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.
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.
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 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.
When presented with a morality clause, talent should:
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[This blog post has been updated from a previous version, published October 13, 2021]