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Oct. 19 — Billy Bush exited his post as a co-host of NBC’s “Today” show earlier this week after a video was released of him egging on a lewd conversation with Donald Trump in 2005. Olympic swimmer Ryan Lochte lost sponsorship deals after it came to light that an incident in which he initially described as being robbed at gunpoint was actually a cover for him vandalizing a gas station restroom.
When people in high-profile positions do something embarrassing, it can affect their employer. Companies that enter into employment or sponsorship contracts with someone because of his or her celebrity should consider including a morality clause so they can quickly cut ties if things go bad, attorneys told Bloomberg BNA.
Morality clauses, which are also known as morals clauses, are designed to protect an employer’s reputation and bottom line, Nancy Gray, a Los Angeles attorney who has represented both performers and production companies in litigating morality clauses, told Bloomberg BNA. “It’s a question of whether we want this person associated with our brand,” she said.
A review of employment agreements in Bloomberg Law’s database of corporate contracts shows morals clauses tend to call for conduct in line with good morals. Behavior outside this standard is cause for termination.
“The idea is actions that bring the individual or the entity into disrepute” can be costly and hurt a company's reputation, Marc Engel told Bloomberg BNA. Engel represents employers as a principal at Lerch, Early & Brewer in Bethesda, Md., and has negotiated and litigated morality clauses as co-chairman of the firm’s labor and employment group.
In Billy Bush’s case, the company faced extra pressure because of his role as host of a news program, Gray said. NBC probably questioned whether Bush could still be seen as a newscaster with integrity, she said.
Just like other aspects of contract negotiation, the specific contours of a morality clause or other components of an employment agreement can vary depending on the bargaining power of the parties involved, Engel said. A low-ranking worker who doesn’t command much publicity is more likely to be an at-will employee, so firing such an employee is easier. Nevertheless, companies tend to prefer standard morals clauses so that no one can claim different treatment, Engel said.
On the other hand, when someone is hired in part because of his celebrity, or if it’s anticipated that his public image and the company’s will be intertwined, it’s a good practice for the company to spell out terms in the employment agreement, such as whether the talent may appear publicly, or steps that should be taken to ward off the impression that he is representing the company.
Terms like these also exist in executive employment agreements, Engel said, for company heads whose public persona is intertwined with the businesses they lead. Remember American Apparel Inc. ex-CEO Dov Charney? A pileup of sexual harassment allegations led the board to dismiss him in 2014 from the company he founded 25 years earlier. A Bloomberg Businessweek cover at the time proclaimed Charney “the sleaze king.”
With Bush, it might not even have mattered whether there was a morality clause.
“A morality clause will do it,” but laws against workplace sexual harassment also justified Bush’s termination, Nancy Erika Smith, a partner at Smith Mullin P.C. in Montclair, N.J., told Bloomberg BNA. Smith represented former Fox News anchor Gretchen Carlson, who in September settled a sexual harassment lawsuit against then-CEO Roger Ailes for $20 million.
Bush “was at work. It’s not a locker room,” Smith told Bloomberg BNA. “Clearly he’s a liability to the company for sexual harassment and creating a hostile work environment for women.” The incident occurred in the context of Bush’s job as a host for Access Hollywood.
A company has to be concerned about an employee participating “actively in creating a hostile work environment for women and those who respect women,” Smith said.
“Any employer can fire a person who does this, and it should,” Smith said. Employers have a duty to respond proactively to sexual harassment, she said.
“This isn’t just going along” with Trump’s lewd talk, Smith said. “This is participating actively in creating a hostile work environment for women. You can and should be fired for that,” she said.
In the video, Bush joins Trump as they discuss leering at a woman. As they emerge from a bus, he encourages the woman to hug Trump, then him. As they walk off together, Bush repositions them so she is in the middle, arm in arm with the two men.
If they didn’t fire Bush, “women who have been in that workplace are going to have lots of evidence that the company knew that he creates a hostile work environment,” Smith said. That would expose NBC to liability for sexual harassment, she said.
To contact the reporter on this story: Jon Steingart in Washington at firstname.lastname@example.org
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