“If my mother works for my employer’s competitor, is that a conflict of interest?”

Question: Hi, Alan. I have recently been given a new contract at the place that I work. I work in the health care industry. So does my mother. In fact, she works at the competition just down the road from the store I work at. Do you consider that a conflict of interest? Do you think it is necessary to let my boss know before signing the contract? Thanks. 

Toronto, Ontario

Answer: Dear Kylie: Conflicts of interest are tricky things to spot and even trickier to deal with. I am glad you have, at the very least, spotted the potential problem, and have written in. Here are my thoughts: 

1. A conflict of interest can be said to exist when your “interests” may make you feel “conflicted,” and thus make you uncertain of what to do or who to be loyal to. As readers of my blog know, I love to use this illustration: “A person with one watch always knows what time it is. A person with two watches is never sure.” 

I ask you to consider this hypothetical: Imagine your employer had a lot of business, but your mother’s employer had very little business. In fact, imagine that your mother’s employer had so little business, that her employer told her “Unless we get a new client this week, we must lay you off.” Imagine, too, that you felt very strongly that your employer would not at all suffer by your directing a client to your mother’s company. 

Kylie, would you be tempted, even just a little, to send one client to your mother’s business – and away from your employer – in order to save your mother her job? I think it is likely you would, and that suggests to me that there does, indeed, exist a conflict of interest at the moment in your work life. 

2. Having a close relative working for the competition is almost always considered a conflict of interest. For the “heart-tugging” reason I illustrated above, it is the common view that having a close relative working for the competition is a conflict of interest. There is no clear line to be drawn regarding how close a “close relative” has to be – a cousin? an uncle? an in-law? – but I would say it is pretty clear that immediate family, spouse and child are “close enough” to be considered a presumptive conflict of interest. This common view is so common that many employers have rules requiring the immediate disclosure of any immediate family member who works for the direct competition, as well as any immediate family members who work for vendors, suppliers and contractors to the company.

3. Even if an actual conflict of interest does not exist, the mere perception that a conflict of interest might exist is enough to cause a problem. To a degree, conflicts of interest exist in the eye of the beholder. There is a degree to which intelligent people acting in good faith could disagree as to the existence or not of a conflict of interest. It is interesting to me that you spotted this possibility, yourself. That says to me that your employer could do so, too. And that could cause you a problem.

4. In almost all situations – but not all – disclosure of a conflict of interest is the best way to deal with it. In most cases the best thing to do is to present the facts of the conflicting situation to your employer, so it can decide the best way to address it. This way, you have a record of your reporting your apparent conflict, and – hopefully – your employer’s deciding to either (a)  “waive” it (that is, telling you that it is not upsetting to him or her) and permitting it to continue, or (b) “accommodate” it in some way that is not upsetting to you, such as asking someone to monitor the situation to watch out for problems, or perhaps giving you or your mother six months to find a different – non-conflicting – job.

It is always hoped that employers will act with intelligence, good faith and reasonably in these situations, and so either waive or accommodate the conflict of interest, so that no one is harmed by the problem. However, that is not always the path chosen by employers.  

5. Since you have apparently been working in this potentially conflicting situation for awhile, I am concerned that, if you disclose it now, you could be accused of, or terminated for, misconduct. Your note to me includes information that suggests the conflict of interest may have existed for some time. That leads me to be concerned that disclosure of it now might cause a problem. As I noted above, employers don’t always react to conflicts of interest that have existed for some time without disclosure in the most positive ways. It is possible that your past failure to disclose this conflict of interest is a violation of (a) a company policy, (b) good judgment, or (c) honesty. As a result, your contract could be withdrawn, you could be disciplined, or even terminated.

6. So, I must counsel you to carefully balance a few different factors in making your decision about whether to make disclosure. (a) Is your employer likely to react reasonably or in an irrational or spiteful way? (b) How likely is it that your employer will find out something that it has not found out to date? (c) Is it possible for you or your mother to find alternative employment in the meantime? (d) Are you essential or critical to the success of your company, and thus likely to survive any resulting “storm?” (e) In your position, could you possibly help your mother’s company even if you wanted to?

With these and similar thoughts in mind, if I was your attorney I could give you a judgment as to your best course of action, but for now that is what you need to do: make a reasoned decision as to your best course of action. Like so many other decisions, there is no absolute right or wrong decision, but only time will tell what decision is best.

If you do decide to disclose your conflict of interest, and suggest ways your employer should best deal with it, we offer a Model Letter entitled “Addressing a Conflict of Interest at Work” that might be helpful to you. To obtain a copy, just [click here].

Kylie, thanks for writing in, and give my best regards to your wonderful city. Torontonians are some of my very favorite people! Good luck.

Al Sklover

P.S.: Help Others While You Help Yourself! Become a SkloverWorkingWisdom™ Sales Affiliate –encourage others to take advantage of our Model Letters, Memos, Checklists and Agreements. Earn a substantial commission. Just [click here.]

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