Employment Agreements: When Your Star Employee Becomes Toxic

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.

Morality Clauses, Part II: The Family Law Edition

When couples divorce, often the most difficult part is how the children are affected by the process and the behavior of the divorcing parents.  No one wants someone else raising their children.  However, that can be a very harsh reality to face for divorced people with minor children. 

Previously in this space, we looked at employment contracts for executives and high visibility employees or representatives, and how a company can manage the risk of illegal or otherwise improper behavior of those key persons.  With some foresight, and smart contractual drafting, the company can protect itself from bad behavior through morality clauses.   

Surprisingly, this very same issue - guarding against the poor judgment of others - appears in many, many divorce cases, particularly when there are minor children and custody issues involved. These issues can have a profound impact on many people, regardless of social status, wealth, religion or any other demographic category.

Even the most amicable divorce matter can be psychologically and emotionally challenging at times.  More often than not, those challenges can become extreme when mixed with the financial pressures that divorcing couples also face.  Add to that the difficulty of navigating custody issues, and the parties’ differing perceptions of what is in the child’s best interest, and you have a powder keg waiting for ignition.  Eventually, more often than not, this issue explodes into conflict.

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