Labor Logic

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John D. Finerty, Jr.

When Mel Gibson was arrested in Malibu, California for drunk driving, and went on an anti-Semitic tirade, studio executives in Hollywood likely cringed. Then, they undoubtedly pulled out their contracts with Gibson to read the fine print in the search for some clause that would let them out of the relationship. One possibility would be a “morals clause” that allows termination of a contract if an employee engages in morally offensive conduct or does something to damage the reputation of the employer.

Employees don’t like morals clauses because they are open to interpretation; thus, these clauses have fallen out of favor in Hollywood. They are, however, still standard fair in television, advertising and endorsement deals. For example, Chanel terminated its contract with Kate Moss when the model was photographed allegedly snorting cocaine; ABC terminated Michael Nader from the soap opera “All My Children” after a 2001 cocaine arrest.

The following are a few issues to consider when negotiating employment contracts, independent contractor, endorsement or advertising contracts, that contain a morals clause.

Contracts and Collective Bargaining Agreements

When ABC fired Michael Nader, he sued on a number of theories. His primary claim was breach of contract. Nader was also a union member covered by the Screen Actors’ Guild’s collective bargaining agreement.

Nader argued the morals clause in his contract was overly broad. In an unpublished decision, the Second Circuit held in Nader v. ABC Television, Inc., that “morals clauses have long been held valid and enforceable.” This is also the law in California. See Lowe’s, Inc. v. Cole, 185 F.2d 641 (9th Cir. 1950).

Disability Issue

Nader also sued ABC for disability discrimination under the Americans with Disabilities Act. This theory was two-fold: he was an alcoholic and thus disabled; and, he had previously sought treatment for drug and alcohol addiction and the ADA protected him as “disabled.”

These arguments were rejected. Others have tried the same arguments in Wisconsin courts and also lost. See Despears v. Milwaukee County, 63 F.3d 635 (7th Cir. 1995).

State Law Statutory Issues

Wisconsin law creates protections for employees that transcend and may invalidate contractual provisions to the contrary. For example, Wisconsin prohibits discrimination on the basis of the use or non-use of a lawful product. See Wis. Stat. Sec. 111.35.

The statute originally applied to protect cigarette smokers from discrimination in the workplace, but may also extend to those who drink beer or other alcohol on non-work time, provided they do not become impaired. Mel Gibson’s alcohol use may fall into this category; his anti-Semitic tirade and drunk driving offense, do not.

Wisconsin also prohibits discrimination on the basis of an arrest or conviction record. See Wis. Stats. Sec. 111.321. That is, an individual cannot be terminated or refused employment because he or she has been arrested or has a record of conviction. Employers may, however, terminate employment based on the underlying conduct of the employee without regard to whether or not the employee was arrested.

In Gibson’s case, his offensive conduct was the anti-Semitic remarks he made to the Los Angeles County Sheriff Deputy. Although he was arrested for drunk driving, news reports of the incident indicated his remarks are not the subject of criminal charges, nor was he arrested for them. The arrest records statute would, therefore, not apply.

Sample Contract Provision

The following is an example of a morals clause used in an employment contract in a published case. Employers considering such a clause, however, should be aware that most entertainment industry collective bargaining agreements prohibit such clauses and most lawyers representing employees object.

“The employee agrees to conduct himself with due regard to public conventions and morals, and agrees that he will not do or commit any act or thing that will tend to degrade him in society or bring him into public hatred, contempt, scorn or ridicule, or that will tend to shock, insult or offend the community or ridicule public morals or decency, or prejudice the producer or the motion picture, theatrical or radio industry in general.” See Noah B. Kressler, Using the Morals Clause in Talent Agreements: A Historical, Legal and Practical Guide, COL. J. OF LAW AND THE ARTS, 235, 236 (2005) (citing Lowe’s, Inc. v. Cole, 185 F.2d 641, 645 (9th Cir. 1950)).

For more information on this topic, contact John D. Finerty, Jr. at Michael Best & Friedrich LLP at (414) 225-8269 or on the Internet at JDFinerty@ michaelbest.com.