In the #MeToo era, entertainment companies have incurred significant financial and reputational damage from alleged crimes and misbehavior by the producers, directors, executives, and actors they’ve employed.
Seeking new win-win negotiation skills and tools, organizations are increasingly using morality clauses to reduce the risk they face from possible allegations against their contract workers and employees. Notably, a morality clause is unlikely to motivate good behavior from serial predators. However, it can clarify what’s acceptable behavior to other employees and spur compliance. We take a closer look at morality clauses and other win-win negotiation skills and strategies that organizations can use to promote ethical behavior and reduce their risk exposure.
A morality clause, or morals clause, is a contract provision that an organization negotiates to require a prospective employee to adhere to certain behavioral standards during the life of the employee’s contract.
Organizations often ask entertainers, financial executives, athletes, and other individuals whose unanticipated behavior could expose it to significant financial loss to sign a morality clause. If the person fails to live up to specified standards, the company has the right to nullify the contract, end the business relationship, and cease paying the individual.
Win-Win Negotiation Skills to Ward off Bad Behavior
Given the high financial stakes involved, morality clauses often are heavily negotiated, writes attorney Andrew Zarriello in a 2015 article in the Boston College Law Review. While still striving for mutual gain, employers and job candidates most typically bargain over how broad or narrow the list of prohibited behaviors should be.
The hiring organization commonly has incentives to negotiate language giving it the authority to fire an artist for a broad spectrum of undesirable behaviors, ranging from the criminal to the unethical to the merely embarrassing. Hollywood talent agents generally try to negotiate for language that prohibits only clearly illegal behavior, such as being “charged with or convicted of an offense [involving moral turpitude] under federal, state, or local laws or ordinances,” writes attorney Bob Tarantino on the Entertainment & Media Law Signal blog.
3 Win-Win Negotiation Skills
The following three win-win negotiation skills, framed in the context of employment contracts, can help us ward off worst-case scenarios in many types of deals.
1. Prioritize learning over haggling. “When attorneys focus on who owes what to whom in every imaginable worst-case scenario, they cast a pall on even the most promising deals,” Harvard Business School professor Michael Wheeler has written in the Program on Negotiation newsletter Negotiation Briefings. “When you bargain too hard in the pursuit of self-interest, the relationship may be doomed from the start.”
Wheeler encourages us to look at the process of negotiating terms and conditions as “one of mutual learning in which parties anticipate problems before resources are wasted or tempers flare.” For hiring organizations, that means taking time to get to know job candidates and investigating red flags before negotiating contract terms. The information you acquire might lead you to decide not to hire someone or to demand a broad morality clause as part of win-win bargaining.
2. Prepare for conflict. When conflicts arise between parties to a contract, often it’s because they interpret vague terms, such as “moral turpitude,” differently. That doesn’t mean you need to pay your lawyers to spell out every possible scenario, but it does mean you should include a dispute resolution clause in your contract—a proven win-win scenario. For example, parties might promise to make a good-faith effort to resolve any dispute that arises through mediation or arbitration before filing a lawsuit.
3. Diffuse your risk. You can also try to minimize fallout from a counterpart’s unanticipated behavior by reducing your financial reliance on him or her. Zarriello proposes several ways to do so in the context of employment contracts. First, rather than offering an employee a large signing bonus, negotiate to pay it over time; as part of your win-win negotiation, you might also offer financial incentives to motivate good performance through the life of the contract. Second, you can negotiate shorter employment contracts and the right to renegotiate them. Third, in some contexts, rather than pursuing a small number of top candidates, it might be preferable to negotiate deals with multiple midlevel candidates to reduce the risk of a single large loss.
What other win-win negotiation skills have you identified in your employment negotiations and beyond?