Sometimes, a company’s star employee (or CEO or Head Coach) can be an inspirational force within an organization. Those key employees can drive a company’s sales performance to new heights and increase profitability. The company may want to reward those star employees with expensive long term contracts. That is all fine and well as long as the company goes into those negotiations with open eyes.
What if your star employee (or CEO or Head Coach) is revealed to have written emails or social media posts that by any rational definition are racist or misogynist? What if that star employee’s personal conduct is so far beyond any rational boundary of decency that the company has no realistic choice but to terminate the employee? Hopefully, the company has received good legal advice at the time the employment agreement was negotiated, and there is a morality clause in the agreement.
Most employment agreements address the circumstances in which the agreement may be terminated by the employer. Those provisions are usually negotiated with specificity if the parties to the agreement are experienced businesspeople. However, it is a surprise how many times an employment agreement comes across my desk where there is no morality clause. This may mean that an employer has to buy out the remaining payments on the contract while the former employee sits at home and collects his or her money. Clearly, less than an ideal outcome.
What is a morality clause? Simply put, a morality clause is language in an employment agreement which allows the employer to terminate the agreement if the employee engages in conduct which the company has defined to be morally objectionable. Often, this provision contains some specific examples of conduct (i.e. indictment of a crime of financial dishonesty, lewd acts, etc.).
In a previous post (which is the #1 most read post on this blog) I wrote about this topic in depth. Click here to read the original post. As an employer, you will be glad you did. For more details, email me.