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Policy
#54
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CONFLICTS OF INTEREST AND COMMITMENT
I. Introduction The number and complexity of relationships between universities and members of their faculties and research staffs on the one hand and private enterprise, the federal and state governments, and the nonprofit sector on the other, have grown substantially in recent years. Faculty and EPA non-faculty employees are encouraged to engage in outside relationships if those activities are consonant with the university's threefold mission of teaching, research and service. Facilitating the transfer of knowledge and technology to improve society is an important goal of such cooperative relationships. The purpose of this Policy and Procedure is to provide guidelines for those relationships and procedures that will help ensure both the primacy of academic integrity and compliance with applicable state and federal guidelines. II. Applicability A. This policy applies to all full and part-time faculty other than adjunct faculty and to all full and part-time EPA non-faculty employees. This policy also applies to faculty and EPA non-faculty employees who are on leave of absence. Although faculty members and EPA non-faculty members are the subject of concern directly addressed in this policy, all other university employees similarly must avoid conflicts of time and commitment. III. Definitions A. "Business" means any corporation, partnership, sole proprietorship, firm, franchise, association, organization, holding company, receivership, business or real estate trust, or any other entity organized for profit or non-profit purposes. "Business" excludes entities controlled by the university. B. "Department" means an academic department, a professional school without formally established departments, or any other administrative unit designated by the Chancellor for the purposes of implementing this policy. "Department Head" refers to the person with supervisory responsibility for the employee, whether in an academic or non-academic department. C. "Employee" means all faculty and EPA non-faculty employees to which this policy applies. D. Employee's "immediate family" or "household" includes the employee's spouse, life-mate, child, parent, sibling and grandparent. E. "External professional activities for pay" means any activity that 1) is not included within one's University employment responsibilities; 2) is performed for any entity, public or private, other than the University employer; 3) is undertaken for compensation; and 4) is based upon the professional knowledge, experience and abilities of the EPA employee. Activities for pay not involving such professional knowledge, experience and abilities are not subject to the advance disclosure and approval requirements as external professional activities for pay, although they may require disclosure and approval as potential conflicts of interest and are subject to the basic requirement that outside activities of any type not result in neglect of primary university duties, conflicts of interest, inappropriate uses of the University name or resources, or claims of university responsibility for the activity. F. "Inappropriate use or exploitation of university resources" means using any services, facilities, equipment, supplies or personnel which members of the general public may not freely use. A person engaged in external professional activities for pay may use, in that connection, his or her office and publicly accessible facilities such as university libraries; however, an office shall not be used as the site for compensated appointments with clients, e.g., for counseling or instruction. Under no circumstances may a supervisory employee use the services of a supervised employee during university employment time to advance the supervisor's external professional activities for pay. G. "Significant financial interest" is an interest in a business consisting of stock, stock options or similar ownership in such business, or anything of monetary value received from such business. It does not include mutual, pension or other funds over which the employee does not exercise control of the fund's investment in specific companies. Also excluded from the definition of "significant financial interest" are interests in business enterprises or entities where both the following conditions are met: (i) the value of such interest is less than $10,000 for any one enterprise or entity when aggregated for the employee and the employee's immediate family, and (ii) the interest represents less than a 5% ownership interest for any one enterprise or entity when aggregated for the employee and the employee's immediate family H. "University employment responsibilities" include both "primary duties" and "secondary duties." Primary duties consist of assigned teaching, scholarship, research, institutional service requirements, and other assigned employment duties. Secondary duties consist of professional affiliations and activities traditionally undertaken by employees outside of the immediate university employment context that benefit the profession and higher education in general. Such endeavors, which may or may not entail the receipt of honoraria or the reimbursement of expenses, include membership in and service to professional associations and learned societies; membership on professional review or advisory panels; presentation of lectures, papers, concerts or exhibits; participation in seminars and conferences; reviewing or editing scholarly publications and books; and service to accreditation bodies. Such integral manifestations of one's membership in a profession are encouraged, as extensions of university employment, so long as they do not conflict or interfere with the timely and effective performance of the individual's primary duties. IV. Conflicts of Commitment Conflict of commitment relates to an individual's distribution of effort between obligations to one's university employment and one's participation in other activities outside of university employment. The issue, in each case, is whether the employee is meeting the requirements of the job. For example, if presented with evidence that a faculty member is not meeting full-time responsibilities to the university, the Code prescribes that "neglect of duty" is a ground for disciplinary action, including the possibility of discharge. In another related context, Paragraph VI of this policy and procedure addresses external professional activities for pay. In another example of special legislation, the Board of Governors has established rules for monitoring and regulating the involvement of university employees in political candidacy and office holding that could interfere with full-time commitment to university duties. A conflict of commitment occurs when the pursuit of such outside activities involves an inordinate investment of time that interferes with the employee's obligations to students, colleagues, and to the mission of the university. For example, an employee engaged in private consulting for pay during normal university business hours may be deemed to have a conflict of commitment. On the other hand, a faculty member engaged in professional activities related to his/her field of academic or research expertise for up to 8 hours per work week would generally not be deemed to have a conflict of commitment. All employees must adhere to and comply with existing guidelines to avoid conflicts of commitment. V. Conflicts of Interest The term conflicts of interest refers to situations in which financial or other personal interests may compromise or may have the appearance of compromising an employee's professional objectivity in meeting university duties or responsibilities. The bias that such conflicts may impart can affect many university duties, including decisions about personnel, the purchase of equipment and other supplies, the collection, analysis and interpretation of data, the sharing of research results, the choice of research protocols and the use of statistical methods, and the mentoring and judgment of student work. An employee may have a conflict of interest when the employee, or any member of the employee's immediate family, has a personal interest in an activity that may affect decision making with respect to the university. It is the policy of the university that employees must avoid conflicts of interest that have the potential to affect adversely the university's interests, to compromise objectivity in carrying out university responsibilities, or otherwise to compromise the performance of university responsibilities. Accordingly, personal activities and financial interests must be arranged so as to avoid such conflicts. Failure to do so is a breach of this policy and may constitute misconduct or neglect of duty. Additionally, North Carolina General Statutes 14-234 prohibits any university officer or employee who is involved in making or administering a university contract from deriving a benefit from the contract except as otherwise provided by law. Activities that may involve conflicts of interest can be categorized under three general headings: First, those that otherwise might appear to involve such a conflict but that in fact do not, are allowable, and need not be reported; second, those that are questionable and must be reported, but that may be allowable with administrative approval; and third, those that generally are not allowable. The following examples are merely illustrative and do not purport to include all possible situations within the three categories: A. Activities allowable, with no reporting required The cited examples do involve activities external to university employment, and thus may present the appearance of a technical conflict, but they in fact do not have the potential for affecting the objectivity of the employee's performance of university responsibilities; at most, some such situations could prompt questions about conflicts of commitment. 1. A university employee receiving royalties from the publication of books or for the licensure of patented inventions subject to the UNC Patent and Copyright Policies. 2. A university employee having an equity interest in a corporation, the exclusive function of which is to accommodate the employee's external consulting activities. 3. A university employee receiving nominal compensation, in the form of honoraria or expense reimbursement, in connection with service to professional associations, service on review panels, presentation of scholarly works, and participation in accreditation reviews. B. Activities requiring disclosure for administrative review The cited examples suggest a possibility of conflicting loyalties that can impair objectivity, but disclosure and resulting analysis of relationships may render the activity permissible, perhaps with certain types of limitation or monitoring. 1. A university employee requiring students to purchase the textbook or related instructional materials of the employee or members of his or her immediate family, which produces compensation for the employee or family member. 2. A university employee receiving compensation or gratuities (other than occasional meals, gifts of desk copies of textbooks, and the like) from any individual or entity doing business with the university. Note that no university employee may seek or receive any gift, reward or promise of reward for recommending, influencing or attempting to influence the award of a contract by his or her employer. 3. A university employee serving on the board of directors or scientific advisory board of an enterprise that provides financial support for university research conducted by the employee or a member of his or her immediate family. 4. A university employee serving in an executive position in a for-profit or not-for profit business which conducts research or other activities in an area related to the university duties of the employee. 5. A university employee having significant equity in a for-profit business which conducts research or other activities in an area related to the employee's university duties. 6. A university employee having a financial interest in a business that competes with services provided by the university. 7. A university employee accepting support for university research under conditions that require research results to be held confidential, unpublished, or inordinately delayed in publication. Research conducted by faculty or students under any form of sponsorship must maintain the university's open teaching and research philosophy and must adhere to a policy that prohibits secrecy in research. Such conditions must be in compliance with UNC Policy Manual 500.1 and 500.2, and with any applicable university policy on intellectual property. C. Activities or relationships that generally are not allowable The cited examples involve situations that are not generally permissible because they involve potential conflicts of interest or they represent obvious opportunities or inducements to favor personal interests over institutional interests. Before proceeding with such an endeavor, the faculty member would have to sustain the burden of demonstrating that in fact his or her objectivity would not be affected or university interests otherwise would not be damaged. 1. A university employee participating in university research involving a technology owned by or contractually obligated to (by license or exercise of an option to license, or otherwise) a business in which the individual or a member of his or her immediate family has a consulting relationship, has an ownership interest, or holds an executive position. 2. A university employee making referrals of university business to an external enterprise in which the individual or a member of his or her immediate family has a financial interest. 3. A university employee either participating in a university research project or assigning students or other trainees to a university research project which is funded by a grant or contract from a business in which the individual or a member of his or her immediate family has a financial interest. 4. A university employee making unauthorized use of privileged information acquired in connection with one's university responsibilities. 5. A university employee associating his or her own name with the university in such a way as to profit financially by trading on the reputation or goodwill of the university. D. Submission of Annual and Revised Disclosure Forms All employees are required to complete and submit a Conflict of Interest Disclosure Form ("Disclosure Form", see Appendix ) on an annual basis as of September 1 to disclose potential conflicts of interest during the upcoming academic year . Further, revised Disclosure Forms must be submitted any time circumstances arise which eliminate a potential conflict of interest previously disclosed, or not less than 10 days before the date of the activity that may give rise to a conflict of interest. Note that the obligation to disclose potential conflicts of interest is not excused or otherwise affected by the filing of a Notice of Intent for review of external professional activities for pay. Disclosure Forms shall be submitted to the employee's department head. In the case of employees who hold administrative positions, Department Heads will report to their Dean, Deans and Directors will report to the appropriate Vice Chancellor, and Vice Chancellors and Directors who routinely report directly to the Chancellor will report to the Chancellor. E. Review of Disclosure Forms 1. Initial Review The administrator designated to receive an employee's disclosure form (reviewing official) shall have the initial responsibility for reviewing the form and for determining compliance with this policy. That determination involves two questions, (1) has the form been properly submitted (i.e., on time and complete) and (2) does the information provided reveal any conflicts or potential conflicts described in paragraphs V.B or V.C above. 2. Failure to Submit or Improper Submission of Disclosure Forms If the reviewing official determines that a form has not been submitted or is incomplete, the reviewing official shall take action to obtain compliance with this policy, including, if necessary, recommendations for disciplinary action. 3. Conflicts of Interest If the reviewing official determines that an employee has a potential conflict of interest the following options are available, depending on the circumstances: 1. The reviewing official may determine that an actual conflict of interest either does or does not exist and mark the disclosure form accordingly. 2. The reviewing official may discuss the situation with the employee in hopes of reaching one of the following solutions (see also Appendix B): a. The employee may take necessary steps to eliminate the conflict of interest (e.g., through divestiture of a financial interest or through cessation of the activity) and appropriately supplement the information provided with the original form, resulting in a determination by the reviewing official on the original form that a conflict does not exist. b. The reviewing official and employee may agree, with or without specified conditions or monitoring requirements, that the potential conflict of interest is actually permissible. 3. If the reviewing official decides to permit, with or without conditions, a Paragraph V. C. conflict of interest, the decision and the reason for it must be forwarded to and reviewed by the next highest administrator who may accept, reject or modify the decision. 4. The reviewing official may take or initiate other action as appropriate to address a conflict of interest. If the conflict involves an activity funded by a federal agency and if the reviewing official determines that he or she is unable to satisfactorily manage the actual or potential conflict, the reviewing official must notify Research and Graduate Studies. The appropriate funding agency must be notified of the situation by Research and Graduate Studies. F. Appeals An employee may appeal a reviewing official's determination that a disclosure form has been improperly submitted or that a conflict of interest exists. The administrative appeal process shall begin with the reviewing official's supervisor and shall end with the appropriate vice chancellor. The appeal shall be initiated by a simple written request. After the vice chancellor's decision, the employee may file an employee grievance to be handled under existing grievance appeal procedures for faculty and EPA non-faculty employees as appropriate. G. Confidentiality and Record-Keeping Research and Graduate Studies shall ensure that the appropriate certifications related to research objectivity and financial disclosures are submitted to funding agencies that require them (see Appendix C). Completed Disclosure Forms, including attachments and supplemental documentation, are confidential personnel records as defined by the State Personnel Records Act. The provisions of that Act, governing access to and confidentiality of personnel records shall be strictly observed. A copy of the completed Disclosure Forms will be forwarded to the Dean of the appropriate College for his/her information. Upon completion of the review process, the reviewing official should retain a copy f the Disclosure Form, with attachments and supplemental documentation, and send the originals to the custodian of the employee's official personnel file for storage. The originals must be kept for a minimum of three years after the termination or completion of the federal financial award, if any, to which they relate. H. Undisclosed Conflicts A member of the university community who has reason to believe that another employee has an undisclosed conflict of interest should consult confidentially with his or her supervisor regarding the basis for concern. Should an allegation be considered by the supervisor to be serious enough to constitute a possible undisclosed conflict of interest, a written, confidential report describing the allegation shall be prepared by the concerned party and sent to the supervisor of the accused party via appropriate supervisory personnel. The supervisor of the accused party shall immediately contact Research and Graduate Studies. VI. External Professional Activities for Pay The university seeks to appoint and to retain, as faculty and non-faculty EPA employees, individuals of exceptional competence in their respective fields of professional endeavor. Because of their specialized knowledge and experience, such persons have opportunities to apply their professional expertise to activities outside of their university employment, including secondary employment consisting of paid consultation with or other service to various public and private entities. Through such practical, compensated applications of their professional qualifications, university employees enhance their own capabilities in teaching, research, service, and administration. However, such external professional activities for pay are to be undertaken only if they do not: 1. Create a conflict of commitment by interfering with the obligation of the individual to carry out all primary university duties in a timely and effective manner; or 2. Create a conflict of interest relating to the individual's status as an employee of the university; or 3. Involve any inappropriate use or exploitation of university resources; or 4. Make any use of the name of the university for any purpose other than professional identification; or 5. Claim, explicitly or implicitly, any university or institutional responsibility for the conduct or outcome of such activities. Note that external activities for pay may give rise to either or both a conflict of commitment and a conflict of interest, and the proposed activities must be reviewed and approved consistent with the procedures outlined in IV.B, V.D, and V.E below. A. Review Procedures for External Professional Activities for Pay 1. Any employee who plans to engage in external professional activities for pay must complete the "Notice of Intent to Engage in External Professional Activity for Pay" ("Notice of Intent", see Appendix D). A Notice of Intent must be completed for each proposed activity. Unless there are exceptional circumstances, the Notice of Intent must be filed in a timely manner and in any event not less than 10 days before the date the activity is scheduled to begin. 2. Approval may be granted for a period not to exceed the balance remaining as of the date of approval of either (1) the fiscal year (in the case of 12-month employees and employees with service contracts that include the summer session), or (2) the academic year (in the case of 9-month employees with no summer session contracts). Extensions may be granted in accordance with this procedure. 3. The Notice of Intent shall be initially reviewed by the employee's department head. If the department head determines that the proposed activity is not consistent with this policy, the employee shall be notified of such determination within 10 days. In the event of such determination, the employee shall not proceed with the activity but may appeal the determination in writing to the administrative officer to whom the department head reports, and then to the Chancellor. 4. If question 8, 9a or 9b of the Notice of Intent is answered in the affirmative, the decision of the department head to approve the activity must be reviewed within 10 days of the determination by the administrative officer to whom the department head reports, and the appeal of a disapproval by that officer shall be to the Chancellor. 5. Departmental summaries of all Notices of Intent filed and of actions taken during the preceding fiscal year shall be submitted by department heads to the Chancellor each July 1. External professional activities for pay performed for another state agency also must comply with state policies regarding dual employment and compensation. Additionally, senior academic and administrative officers may be subject to special regulations and honoraria found at UNC Policy Manual 300.2.2.2 [R]. These procedures shall not be required of employees serving on academic year contracts if the external professional activity for pay is wholly performed and completed outside the academic year and the activity does not conflict with university policy statements, and the activity is not conducted concurrently with a contract service period during a summer session. In those instances when State-reimbursed travel, work time, or resources are used or when the activity can be construed as related to the employee’s State position or official duties on behalf of the State, the employee shall not receive an honorarium. In these instances the employee may request that the honorarium be paid to the University. The honorarium may be retained by the employee only for activities performed during non-working hours or while the employee is on annual leave, if all expenses are the responsibility of the employee or a third party that is not a Stateentity and the activity has no relation to the employee’s State duties. Employees who do not comply with this procedure will be subject to disciplinary action. Appendix A: Conflict
of Interest Disclosure Form
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