Morals Clauses in Employment Contracts and Employee Handbooks: Should an Employer Require One

With the recent highly publicized terminations and resignations of celebrities, broadcasters, politicians and other public figures for alleged sexual harassment, employers should seriously consider adding a "morals clause" to their key executive's Employment Contracts and or consider adding a "morals clause" to Employee Handbooks.

A well-drafted morals clause in an Employment Contract allows your company to take disciplinary action, up to and including immediate discharge, when the clause has been breached. A morals clause not only protects your company's public image but also trumpets your high ethical standards to your customers. Morals clauses can apply not only to immoral behavior at work, but also personal non-work related immoral behavior. For example, a clause which requires the employee to "avoid the appearances of impropriety" could be grounds for discipline without the employer's need to show or prove actual immoral conduct.

Employee Handbook morals clauses apply to all employees, not just key executives. With employer-bashing social media (e.g., Twitter, Facebook and Instagram) increasingly popular, Employee Handbook morals clauses provides the segue for the employer to discipline any employee when his or her social media conduct reflects poorly upon the company's reputation, status, or brand.

Recent case law shows that courts will generally enforce an Employee Handbook morals clause if the morals clause is specific, limited, and does not infringe on an employee's civil rights such as the right to free speech or the right to religious freedom.

The employer's takeaway? If your company's name and good reputation is important to your business success, consider adding a morals clause for key employees or to your Employee Handbook. If you have any questions about a suitable morals clause, reach out to Gordon L. Osaka, Attorney at Law, P.C.