Since coming to the forefront in 2017, the #MeToo and #TimesUp movements have made an indelible mark on Hollywood and on Madison Avenue. My colleagues, James Johnston, Josh Gordon, and Samantha Rothaus wrote a timely piece about the impact in the latest edition of Trends in Marketing Communications Law, Davis & Gilbert’s annual publication surveying the law affecting marketers and their agencies. Though the long-term ramifications of these movements are still playing out, as my colleagues noted, one impact is clear. #MeToo has caused studios and agencies to revive old contractual provisions like the “morals clause” (in addition to popularizing the new “inclusion rider” provision).

Designed to protect a producer’s investment, a morals clause allows the producer to terminate the performer and recoup payment if the performer engages in scandalous, offensive or criminal behavior. It’s based on the premise that a performer’s salary is based on his or her ability to connect with audiences—and in the case of a celebrity endorser, create a positive association with the brand. That rationale is undone when performers engage in behavior that repulses those very audiences.

The inclusion of moral clauses in talent contracts has ebbed and flowed over the years, but as a result of the watershed #MeToo and #TimesUp movements, producers are now insisting on them for performers of every stature. In the event of unscrupulous behavior by a performer, a morals clause not only protects against a potential public relations backlash, it can also prevent the costly expense cost of reshooting projects midstream or, being forced to pay the performer. Kevin Spacey reportedly did not have a morals clause in his contract for House of Cards, forcing Netflix to pay his full fee for the final season even after removing him from the show. (Another project of his, the “Billionaire Boys Club,” did get released—and made a total of $126 on its opening weekend.)

The effectiveness of a morals clause depends greatly on how it is triggered. Relying on a criminal conviction or arrest as the trigger leaves producers exposed to substantial losses, since the criminal justice system can move at a slow pace and, as demonstrated by the #MeToo movement, obtaining an arrest or conviction can remain difficult even with multiple, credible accusations. Drafters of morals clauses will renew their focus on the actions themselves, the credible reporting of those actions and their immediate impact on a production.

In addition to their other benefits, the #MeToo and #TimesUp movements have strengthened the push for equality in pay and enhanced representation for women and other underrepresented groups in entertainment. The “inclusion rider,” which requires increased diversity in staffing cast and crew, is a more modern clause that attempts to address those concerns. Frances McDormand championed this concept in her 2018 Academy Award acceptance speech, resulting in many top stars calling for these riders and commitments by producers to honor their demands.

The Way I See It

  • Studios, networks, agencies and marketers are negotiating for stronger and broader morals clauses in talent contracts in the wake of the #MeToo revelations.
  • Given the financial stakes, negotiations over morals clauses will likely become more protracted.
  • Talent representatives are seeking inclusion riders in talent contracts that seek equal representation in staffing and casting for productions.