From stealing to kneeling, what do NFL player contracts say about “bad” behavior?

From stealing to kneeling, what do NFL player contracts say about “bad” behavior?

Three times each year, two professional American football teams journey across the pond to play against each other in the NFL London Games. This weekend however, four players from the Jacksonville Jaguars made headlines for something they did off the field. They were arrested under suspicion of fraud by false representation for attempting to leave a nightclub without paying the £50,000 ($64,000) bar tab.

According to ProFootball Talk, expensive bottles of champagne and vodka were sent to the players’ table. They thought someone else was paying, and were surprised to learn that they were expected to pay. The bill was settled hours after the arrest, and the players were released with no further action taken by police. “There was definitely a misunderstanding,” said Barry Church, one of the players arrested. “We handled it as a private matter within the team, and we’ll just go from there.”

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Despite their fame and talent, at the end of the day, professional athletes are capable of making mistakes just like the rest of us. But unlike the rest of us, sports stars are often contractually obligated to maintain a positive reputation.

The NFL has had a formal policy addressing off-field conduct since 1997. The current 2014 Personal Conduct Policy prohibits physical violence, illegal possession of a gun or drugs, and cruelty to animals – remember Michael Vick and his dogfightingBut the policy also prohibits anything “that undermines or puts at risk the integrity of and public confidence in the NFL.” Even if a player’s conduct does not result in a criminal conviction, the NFL can impose fines, suspension, or even banishment from the league.

In addition to the NFL Policy, individual player contracts also contain “morality clauses.” Also known as a “moral turpitude clause” or “bad boy clause”, this permits an employer to end the contractual relationship if the employee’s conduct breaches the moral expectations laid out in the employment or endorsement agreement. For my overview of the history and use of morality clauses more generally, see Morality Clauses in Talent Contracts.

The 2012 contract between Arian Foster (“Player”) and the Houston Texans (“Club”) is available online thanks to a (fascinating) IPO filing with the Securities and Exchange Commission. Clauses regarding Foster’s behaviour and conduct included:

  • Player agrees to give his best efforts and loyalty to the Club, and to conduct himself on and off the field with appropriate recognition of the fact that the success of professional football depends largely on public respect for and approval of those associated with the game. 
  • If at any time, in the sole judgement of Club, Player has engaged in personal conduct reasonably judged by Club to adversely affect or reflect on Club, then Club may terminate this contract.
  • Player recognizes the detriment to the League and professional football that would result from impairment of public confidence in the integrity and good character of NFL players.

“Meaning Transference” and marketing magic

You might be wondering why a football team should care about the off-field behaviour of its players. As long as the guy can run the ball or block a tackle, who cares if he’s arrested for trying to skip out on a bar tab. Right? Wrong.

Consider for a moment the amount of money teams and companies invest in employment contracts and endorsement agreements. By way of example, Russell Wilson earned $2 million during his first three seasons with the Seattle Seahawks. In 2015, the Hawks rewarded their quarterback with a renewed contract worth nearly $90 million. Wilson also gets $10 million a year from his deals with Bose, Nike, and Alaska Airlines. On the other side of the country, the New York Giants’ wide receiver Odell Beckham Jr is earning about $10 million over four years. But the real kicker is that Nike recently signed him for the biggest shoe endorsement ever, worth $25 million over five years.

CFO
“Seattle’s hometown airline” Alaska Airlines “couldn’t be more proud of Seattle’s football hero, Russell Wilson.” Thanks to Wilson’s impressive skill and wholesome image, they even made him their CFO! Chief Football Officer, that is.

Meaning Transference is a social theory which posits consumers “transfer” the perceived ideals, credibility and reputation of celebrities to the associated product or service being sold (Grant McCracken). Because negative perceptions can also transfer, a company will want to distance themselves if a celebrity behaves badly. Essentially, morality clauses protect the team or company’s public image from the athlete’s potential scandals. In practice, this could mean suspending or terminating the contract, which could cost the athlete thousands – or potentially millions – of dollars.

The crux of any morality clause is how the “bad behaviour” is defined. Does a player kneeling during the American national anthem adversely affect the image of the NFL?

Given today’s heated political climate, it’s no surprise that professional athletes are increasingly voicing – or otherwise demonstrating – their opinions on social issues. In 2016, Colin Kaepernick of the San Fransisco 49’s started the trend of protesting police brutality and racial inequality, by kneeling during the national anthem at the start of games. Other players soon joined in, much to the ire of many football fans and prominent figures, including President Trump. That same year, Kaepernick was deemed the most hated player in the NFL.

Speaking to The Washington Postconstitutional law Professor Fred Smith Jr. described the anthem debate as a “clash of values which has become a very fraught issue in the American political imagination.” The NFL reacted to the situation by announcing a new policy in May of this year: players must either stand for the national anthem on the field or wait in the locker room. The policy was then shut down by the NFL’s labour union (NFLPA) only two months later.

As the NFL and the NFLPA continue to negotiate, “no new rules relating to the anthem will be issued or enforced”. However, introduction of the new rules in the first place demonstrates that the NFL is at least attempting to mitigate the perception that it is an unpatriotic organisation. It could be argued that from the NFL’s perspective, it is the result of the public’s perception that matters, and not the conduct itself. 

In spite of the furor and uproar, Nike made a risky decision in September to feature Colin Kaepernick in an advertising campaign. Despite some backlash and boycotts, the move paid off handsomely overall: Nike received valuable free publicity, and online sales and stock price skyrocketed. In this way, Kaepernick’s kneeling is both detrimental to one organisation (the NFL), as well as highly profitable for another (Nike).

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Nike released a controversial commercial featuring Colin Kaepernick, which hints at the embroilment over NFL players kneeling during the American national anthem.

Ultimately, it is critical to understand that morality clauses attempt to regulate something that is continually in flux. Opponents of morality clauses worry that the definition of what constitutes “immoral” or damaging activity could be too broad and subject to abuse by the employer. Smart sports stars and their lawyers will therefore do well to ensure that morality clauses are carefully negotiated and written precisely in order to protect their position – and their paycheques.

NDAs and the Sound of Silence

NDAs and the Sound of Silence

“When truth is replaced by silence, the silence is a lie.” 
Yevgeny Yevtushenko

The #MeToo movement has brought Non-Disclosure Agreements (NDAs) as a way to silence allegations of sexual harassment into the public debate.  In light of controversies surrounding Donald Trump, Harvey Weinstein and now – Sir Philip Green, the billionaire retailer whose brands include Topshop – much has been discussed about the legality and morality of using NDAs to prevent publicity or otherwise cover up  bad behaviour.

But like any legal document, NDAs are not inherently “good” or “bad”. They are simply a tool, regularly used by lawyers in many contexts. To understand why they have become controversial, and to contribute to the debate concerning their use and abuse, we must first consider their structure and purpose.

NDAs, which are also called Confidentiality Agreements, are simply a type of contract used to prevent someone from sharing confidential information in ways which are unacceptable or damaging to another person. What information is considered “confidential” depends very much on the situation, as well as the relationship between the person providing the information (“discloser“) and the person receiving it (“recipient“).

Use of the word “confidential” to mean “intended to be treated as private” dates from the 1770s, and has its roots in the Latin word confidentia. This means “firmly trusting,” and is itself derived from confidere, which means “to have full trust or reliance.” 

Confidential information is often shared for a business purpose or in corporate negotiations, especially when mergers or collaborations occur. For example, a restaurant chain looking for a deal with a food manufacturer may want to share recipes, or a fashion designer may seek a partnership with a well-known athlete who has sketches and drawings of a sports-inspired clothing range. Likewise, when a company hires a new employee, they may be given access to company client lists, manufacturing processes or other valuable data.

The basic anatomy of the NDA is relatively straight forward, and should always contain the following elements:

  • A clear definition of the confidential information.
    These are often heavily negotiated clauses, and it is usual to have very wordy and detailed definitions which set out explicitly what is and is not captured by the agreement. Sometimes, even the NDA itself is considered “confidential information,” which means that its terms or existence must be kept secret.The discloser will often want a broad definition of confidential information which covers not only the documents or products in question, but perhaps any derivative ideas, feedback, analysis or concepts created or inspired by the confidential information. On the other hand, the receiving party will want to keep this definition as narrow as possible.

 

  • The key obligation to keep the information secret.
    Standard wording will typically begin as follows: “In return for the discloser making confidential information available to the recipient, the recipient promises to the discloser that it shall keep the confidential information secret and confidential.”However, the obligation clause almost always contains many more rules and responsibilities. For example, the recipient may be prohibited from even indirectly sharing or hinting at the confidential information. They may also be prohibited from making copies, removing the information from a particular location, or storing it on their personal smartphone.

 

  • The ways in which the information can be used.
    The recipient will be prohibited from using or exploiting the confidential information except for the “purpose.” The purpose is the defined reason the information will be shared in the first place, for example, “to establish a collaboration in respect of the Tommy Hilfiger x Lewis Hamilton fashion line.”Disclosures of the information by the recipient to their employees and professional advisers (including lawyers and accountants) are usually permitted. In such cases, the discloser may ask that all individuals who receive the confidential information from the recipient sign a separate confidentiality agreement. While some may consider this a bit over the top, it makes sense from the discloser’s perspective that the receiver should take responsibility if its employees or advisers breach confidentiality.

 

  • What happens if the project or deal does not go ahead, and the duration of the secrecy.
    The discloser will often ask that the receiver returns or destroys the confidential information if the project or transaction fails to materialise. The parties should also establish a realistic time period for the duration of the secrecy, as it may be unreasonable to expect that the information has to remain confidential for eternity.
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Lilly Panholzer for City finds it is easy to silence women with NDAs

Seems simple enough, so what’s all the fuss about?

As mentioned above, NDAs are incredibly common and used in a wide variety of situations, ranging from complex corporate takeovers to short-term collaborations. But despite their ubiquitous nature and seemingly straightforward terms, it would be a mistake to assume that these are simple contracts. 

It is rare for the parties entering the agreement to have perfectly equal bargaining power. Due to an imbalance of money, expertise, resources or even reputation, one of the parties involved will almost always be able to exert more influence over the other. This inherent imbalance can lead to the creation of NDAs which grant – or limit – rights in an unfair or improper way.

Entrepreneurs may think that an NDA adequately protects their valuable information when it is divulged to a potential investor. But unless the definitions and obligations are sufficiently locked down, little may prevent the investor from stealing the entrepreneur’s ideas.

Similarly, some unscrupulous companies may attempt to force their employees to enter into NDAs in an attempt to prevent whistleblowing or discrimination lawsuits. Matters can become very complex when an individual who has a grievance against a powerful boss is threatened with dismissal or further harassment, unless they sign an NDA. Moreover, a new common extension of NDAs is the inclusion of a “non-disparagement” clause. This goes beyond the protection of confidential information, and requires employees to never speak negatively about their employer or former employer.

In both the United States and the United Kingdom, lawmakers and courts have begun to establish clearer boundaries about the enforceable scope of NDAs. In the court of public opinion, powerful individuals who weaponise NDAs in an attempt to stifle access to justice, impair free speech and limit creativity are already losing. Regardless of the reason for entering a NDA, you owe it to yourself to ensure the document is checked first by a lawyer, and that your rights – and remedies – are adequately protected. 

 

For creatives in California, a recent employment law case may raise concerns over copyright ownership

For creatives in California, a recent employment law case may raise concerns over copyright ownership

This story was first published for the 1709 Blog, where I regularly write about copyright law in entertainment, technology and media. 

A California court ruling from April has raised concerns regarding its potential impact on copyright ownership. In Dynamex Operations West, Inc. v. Superior Court of Los Angelesthe matter before the court was a wage dispute, which required the court to consider the standard to apply in determining whether workers should be classified as employees, or as independent contractors.

Nowhere in the 85-page judgement is “copyright” or even “intellectual property” mentioned. However, in a state with so many media and software companies, the new ruling could affect whether a creator or a company gets to claim ownership as the original author of a work. In deciding if a worker is eligible for statutory employment protections, Dynamex replaced a complex multi-factor consideration with a simple three-part “ABC” test. Now, Californian companies are burdened with the requirement to prove that all three parts weigh against an employment relationship.

What does this mean for copyright law? The rise of the gig economy, which is characterised by short-term contracts and freelance work, poses new questions for intellectual property ownership. To determine if someone is an employee for purposes of copyright authorship, American Federal courts currently use a test in the US Treasury Department’s Internal Revenue Service code.

If, however, the courts start looking to the Dynamex case for guidance, people’s expectations might change. Speaking to Bloomberg Law, music industry lawyer Michael S. Poster explained: “If, under California law, a lot more people are going to be treated as employees rather than as independent contractors, chances are that a lot of their work product that they would have retained a copyright interest in might belong to their employer.”

Although the Copyright Act of 1976 provides authors with initial copyright interests, under the work-made-for-hire doctrine, it is the employer that is considered to be the author. (Section 201(b)). On the other hand, if the author is an independent contractor or freelancer – rather than an employee – ownership is retained by the individual creator, unless there is a contractual agreement to the contrary.

For participants in the gig economy, the Dynamex ruling could simply prompt media and software companies to hire fewer independent contractors, and instead only hire people as employees. Although the copyright implications of Dynamex are unknown, the decision underscores the need for employers and workers alike to ensure that any contract for services includes a carefully drafted intellectual property rights clause – especially for those in creative industries.

Lights, camera, data protection.

Lights, camera, data protection.

Cannes: movie stars, auteurs, glamour, the French Riviera, and… data privacy?

Before the cameras start rolling, a film production company will need to agree service contracts for cast and crew.  In honour of the Cannes Film Festival happening this week, let’s consider how data protection issues need to be addressed for an actor’s contract.

A standard Actor’s agreement will cover payment, travel and residence allowances, box office bonuses, and of course, intellectual property.  But if the production company intends to process a significant amount of personal data about the Actor – such as dates and locations of filming, and details of travel arrangements and accommodation –  the agreement should also contain a data protection clause.  Remember that “processing” is widely defined, and covers any activity involving personal data, including storing, sharing, or reading.

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The Cannes 2018 poster, featuring an image from Jean-Luc Godard’s 1965 film “Pierrot le Fou.”

“The Actor agrees and hereby give her consent to the holding and processing of personal data relating to the Actor in any form, whether obtained or held in writing, electronically or otherwise, by the Producer.”

The above clause may be acceptable under the UK Data Protection Act 1998, but is problematic under the incoming General Data Protection Regulation (GDPR).

Consent. As worded above, the Actor is providing the Producer with blanket consent to process her personal data.  Under the GDPR, consent means “freely given, specific, informed and unambiguous indication of the data subject’s wishes by which he or she, by a statement or by a clear affirmative action, signifies agreement to the processing of personal data relating to him or her” (Art. 4(11)).

Given that this is a contract between a prospective employee and her boss, there is an imbalance of power between the parties. Accordingly, the Actor’s consent statement is unlikely to be considered “freely given” as is required under the GDPR.  Furthermore, personal data processing should neither be disguised nor bundled with the provision of a contract (Art 7(4)).

Even in other contexts, it would be unwise to rely on the Actor’s consent for processing, as this can cause difficulties if consent is withdrawn at a later date.  It is therefore advisable to rely on another lawful basis.

Another lawful basis? “Lawful basis” is just another way of saying “reason to do something.” Consent is just one of the six lawful bases permitted (Art. 6 GDPR). As the conditions for consent are very strict and unlikely to be met in this scenario, the Producers should consider their other options:

  • Contract: Processing is necessary for a contract with the person. Employment contracts are certainly applicable in this instance: for example, the Producers must process the Actor’s bank details to pay her.
  • Legal obligation: Processing is necessary for the Producers to comply with the law. This could include their tax obligations for HMRC, or complying with money laundering regulations.
  • Legitimate interests: The Producers must process the data for their legitimate interests. This could include business purposes such as sending out publicity emails with the Actor’s name and contact details, posting her image on social media, and so on. This is the most flexible basis to rely upon, but requires the Producers to demonstrate (inter alia) that their objectives are not unreasonable, and do not harm the Actor’s human rights (Recital 47).
  • The other lawful bases of protecting vital interests and carrying out a public task are not applicable in our scenario, but worth noting for completeness.

To be GDPR compliant, the clause could be amended to something like:

The Producers will collect and process the Actor‘s personal data in accordance with the Privacy Notice annexed to this Agreement. The Actor will sign and date the Privacy Notice and return it to the Executive Producer within 10 days of signing this Agreement.

The purpose of the Policy Notice is to provide the ActorActor with the information she is entitled to receive as a data subject (Articles 13 and 14). The Privacy Notice, likely to take the form of a letter, will explain how the Producer obtains, uses, and retains the Actor’s personal data. It will also set out the relevant lawful bases for each type of processing, and explain how the Actor can exercise her rights (Articles 15 through 22 inclusive).

Of course, the work doesn’t end once the agreement is signed. The Producers will need to make sure anyone who handles personal data within their organisation understands the new requirements under the GDPR. Having clear policies is only part of the story: those policies will need to be followed.

It’s a common misconception that the GDPR is just about IT security and marketing emails filling up your inbox. In reality, the legislation will provide enhanced rights for data subjects, and it’s important to remember that employees are data subjects too.

The price of talent: new California law seeks to address gender pay gap

The price of talent: new California law seeks to address gender pay gap

“I knew I was being paid less and I still agreed to do American Hustle because the option comes down to do it, or don’t do it. So you just have to decide if it’s worth it for you. It doesn’t mean I liked it.” — Amy Adams

From January 2018, employers in California will be prohibited from asking job applicants about their previous pay.  Guidance for the new Labor Code 432.3 states “closing the wage gap starts with barring employers from asking questions about salary history, so that previous salary discrimination is not perpetuated.” If asked to do so, employers must also provide the “pay scale” for the position being filled. The Code does not prohibit applicants from volunteering their salary history, nor does it prohibit an employer from using that information to determine their offer.

How does this compare with equal pay laws in England? Before the Equal Pay Act 1970 and Sex Discrimination Act 1975, businesses did not hide the fact that men and women who performed the same job could be paid different wages, or that certain lower-paid jobs were explicitly reserved for women. The current legislation, the Equality Act 2010, states that men and women should receive equal pay for equal work, as prescribed by Article 157 of the Treaty on the Functioning of the European Union.

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