The recent flurry of scandals in professional sports, particularly those from the NFL that dominated headlines in recent weeks, are not without their counterparts in the college ranks. Indeed, in the past year there have been an increasing number of controversies involving college coaches, which in turn have led to terminations and wrongful termination lawsuits. These lawsuits have exposed some poorly drafted "for cause" termination and morals clauses that have forced the schools to litigate and, at times, left them on the hook for some or all of the remaining contract.
Over the past few years, college coaches, particularly the successful ones, have demanded longer and more lucrative contracts. As the highest paid college football coach, Alabama's Nick Saban will make more than $6.9 million per year for the next eight years. Issues arise when a successful program struggles to win (the seat of Brady Hoke, head coach of Michigan's football team, seems to be the hottest right now...) or, as is the case of recent lawsuits, incidents occur that are unrelated to the team's success which leads to the employer (university or college) to terminate the contract.
For example, after an investigation which led to findings that a former head basketball coach at a smaller college verbally abused his players, assistant coaches, and employees, the institution terminated the coach's contract. The findings of the investigation were particularly disturbing and included one instance where the coach told a player to "go stand in the middle of the street and get hit by a car." At the time of termination, the coach had three years left on his contract and was reportedly going to be paid nearly $1.2 million. Unfortunately, the coach's contract failed to include a "for cause" termination clause that would have allowed the college to terminate him for this type of behavior. As such, when the coach threatened a wrongful termination and breach of contract lawsuit, the college was forced to pay a sizable settlement.
The small college is not alone. A North Carolina university recently ran into similar difficulties after its now former head football coach was arrested for the second time in 16 months for violating a domestic violence protective order. After the coach was found not guilty of the criminal charges, he filed a wrongful termination suit against the school. Fortunately for the university, a judge recently dismissed the case and found that, even though the coach was not ultimately found guilty, the school was justified to terminate the coach under the morals clause in his contract.
In addition to attempting to protect themselves by trying to reduce the number of years and the guaranteed money of coach contracts, institutions should carefully examine the breadth of their "for cause" termination and morals clauses and consider broadening them to protect themselves from similar "off-the-field" incidents. This review should extend not only to head coaches (who in the realm of major college football and basketball have significant bargaining leverage based on pressures to build and maintain winning programs), but also to assistant coaches and other athletic department staff. Emphasizing the point that all coaching contracts need careful review and not simply head coach contracts, on September 26, 2014, a former assistant football coach at a Florida university filed a lawsuit against the school for, among other things, wrongful termination.
The world of professional and major college sports can often serve as an interesting parallel for what is occurring in the commercial business world and culturally within our population. These recent examples in coaching contracts and issues faced by colleges and universities has clear parallels to what companies may be experiencing with their executives. We suspect that colleges and universities are learning valuable lessons by the lawsuits created through less than clear contract language in their coaching contracts, and employers can look to these situations for similar lessons with respect to their executive employment agreements. Strong "for cause" termination and potentially "morals clause" language are key components of an executive agreement, and it is definitely advisable for employers to pay careful attention to such language in their own agreements.
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