{1:55 minutes to read} A conflict of interest situation can arise when an employee takes an action or has an interest outside of their employment that may impede their ability to perform their work effectively, or in a manner inconsistent with their duty of loyalty to the company. A conflict of interest occurs when an employee engages in activities or holds other jobs that are in conflict with the interests of the employer:

• Competing with the employer;
• Being a director or consultant for any competitor of the company; and 
• Working for an outside supplier or another customer.

Any of the above situations clashes with an employee’s duty of loyalty to the company to advance its legitimate business interests. It also violates an employee’s obligation to not personally take for themselves any opportunity that’s discovered through the use of information that is exclusively the property of their employer.

If a situation arises where you suspect that your employee or a family member is involved with a competitor or has an interest adverse to the employer, it calls for extra sensitivity and investigation.

In all these instances, conflicts of interest have to be vetted carefully to ascertain whether or not they are in fact conflicts that pose a legitimate threat to the company. Vetting requires communication and thorough investigation. Not every situation will turn out to be a conflict of interest, but they have to be properly investigated. A clearly defined policy, as well as careful analysis of each potential conflict of interest situation, will go a long way toward clarifying the situation and preventing future problems.

Alan Krystal

Alan H. Krystal, P.C.
631 780 6555
Alan@alankrystallaw.com