiring company, its trademarks or products.

Companies often favor morals clauses that cover broad, general behavior, making it easier for the company to split from talent it no longer desires to be associated with and potentially keep talent on the hook for seemingly small indiscretions.  For example, the NFL takes this approach in its standard player contract, which allows for termination if a player engages in conduct that the player’s team may reasonably interpret as adversely affecting or reflecting poorly on the team itself.

WHAT SHOULD TALENT DO?

When presented with a morality clause, talent should:

  1. Narrow the scope. As mentioned, the company will most likely include broad, wide-sweeping language to maintain flexibility in their favor.  Depending on the individual’s bargaining power, talent should negotiate for more specific language, so it is clear what behavior may trigger the company’s right to end the contract.
  2. Require proof. Generally, both parties stand to lose a great deal (financially and otherwise) in transactions where companies require a morality clause.  Talent should demand that the right to end the contract only be triggered by conduct with factual support, and should push to exclude triggering the termination right in instances of unsupported claims, false arrests and wrongful accusations.
  3. Seek mutuality. It is important to remember that talent has a brand to protect, too. In an ideal world, talent should be able to protect his or her brand from corporate conduct that threatens to injure their image or reputation, with a clear and one-sided right to end the agreement without fear of a revengeful lawsuit.
  4. Push for neutral third-party review. A company will most likely grant itself the exclusive right to determine whether the talent’s particular conduct violates the morality clause and triggers the termination right, leaving talent at a significant disadvantage.  Having a neutral third party review the facts, whether through arbitration or otherwise, will at the very least give talent an objective and fair resolution to the dispute at issue.

CONTACT ROMANO LAW

The experienced attorneys at Romano Law are ready to help.  Contact us to speak with a member of our team.

[This blog post has been updated from a previous version, published October 13, 2021]

Photo by Romain Dancre on Unsplash

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This Blog is made available by Romano Law PLLC for general informational and educational purposes only, not to provide specific legal advice. By using this Blog you understand that there is no attorney client relationship between you and Romano Law PLLC or any individual contributor. You should consult a licensed professional attorney for individual advice regarding your own situation.

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