The Facts on Lifestyle Clauses and Liability

Lifestyle clauses, or personal rights clauses, are increasingly viewed as an important tool when trying to limit liability and build a solid corporate reputation. However, critics point to privacy concerns and the potential for discrimination. Wondering what the bottom line is in regard to lifestyle clauses? The following may help you understand this complex topic:

What Is a Lifestyle Clause?

A lifestyle clause is one type of contractual agreement typically used in conjunction with an employment agreement or offer for key positions. High-profile personalities, critical management positions and others who may have a direct impact may be asked to sign a lifestyle clause, stipulating grounds for dismissal or other actions based upon outside conduct.

Why Include a Lifestyle Clause?

A lifestyle clause can provide an additional layer of protection for a business that deals with celebrities, requires a high level of security clearance or relies upon a trustworthy reputation for a significant portion of its business. Unfortunately, an improperly drafted lifestyle clause may actually increase liability, so it is imperative to work closely with both a trusted legal advisor and insurance agent.

What Are the Limits of a Lifestyle Clause?

Lifestyle clauses can’t include any provision that is illegal or violates the rights of an employee. Issues dealing with religion or sexual orientation would be off limits, while those dealing with criminal conduct, drug use or even appearance may be fair game. Remember, it’s imperative to consult with legal and insurance representation when considering inclusion of a lifestyle clause.