Tipping the Scales: How “Reverse” Morals Clauses Can Give Influencers Real Power to Hold Brands Accountable

July 5, 2023Article

A contract provision could give influencers the power to escape a sponsorship with a company engulfed in bad PR.

In June 2020, women’s clothing retailer Anthropologie posted a Maya Angelou quote to its social media feed. The post, which the brand likely thought was innocuous, called for “equality and empathy” in the wake of the George Floyd killing. Instagram users scoffed at the perceived hypocrisy. In the comments, shoppers and former Anthropologie employees accused the brand of training managers to use codenames to identify black customers. Weighing in on the conversation, actress Emmy Rossum took to Twitter—she regretted having to wear so many of the retailer’s “stupid bralets.”

Seemingly absent from the conversation were Anthropologie’s paid influencers. The company, along with sister-brands Urban Outfitters, Free People, and Nuuly, all rely on influencer marketing. Yet none of these content creators called the brand owner to account for its allegedly racist policies.

While brands frequently require talent to abide by morals clauses in their agreements, influencer agreements rarely hold the corporations to the same standard. Influencers often lack the leverage to stand up to corporations they are paid to represent. But by negotiating for a contract term that has become popular among other celebrities—reverse morals clauses—influencers could gain tremendous power against brands they may wish to cut ties with or whose policies they wish to criticize.

What is a morals clause?

Traditionally, a morals clause is a contractual provision that gives a party a one-sided right to terminate the agreement if the other party engages in illegal or immoral conduct. These provisions are common in entertainment contracts and endorsement deals, the success of which often depend on the public’s favorable reaction to the celebrity. Scandals that tarnish a celebrity’s image can in turn harm the corporation’s reputation, and morals clauses provide an escape hatch.

These provisions have existed and been enforced by courts since the 1920s. Courts are often hesitant to enforce contracts that require interpretation of subjective terms—like the slippery subject of “morals”—but morals clauses nevertheless have a long history of being upheld. In 1921, when celebrity scandal was in its infancy, Universal Studios instituted a new policy by which all of its actors would be bound by morals clauses in their contracts. Universal had observed the impact that comedian Roscoe “Fatty” Arbuckle’s illegal activities had on Paramount Pictures, and wanted to avoid a similar fate. As Universal’s lawyers explained in a statement, these newly drawn “protective clause[s]” were to [be] inserted in all existing and future actors’, actresses’, and directors’ contracts with the company” as a “direct result of the Arbuckle case.”

Morals clauses and litigation around them also existed during the red scare in the 1940s and ’50s. The House Committee on Unamerican Activities held hearings and demanded testimony from writers, directors, and actors allegedly involved in communist activity. A group that became known as the “Hollywood Ten” refused to testify. Three members of the Hollywood Ten had their contracts terminated and filed lawsuits in response. All three lost. In each case, the Court upheld the enforcement of the morals clause, emphasizing the public nature of the employee’s transgressions. As one court explained: “a company might well continue indefinitely the employment of an actor whose private personal immorality is known to his employer” but would be “fully justified in discharging him” if he makes the “same misconduct notorious.”

The takeaway for others in Hollywood was crystal clear: morals clauses are enforceable in court, and a powerful weapon to control talent. Since then, morals clauses have become the norm in talent agreements in the entertainment industry. They have been used to terminate contracts against celebrities, including Gina Carano, Tiger Woods, Whoopi Goldberg, Kate Moss, Paula Dean, and Ryan Lochte, to name a few.

Reverse and Reciprocal Morals Clauses

In more recent years, talent has been able to negotiate for reverse or reciprocal morals clauses. These agreements flip the traditional morals clause on its head: instead of a brand firing an immoral celebrity, these new clauses allow a celebrity to escape a contract with an immoral brand owner. The first reverse morals clauses dates back to 1968 when singer and actor Pat Boone entered into a contract with Bill Cosby’s Tetragrammaton label. There, the parties agreed that Boone had the unilateral right to terminate the agreement if the label did anything to harm Boone’s religious image and reputation.

Later, in the wake of financial scandals in the 2000s, corporate fiscal irresponsibility led to public outcry, forcing talent to reconsider their relationship with financial institutions. For instance, in 2009, PGA golfer Vijay Singh signed an endorsement deal with Stanford Financial Group merely a month before allegations came out about the corporation’s involvement in an $8 million Ponzi scheme. Under the terms of the agreement, which did not have a reverse morals clause, Singh had to continue wearing the Stanford logo on his shirt and golf bag.

However, instances of celebrities actually using their power to reject corporate malfeasance are few and far between. Often, when faced with public outrage about a brand’s actions, celebrities look the other way and choose to defend the brand owner. In 2013, a Change.org petition circulated to request that Jay-Z withdraw from his partnership with Barneys over accusations that the store called the police on two black customers after they had made expensive purchases. In a statement, Jay-Z said “I am waiting on facts and the outcome of a meeting between community leaders and Barneys. Why am I being demonized, denounced and thrown on the cover of a newspaper for not speaking immediately?"

Influencers and Morals Clauses

Influencers are much more vulnerable to harm from a flagging reputation than other celebrities. While A-List celebrities often have a body of work behind their names, influencers make a living representing and recommending brands. They have a business interest in making sure that the brands are aligned with their values, and the values of their audiences. And unlike megawatt movie stars or superstar athletes, influencers can’t always hide behind a PR team and a formal statement to the press. Nor can they win back lost fans by winning a championship or starring in a great film. Their appeal is in their accessibility and likeability. They confront consumers daily via stories, call-in podcasts, “ask-me-anythings” and direct messaging. If fans no longer want to see an influencer’s content, even for a few days, the influencer’s career can be devastated.

“Micro” influencers—or those with under 100,000 followers—may be even more vulnerable to brand tarnishment. While these content creators may feel they lack the clout necessary to negotiate their sponsorship agreements, requesting a reciprocal or reverse morals clause is an easy way to exert greater control over their image. From the perspective of the brand, some industry experts argue that micro-influencers are the best bet for advertisers because they cost less to engage, and they tend to have much stronger engagement rates with their followers. Thus, influencers at this level should not assume they have no bargaining power.

Yesterday’s celebrity ambassadors interacted with consumers irregularly and only from a distance. But today, influencers confront audiences directly every day. Since creators have an independent business interest in keeping viewers watching, they can’t afford to settle for a company’s ill-advised attempts to engage with their audiences. Influencers should negotiate for reverse morals clauses. By giving their contracts teeth, influencers can harness the power of their audience and hold brand owners accountable.