As film producer Harvey Weinstein’s crimes against women helped ignite the #MeToo movement and ultimately led to the collapse of his company, many organizations—particularly in entertainment, media, and sports—began rethinking how to reduce the risk of similar scandals. One increasingly common tool in employment contract negotiation is the morality clause, designed to limit reputational and financial damage stemming from employee misconduct.
A high-profile example came in December 2021, when CNN fired anchor Chris Cuomo following an internal investigation. The inquiry reportedly found that Cuomo had been more deeply involved in advising his brother, former New York governor Andrew Cuomo, during sexual harassment allegations than he had previously acknowledged.
According to reporting by the New York Post, Chris Cuomo was prepared to sue CNN if the network refused to pay the remainder of his four-year contract, estimated at $18–$20 million. CNN, however, had “no intention of paying Cuomo a penny,” a source told the paper, citing the network’s standard morality clause, which allows immediate termination if an employee engages in conduct that brings disrepute.
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What Is a Morality Clause?
A morality clause (also known as a morals clause) is a provision negotiated into an employment contract that requires an employee to meet certain behavioral standards throughout the life of the agreement. In practice, it functions as a form of contingent contract, a familiar tool for managing uncertainty by spelling out what happens if specific events occur.
Today, morality clauses are most commonly used for entertainers, executives, athletes, and other high-profile employees whose actions could expose an organization to significant financial or reputational harm. If the employee violates the clause, the organization may have the right to terminate the contract and stop paying compensation.
Because the stakes are high, morality clauses are often heavily negotiated. Writing in the Boston College Law Review, attorney Andrew Zarriello notes that employers typically push for broad language that covers criminal acts, unethical conduct, and even behavior that is merely embarrassing. By contrast, performers and their representatives often try to limit such clauses to clearly illegal behavior, as entertainment attorney Bob Tarantino has observed.
Clawing back from a scandal
One frustration organizations frequently encounter is that even when a morality clause is triggered, they may not be able to recover compensation already paid. This problem arises, for example, when an actor completes work on a film and is later accused of misconduct.
To address this risk, some organizations attempt to negotiate clawback provisions. A clawback requires an employee to return compensation previously paid if certain conditions are met, either under the contract or by law. In practice, however, clawbacks can be difficult to enforce.
As an alternative, Zarriello suggests negotiating a legally binding financial penalty for violating a morality clause. While still subject to legal scrutiny, such provisions may offer a more practical path than trying to reclaim past wages.
Reduce Risk Exposure in Employment Contract Negotiation
When negotiating employment contracts, organizations often focus heavily on compensation and overlook potential implementation problems. The following three strategies can help negotiators take a longer view.
- Prioritize learning over haggling. Before negotiating terms, invest time in getting to know candidates and investigating potential red flags. The information you uncover may influence whether to proceed at all or how broadly to draft a morality clause. In any contingent contract, stronger protections often come from reducing information asymmetries between the parties.
- Prepare for conflict. Disputes frequently arise over vague terms such as “moral turpitude” or “conduct unbecoming.” While contracts need not enumerate every possible scenario, they should include a clear dispute-resolution clause. Many parties agree to attempt mediation or arbitration in good faith before resorting to litigation.
- Diffuse your risk. Organizations can also limit exposure by reducing their reliance on any single individual. Zarriello suggests several approaches, including:
- Paying signing bonuses, in installments rather than upfront.
- Negotiating shorter contract terms with options to renew
- Structuring teams around multiple midlevel contributors rather than one highly compensated star
Each approach helps limit losses if a relationship must be terminated.
How have you approached morality clauses in employment contract negotiation?
Claim your FREE copy: Business Negotiation Strategies: How to Negotiate Better Business Deals
Discover step-by-step techniques for avoiding common business negotiation pitfalls when you download a copy of the FREE special report, Business Negotiation Strategies: How to Negotiate Better Business Deals, from the Program on Negotiation at Harvard Law School.
