Lawsuit: Dave Ramsey Fires Employee for Having Sex Out of Wedlock

The Christian broadcaster maintains that character matters, all the time. But a former employee who got pregnant out of wedlock says she was wrongfully fired

When she was 12 weeks pregnant, administrative assistant Caitlin O’Connor notified her human resources department and requested paperwork to prepare for her maternity leave. A week later, she was fired — not for being pregnant, but for having sex, her employer said.

O’Connor, who wasn’t married, worked for Ramsey Solutions, the Tennessee business owned by Christian broadcaster and personal finance expert Dave Ramsey, who requires his staff to comply with strict ethical standards, a condition of employment sometimes known as a morality clause.

Often written into contracts of athletes and entertainers, morality clauses date to the early 20th century; the first recorded instance of one challenged in the U.S. was a 1918 case, Ackerman v. Siegel, that involved a contract that prohibited the employee’s “bad behavior or fast living.’’

But morality clauses are under a spotlight today, not only because of the Ramsey case but also because companies are increasingly grappling with how much they can police employees’ behavior outside of the workplace. It’s a complicated issue since for many workers, the “workplace” is now their home, and employers can see what their workers are doing off duty by checking their social media accounts.

“Norms are blurring in the work-life area, and social media has the potential of making public figures out of all of us,” said Patricia Sánchez Abril, who teaches business law and ethics at the University of Miami Herbert Business School. She added that this heightened visibility will increasingly put before courts the question: “To what extent can employers venture into once-sacred areas of employee private life?”

In fact, social media is often a catalyst when people lose their jobs for conduct unrelated to their work.

Last year, Amy Cooper was fired by investment firm Franklin Templeton for something she did while walking her dog in Central Park: accusing a Black birdwatcher of threatening her when he asked her to leash her dog. The company CEO said Cooper was fired because of its “zero tolerance policy on racism” after a video of the encounter was posted on Facebook and Twitter.

And ESPN commentator Paul Pierce, a former NBA star, was recently fired after a video shared on Instagram Live showed him smoking and playing cards in the company of exotic dancers. ESPN is owned by the Walt Disney Co.

Such firings usually hold up in court because most private employers hire people “at will,” meaning they have wide discretion in whether to continue a person’s employment. Ramsey said as much in an answer to a question on Twitter in March, saying that he could fire someone because he didn’t like their eye color. “I’ve got a right to tell my employees whatever I want to tell them. They freaking work for me,” Ramsey said.

But employment law experts say it’s not that simple, and that the O’Connor case is especially complex because it brings pregnancy into a morality debate entwined with federal law.

Here’s what’s at stake in this case, and why your company — and its lawyers — increasingly care about what you do when you’re not at work.

‘Character matters’

In court filings, O’Connor and her legal team acknowledge she was not married when she got pregnant and did not want to marry the father of the child, although she said they were in a “committed, long-term relationship.”

They also spell out the company’s policy on employee behavior, which says: “The image of Ramsey Solutions is held out to be Christian. Should a team member engage in behavior not consistent with traditional Judeo-Christian values or teaching, it would damage the image and the value of our good will and our brand. If this should occur, the team member would be subject to review, probation, or termination.”

Ramsey has said that his “righteous living” policy not only protects the company’s reputation, but establishes a level of trust between him and his employees — if their behavior outside of work means someone else can’t trust them, the unreliability could carry over into the workplace. “If your spouse can’t trust you, what makes you think I can trust you?” Ramsey said in response to the person who asked on Twitter if he could legally fire someone for infidelity.

One of the company’s mottos is “Character matters, all the time.”

In an emailed statement, a spokesperson for Ramsey Solutions said O’Connor’s complaint had made allegations “that unfortunately misrepresent and mischaracterize the company, her employment and her termination.”

“We look forward to correcting all of these misrepresentations in court and proving that the company acted appropriately and in compliance with all applicable laws,” the statement said.

It’s not just the opinion of people within a company that cause employers to act on morality clauses. A company’s constituencies can also be cited as reason for a termination.

Fox Nation personality Tomi Lahren, who shot to fame in 2016 with a show called “Tomi” on Glenn Beck’s BlazeTV, was let go after she appeared on “The View” and said she supported abortion rights. Lahren said she was told she had “offended the community,” meaning, TheBlaze’s core audience of conservatives.

Lahren, who wrote about the legal battle in her 2019 book “Never Play Dead,” told the Deseret News that her stance on abortion had not been a secret and that her position is consistent with her belief in limited government. She eventually settled the case although believes she would have won in court.

“They are not used to being challenged,” she said of people such as Beck and Ramsey.

While there have been legal challenges to firings resulting from morality clauses, there is no reliable accounting of how widespread such clauses are, said Dr. Dean Hashimoto, a professor at Boston College Law School and the chief medical officer overseeing the Workplace Health and Wellness division at Mass General Brigham Hospital in Boston, Massachusetts.

“This area in which you have employers setting rules like this is really sort of a hidden area of law,” Hashimoto said. “My sense is that hospital employers are increasingly sensitive because of social media concerns, having employees embarrass the employer with a certain behavior. I haven’t seen empirical data on this, but my general intuition is that this is a growing area of private regulation by employers.”

He added, “I think we may find that our lives are increasingly ruled, not by the government, as much as our employers.”

But morality clauses are not limited to employment or other contractural representation. In Texas, they’re also turning up in custody agreements between divorcing parents who don’t want to expose their children to new romantic partners spending the night.

‘A very visible condition’

O’Connor and her attorneys contend that Ramsey Solutions violated requirements of the federal Family and Medical Leave Act, as well as state legal protections for maternity and disability leave. They also charge that Ramsey’s policies have a disparate impact on women, and pregnant women in particular because “they are unable to keep their private lives private in the event they become pregnant because pregnancy is a very visible condition.”

However, Abril, at the University of Miami, noted that when it comes to pregnancy, a morals clause can be even more complicated since women can become pregnant without having sex, through assisted reproductive technology.

In a previous Ohio court case that began in 2011, an unmarried employee of a Catholic school got pregnant through artificial insemination and was fired for both her marital status and the use of artificial reproductive technology, which is forbidden by the Roman Catholic Church. The employee, Christa Dias, was not Catholic, but in the ensuing legal battle, Dias v. Archdiocese of Cincinnati, the archdiocese argued that employees were expected to comply with the moral standards of the church. The case went to a jury, which decided the archdiocese had wrongfully discriminated against Dias, and she was was awarded $170,000.

In 1995, however, a Tennessee court affirmed the right of an employer to dismiss a worker for having premarital sex.

In Boyd v. Harding Academy, the plaintiff, an unmarried preschool teacher, acknowledged knowing that her employer required employees to have “Christian character, as well as professional ability,” but said she was never explicitly told that she would be fired for having sex outside of marriage. The employee’s sexual activity came to light when she revealed she had a miscarriage and asked for time off.

When she was fired, the woman sued, charging sex discrimination. But the court found that the school had dismissed other employees for sexual immorality, including two men, meaning that it had applied the standard equally. And the school had offered to reinstate pregnant women who had been fired if they married the father of their child.

Employers do have a lot of discretion, especially if there is a contract, Hashimoto, of Boston College, said. But he said that Ramsey is wrong to say that employers can fire anyone they want, for any reason they want. Ramsey may have been joking when he said he could legally fire anyone for their eye color, but anything that comes up against public policy could cause employers problems.

“Eye color is, in fact, linked to race and ethnicity. And if there is gender discrimination, that’s a concern. So you can run into discrimination issues based on state and federal law,” Hashimoto said.

Ramsey has let men go for moral infractions, most notably on-air personality Chris Hogan, who left the company in March after saying, “I’ve done some things personally that are not in line with Ramsey Solutions.” (Hogan’s former wife, Melissa Hogan, wrote in Medium this week that her husband had been unfaithful, and Religion News Service has reported that the company had known about the infidelity for more than 2 years.)

Ramsey contends that such terminations are strictly business, and that he can personally forgive people for transgressions, while still not being comfortable working with them. “There’s a difference between forgiveness and reconciliation. Some of my brothers and sisters in Christ aren’t theologically deep enough to grasp that,” Ramsey has said.

In a scholarly paper on morality clauses that she co-authored with Nicholas Greene, Abril cautioned that such clauses, if overreaching, can be socially harmful. “Their unrestricted use allows and invites unpredictability, bad faith, and broad limitations on expression, privacy and other liberties. This is especially true when imposed on low-profile agents with little bargaining power,” Abril and Greene wrote. They argued that courts assessing morality clauses should take into account, among other things, the degree to which the employee actually represents the company; for example, an administrative assistant would not represent the company in the way that a person with a public role would.

But while many people may be sympathetic to a pregnant employee who loses her job and health benefits, from the employer’s perspective, morals clauses are increasingly important and deserve greater attention, Abril said.

“When you join a company, you join a family in a way, and your behavior, even if it’s off duty, can arguably be reflective of the values of the company,” she said.