“Is a disclosed conflict of interest still a conflict of interest?”

Question: Hello Mr. Sklover! I would like to ask you a question. It has to do with a conflict of interest where I work.

I have been employed with my present job for going on 17 years. My job description deals with the Hospitality (Hotel) Industry, and I just got part time employment with another company that deals with the same Hospitality Industry, on the same hotel property that I am employed. You see, on my day off from my primary job I work for the new employer at the same hotel.

Before I started the actual work for my part-time employer I spoke with my primary employer, and asked if it would be okay to work on the same property on my day off, and he said it would not be a problem.

Is this a conflict of interest with my primary employer?

Kalaupapa, Hawaii

Answer: Dear Charmaine: Your question is a very good one from my point of view because it permits me to raise and explain a few basic points about conflicts of interest:       

1. Just like “A dog is always a dog, a conflict of interest is always a conflict of interest.” A conflict of interest exists when a person is in a situation that makes him or her unsure of which “side” (or which employer) to be primarily loyal to.

For example, if a Judge is deciding if Pepsi or Coke is right in a big lawsuit between the two companies, and all of the Judge’s life savings are invested in Pepsi stock, can he or she be truly sure that decisions reached will not be affected by his or her own interests? Can a referee in baseball really be objective if his or her son is playing on one of the teams? Both the Judge and the Referee are clearly in conflicts of interest.

As to you, what if your primary job is to paint the hotel rooms, and your secondary job is to inspect paint jobs of the hotel rooms. Can you be “totally objective and totally loyal” to both employers? I think to do that would be humanly impossible. My favorite saying about conflicts of interests is “A person who wears one watch always knows what time it is; a person who wears two watches is never sure.”

So, Charmaine, you do have a conflict of interest on your hands.

2. That said, if you disclose the conflict of interest to “both sides” and “both sides” tell you “I waive or give up any objection to it,” then the conflict of interest is not a problem. Those two things – disclosure and waiver – are the two ways out of a conflict of interest problem. So, if the Judge in the Pepsi and Coke case told Coke about his life savings, and Coke and its lawyers said, “We have considered the conflict of interest, and we are fine with the Judge continuing to decide our case,” then the Judge could do so.

3. Two issues commonly arise in this situation: (i) Was the disclosure complete? and (ii) Do you have “proof” both sides have waived the conflict? Those are the two issues that commonly come up in this context, and the two issues that you now face.

(i) Did you tell “both sides” what kind of work you will do for the other? How much you would be paid? It’s possible your boss on your primary job might one day say, “Oh my gosh – if Charmaine told me that the weekend job was inspecting paint jobs, I never would have given my waiver. I think that I was deceived!” You should consider that potential problem, and bear in mind that putting things in writing always reduces disputes about what was disclosed, and what was not disclosed. Remember that email is a great tool of communication, because it provides proof of what was communicated, to whom, and when.

(ii) Did both sides really waive the conflict of interest? Here, too, an email or other written form of evidence would be preferable, because people sometimes (a) forget, (b) lie, (c) leave the company, or (d) remember things differently than you do.

These two issues don’t always arise, but they often do, so your considering dealing with them “before they deal with you” might be a good idea. 

We do offer a Model Letter entitled “Addressing a Conflict of Interest at Work,” that could easily be adapted to your circumstances, and assist you in addressing this issue. If interested, simply [click here]. 

Charmaine, these are the basic considerations in matters of conflict of interest. With them, I hope you will be able to guide yourself to what is best for you.

Thanks for writing in; please help us by telling others of our blogsite, our Sklover On-Demand-Videos, and our helpful Model Letters, Memos, Checklists and Agreements.

Al Sklover

© 2011 Alan L. Sklover, All Rights Reserved.

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