Questions & Answers on Conflicts of Interest
An explanatory statement of the ALA Code of Ethics
This document is intended to provide general guidance for libraries of all types regarding common questions about conflicts of interest. This document is not meant to be construed as legal advice. Libraries and librarians should consult with their institutions’ legal council for definitive guidance.
1. What is an employee-vendor relationship?
An employee-vendor relationship is any relationship between a library employee, a vendor, or and a proposed vendor that might create a conflict of interest; a vendor is an employee, owner, or representative of a company/firm that proposes to or does buy, sell, or lease goods or services. The relationship between a library employee and vendor may be professional in that business transactions are exchanged; personal if both individuals are already acquainted beyond the scope of contract negotiations or purchase decisions; and/or familial if the individuals are near-relatives of one another.
Examples of employee-vendor relationships that might create a conflict of interest may include:
- A library employee acting as a vendor to sell goods or services to the library.
- A library employee buying goods or services for the library from a vendor who is a member of his/her family.
- A library employee serving as a decision maker for the library that is also on the payroll of the proposed vendor/publisher.
2. Can a library employee accept free samples from vendors?
Generally speaking, no public employee should solicit or accept anything of value, or use or authorize the use of the authority of public employment to secure anything of value or the promise or offer of anything of value that is of such character as to manifest a substantial and improper influence upon the public employee with respect to that person’s duties.
“Anything of value” is generally defined as anything that costs money such as meals, travel expense reimbursements, gifts, gratuities, tickets, promotional items, and frequent flyer miles.
In addition, in determining whether an item is of such a character as to manifest a “substantial and improper influence” upon a public employee, the source of the gift and the nature of the gift must be scrutinized.
“Substantial” has been defined as almost anything other than gifts and meals of nominal value. The examples given of nominal value are t-shirts, calendars, pencils, branded inexpensive pens and other inexpensive promotional items. However, accepting a lot of nominal gifts could still mean that the gifts, when added up, were “substantial.”
If the gift is intended to compensate a public employee for the performance of his/her job duties, then it is prohibited.
To avoid a conflict of interest, the appearance of a conflict of interest, or the need for employees to examine the ethics of acceptance, a library may prohibit its employees from accepting any gifts from vendors, suppliers, customers, potential employees, potential vendors or suppliers, or any other individual or organization, under any circumstances. Please check with your own institution or governmental unit to determine if there are specific rules about accepting gifts.
3. Can a library purchase goods or services from an employee or an employee-owned business?
Generally speaking, a library may purchase goods or services from an employee or an employee-owned business in certain instances. The most important requirement is that the employee must not have any involvement in the decision to use the company. The employee should refrain from all discussions, deliberations, decision-making, implementation and/or oversight of those rendering the services.
Additionally, the goods or services must be legitimately needed for the operation of the library.
There is no law that requires any type of specific disclosure in such a situation; however, it is important to ensure that there is no appearance of impropriety. It is recommend that the library’s governing authority be informed in open session of the desire to use an employee’s company, including explaining why the company was chosen.
4. Why are we required to disclose our external activities? Why doesn’t the library or its governing body simply trust its employees?
A conflict of interest disclosure statement is often required by an employer to help identify and avoid any potential conflicts that may exist between the employer and an employee’s own interests. The disclosure of external activities is not a matter of trust; rather, it serves as a safeguard from inadvertent engagement in any circumstances that may be considered a conflict of interest, thereby protecting the reputation of the institution, its employees, and the integrity of their actions.
5. Will the requirements within this policy discourage employees from getting involved in positive, creative, and entrepreneurial activities?
The American Library Association has long encouraged the professional and personal development of library employees through knowledge and skill enhancement, creative collaboration, and the fostering of individual aspirations and goals. The intent of a conflict of interest disclosure is not to discourage employees from engaging in outside entrepreneurial activities, and the existence of an actual or potential conflict of interest should not necessarily preclude an employee’s involvement in a particular activity or venture. However, according to Article VI of the ALA Code of Ethics, library employees cannot “advance private interests at the expense of library users, colleagues, or our employing institutions.” Therefore, disclosing and resolving conflicts of interest as they arise not only upholds an important ethical standard, but safeguards the integrity of the employee, the institution, and the best interests of its user community. The disclosure policy should be viewed as a means of protection, not a deterrent to the pursuit of personal entrepreneurial endeavors.
6. To whom does the conflict of interest disclosure process apply?
The conflict of interest disclosure process applies to any employee who is in a position to influence a decision from an individual, agency, or vendor.
7. How do I disclose my potential conflicts of interest and commitment?
A disclosure of potential conflicts of interest and/or duality of interest form should be signed annually by all employees who have business dealings with outside individuals, agencies, or vendors. If you think a potential conflict of interest is occurring, be sure to alert your supervisor and take appropriate actions to avoid the conflict.
8. What is an example of a financial interest?
As defined by Indiana University, a financial interest is anything of monetary value, including, but not limited to, salary, consulting fees, honoraria, equity interests (e.g., stocks, stock options or other ownership interests), interests in real or personal property, dividends, royalties, rent, capital gains, intellectual property (e.g., patents, copyrights and royalties from such rights, including those paid by organizations) and forgiveness of debt – see http://researchadmin.iu.edu/Help/COI/faq.html.
9. I received an honorarium for a speaking engagement outside of the library. What do I need to report?
There are a number of factors to consider:
- Does your library or institution have a policy regarding honoraria?
- Were you asked to speak because of your personal expertise (i.e., your knowledge of ethics that is not directly related to your employee responsibilities) or because of your position (i.e., your knowledge of system migration based on your job as systems administrator)?
Did you speak or prepare for speaking on company time or did you use vacation or other leave time to prepare and/or make your presentation? It’s likely that speaking engagements on your own time based on your personal expertise would be considered outside employment, while speaking engagements on company time based on your position would be considered part of your job. Ultimately, however, you should consult with your institution about when it is allowed to accept an honorarium or other related payments (travel, lodging, etc.).
10. What information should a library or institution provide to new employees regarding conflicts of interest?
Libraries should provide new employees with information about applicable state and federal laws and institutional policies, and are encouraged to also reference Article VI of the ALA Code of Ethics: “We do not advance private interests at the expense of library users, colleagues, or our employing institutions.”
A further step is to require new employees to sign a statement affirming that they will comply with the applicable laws and policies. Boston University requires all new employees to sign its Conflict of Interest Policy Employment Disclosure Form, mandating disclose of whether any immediate family members have worked for BU.
While requiring disclosure of such information is common within employment applications for academic employment, BU, a private school, deemed it worthy of its own form, which explicitly highlights its conflict of interest policy.
According to the California State University Office of General Counsel, there are annual disclosure requirements for certain employees in the CSU system, and this includes at the time of hiring: “Every employee in a position designated by the code must complete an annual statement of economic interests called a Form 700… In addition to the annual filing, the Form 700 is also required to be filed when the employee first comes in to a designated position, and when the employee leaves a designated position. There is a $10 per day late fine for each day after April 1 that the Form 700 is not on file, extending up to a maximum fine of $100. All Form 700s are kept for seven years and are open to public inspection.” Conflict of Interest Handbook (August 2009 revision, page3) (www.calstate.edu/GC/Docs/Conflict_of_Interest_Handbook.doc)
Additionally, employees may be required to complete training and education programs on conflict of interest. Massachusetts law makes this mandatory for public employers and employees (see Implementation Procedures: http://www.mass.gov/ethics/education-and-training-resources/educational-materials/explanations-of-the-conflict-of-interest-law/public-library-employees-faq.html). Massachusetts also requires employers to distribute summaries of its conflict of interest law to employees (Section 8 of the Implementation Procedures).
These steps by an employer ensure that employees are made expressly aware of their ethical and legal responsibilities regarding conflict of interest.
11. Are employees bound by any state/federal guidelines regarding conflicts of interest?
Many states have conflict of interest laws and/or guidelines that vary based on the place of employment such as municipal employees, state employees, state legislators, and so forth, although the restrictions are similar or identical. For example, municipal employees in Massachusetts are governed under General Laws chapter 268A, which according to the Massachusetts State Ethics Commission “seeks to prevent conflicts between private interests and public duties, foster integrity in public service, and promote the public's trust and confidence in that service by placing restrictions on what municipal employees may do on the job, after hours, and after leaving public service.” (http://www.mass.gov/ethics/education-and-training-resources/implementation-procedures/municipal-employee-summary.html) The Massachusetts State Ethics Commission has a web page devoted to public library employees FAQs on conflict of interest law (http://www.mass.gov/ethics/education-and-training-resources/educational-materials/explanations-of-the-conflict-of-interest-law/public-library-employees-faq.html). The areas covered by conflict of interest law in Massachusetts include bribes, gifts and gratuities, misuse of position, nepotism, false claims, appearance of conflict, after-hours employment, etc.
In New York State, municipal employees are defined as being employed in every type of local government entity including counties, cities (except for New York City), towns and villages, school districts, BOCES, public libraries, and others. Conflict of interest guidance for New York municipal employees is found in Article 18 of General Municipal law and “prohibits municipal officers and employees from having interests in contracts with the municipality for which they serve.”
Under Section 380.634 of the Revised School Code, the Michigan Department of Education was required to create and distribute to each school district a model conflict of interest policy. It was mandatory for Michigan public school districts to adopt and implement this type of policy no later than July 1, 2005. The state model conflict of interest policy for school district employees, including those working in school libraries, can be found at http://www.michigan.gov/documents/Conflict_of_Interest_Policy_SBE_Adopted_4-12-05_122282_7.pdf
If you work in a library that is a public state-based institution, you will likely also be covered in-house institution conflict of interest policies. For example, the Otsego District Public Library (Michigan) posts a conflict of interest policy on its library website. http://www.otsegolibrary.org/conflictofinterest
The American Library Association provides a “Sample Board of Trustees and Employees Conflict of Interest Policy” at http://www.ala.org/policies/conflict-interest
Ethical behavior and avoiding conflict of interest is also required for federal employees. Title 18, United States Code, Sections 201 through 209 prohibit and provide criminal penalties for certain acts by federal employees that involve conflict of interest, depending on in which governmental agency the person is employed (https://www.osha.gov/pls/oshaweb/owadisp.show_document?p_id=11498&p_table=STANDARDS). Text of the statute is found at http://www.oge.gov/Laws-and-Regulations/Statutes/Statutes/.
12. What should a library do when a conflict of interest is discovered?
One idea about what to do on discovering a conflict of interest is to remove the employee from the circumstances that give rise to the conflict. If that is not possible, thorough disclosure and careful planning may be required. Chapter 8 of the University of Iowa’s Operations Manual is “Conflict of Interest in Employment (Nepotism)” (http://www.uiowa.edu/~our/opmanual/iii/08.htm ). Section 4 of that chapter describes “occasional or irregular” conflicts of interest. The former includes a tenure or promotion vote, for example; for which “recusal is an acceptable and necessary mechanism for managing the conflict.” (emphasis added). However, a written statement of such recusal is not required.
Section 5 distinguishes “ongoing” conflicts of interest: Unlike “occasional or irregular” conflicts, recusal is not a reasonable management mechanism for ongoing conflicts. Under Section 3, “The decision to manage a conflict of interest in employment rather than avoid it must be based on a sound institutional reason.”
For an ongoing conflict, a “management plan” must be worked out, as Section 5 delineates:
“The process to manage the conflict is initiated by notification of the relationship. Ideally, both related individuals should bring the existence of the relationship to the attention of the first neutral supervisor. However, as soon as one of the related individuals does so, the first neutral supervisor shall begin to develop a management plan. For relationships that develop between persons already in a supervisory relationship or when an organizational change results or would result in a supervisory relationship between two related individuals, disclosure should be made at the earliest possible date and no later than within ninety days after commencement of the conflict of interest situation.”
“To deal with situations in which a conflict of interest might arise through a hiring decision, a management plan must be developed such that the hiring process itself is conducted free of any actual or apparent conflicts of interest. In such cases, disclosure of the relationship should be made at the earliest possible point, in many cases even before the related individual applies for the position.”
Section 6 contains the rules for formulating a management plan for an ongoing conflict of interest, and it includes a link to a detailed procedural guide: “Conflict of Interest in Employment – Management Mechanism Template” (http://www.uiowa.edu/hr/administration/conflict.html )
Northwestern University’s “Policy on Conflict of Interest and Conflict of Commitment” includes disclosure requirements for employees who find themselves in conflicts of interest (http://www.northwestern.edu/coi/policy/core_coi_policy.pdf ). There is a system of annual reporting on conflict status, and those who have reported a conflict of interest are required to provide timely follow-up reports on its status. A “Training & Resources” page provides various tutorials and other instructional tools to help employees fulfill these disclosure requirements (http://www.northwestern.edu/coi/training/index_annual_staff.html ).
Northwestern’s Policy concludes with a brief section (12.0) on sanctions that an employee who fails to properly disclose a conflict of interest may face:
“Instances of breach of this Policy, including failure to submit or submission of an incomplete, erroneous or misleading annual or ad hoc disclosure/certification report, failure to disclose information as required by this Policy, or failure to comply with prescribed monitoring procedures, will be decided in accordance with applicable disciplinary policies and procedures as stipulated in the Northwestern University Faculty Handbook or Northwestern University Staff Handbook, as applicable.”
In the State of California: “No public employee at any level of state or local government shall make, participate in making or in any way attempt to use his [or her] official position to influence a governmental decision in which [s/he] knows or has reason to know [s/he] has a financial interest.” Government Code § 87100. Any person who willfully violates the general prohibition is guilty of a misdemeanor. Government Code § 91000.
According to the California State University Office of General Counsel’s Conflict of Interest Handbook (August 2009 revision), the CSU system has disclosure requirements as follows: “Every employee in a position designated by the code must complete an annual statement of economic interests called a Form 700. . . In addition to the annual filing, the Form 700 is also required to be filed when the employee first comes in to a designated position, and when the employee leaves a designated position. There is a $10 per day late fine for each day after April 1 that the Form 700 is not on file, extending up to a maximum fine of $100. All Form 700s are kept for seven years and are open to public inspection.” (p.3) (www.calstate.edu/GC/Docs/Conflict_of_Interest_Handbook.doc )
“Violations of the Conflict of Interest Code are punishable by disciplinary action (Government Code § 91003.5), civil action (§ 91004 et seq.), and criminal prosecution (§ 91000)” (p.7) ]
In Massachusetts, accepting anything of “substantial value” (defined as $50 or more) is punishable by fine or imprisonment, as follows, from Chapter 268A, Section 3:
(b) Whoever knowingly, being a … state, county or municipal employee …, otherwise than as provided by law for the proper discharge of official duty, directly or indirectly, asks, demands, exacts, solicits, seeks, accepts, receives or agrees to receive anything of substantial value: (i) for himself for or because of any official act or act within his official responsibility performed or to be performed by him; or (ii) to influence, or attempt to influence, him in an official act taken . . . (d) … shall be punished by a fine of not more than $50,000, or by imprisonment in the state prison for not more than 5 years, or in a jail or house of correction for not more than 2 ½ years, or both.
Furthermore, under Chapter 268A, Section 25, a public sector employee in Massachusets may be suspended during indictment for the above violation:
“An officer or employee of a county, city, town or district … may, during any period such officer or employee is under indictment for misconduct in such office or employment … be suspended by the appointing authority...
”If the criminal proceedings against the persons suspended are terminated without a finding or verdict of guilty on any of the charges on which he was indicted, this suspension shall be forthwith removed…”
Also refer to “Enforcement of the Code of Ethics of the American Library Association: Questions and Answers” (http://www.ala.org/advocacy/proethics/explanatory/enforcementfaq) Specifically, the third item addresses what libraries should do about violations of the Code of Ethics, including conflict of interest:
“Libraries are encouraged to adopt the Code of Ethics as a policy. With the ALA Code of Ethics as a local policy, enforcement moves to the local level. Violations of the Code of Ethics may also be a violation of local, state, or Federal law… While an employer or employee in violation of this Code of Ethics principle should be accountable, there are many agencies at the state and Federal level designated to handle these infractions.”
A. Conflict of Interest
A conflict of interest involves circumstances where an individual's professional actions or decisions at the library could be influenced by considerations of personal gain, usually of a financial nature, as a result of interests outside his/her library responsibilities.
B. Conflict of Commitment
According to USLegal.com, conflict of commitment means a situation in which an individual has substantial outside activities and business interests, such as consulting, lecturing, acting as an expert witness, public service, or service on a professional board or committee, which lead to conflict of commitment as they interfere with the importance of the individual's commitments to the institution as his/her primary employer. If there is any question about an external activity representing a conflict of commitment or interfering with the fulfillment of an institution’s responsibilities, then the employee should consult with his/her supervisor for directions. If the employee’s supervisor is not available within a reasonable period of time, then the employee should contact the associated unit head for directions.
C. Consulting Consulting refers to paid or volunteer activities that happen outside of the workplace and draw upon a person’s professional expertise. This does not include activities related to membership in professional organizations.
D. External Activities External activities are activities not included within one’s duties and responsibilities to the specified employer. These activities may include outside employment, consulting, and/or professional service that relate to an individual’s area of expertise regardless if compensation, reimbursement, or honorarium is received.
E. Gift USLegal.com defines a gift as “the voluntary transfer of property or funds to another without receiving anything of value in return and without conditions attached…” (http://definitions.uslegal.com/g/gifts/) Examples of gifts of more than nominal value given to a library employee may include, but are not limited to, money, service, loan, travel, lodging, meals, refreshments, entertainment, discount, or promise to do or not do something having a monetary value.
F. Immediate Family Members According to Black's Law Dictionary (2009, 9th ed., p. 679), immediate family is defined as "a person's parents, spouse, children, and siblings, as well as those of the person's spouse; stepchildren and adopted children are usually immediate family members."
G. Library Employee An employee is defined in the Free Dictionary (online) as “A person who works for another [or an institution such as a library] in return for financial or other compensation.” (http://www.thefreedictionary.com/employee/. Original of the definition is The American Heritage® Dictionary of the English Language, Fourth Edition copyright ©2000 by Houghton Mifflin Company. Updated in 2009. Published by Houghton Mifflin Company. All rights reserved.)
H. Lobbying The Free Dictionary (online) defines Lobbying variously as “To try to influence the thinking of legislators or other public officials for or against a specific cause, on behalf of or against (proposed legislation, for example); and/or to take a desired action.” (http://www.thefreedictionary.com/lobbying)
I. Nonlibrary (or Non-Library) Entity A nonlibrary entity is an organization (as a business, nonprofit, or governmental unit) that has an identity separate from those of its members and is not connected in any formal way to the library.
J. Significant Financial Interest According to the Legal Information Institute at Cornell University Law School, significant financial interest is “an interest in an entity outside of the employing institution where an individual receives financial benefit or holds the potential for financial benefit that meets a defined threshold.” As a general rule, this includes:
- Publicly traded entities:
- Remuneration valued at $5,000 or more in the last 12 months; or
- Equity interest valued at $5,000 or more; or
- A combination of remuneration and equity that is valued at $5,000 or more.
- Non-publicly traded entities:
- Remuneration valued at $5,000 or more in the last 12 months; or
- Any equity interest.
- Intellectual property rights and interests:
- Any income received related to such rights or interest.
Adopted by the Committee on Professional Ethics, June 30, 2014.