A conflict of interest policy should include at least the following considerations:
The employee owes a duty of loyalty to the company.
At all times when on duty, without regard to time or place, employees should devote their full attention to the company's business and their duties.
An employee must avoid any activity that conflicts with the interests of the company.
An employee must disclose a potential conflict in advance.
Outside employment is prohibited unless approved by the employer in advance.
The company will deny permission for such outside employment if at any point it adversely affects the employee's ability, fitness, or readiness to work.
It is generally inadvisable to flatly prohibit all outside employment. Many people work two or three jobs. The real concern should be with outside work that interferes with the employee's ability to be a good employee for the employer. For example, an employer may legally prohibit any outside work for a competitor of the company; that conflicts with the working hours for the company; that undercuts the company's image, mission, or goals; or that makes the employee so tired that the employee cannot function effectively in the job he or she performs for the company.
Outside business interests, including passive or active investments, may be limited or prohibited by the company if they adversely affect the employee's work or the company's business operations.
An example of a conflict of interest would be that of an employee who attempts to work out his or her own deals with the company's customers. If the employee is essentially competing against the company, the company would have the right to require the employee to give up such an activity and to take appropriate corrective action. Although a company has the right to require employees to sign non-competition agreements, such agreements are notoriously difficult to enforce and should be undertaken only with the assistance of a qualified employment law attorney. No-solicitation agreements, whereby an employee agrees not to solicit the employer's current customers for personal business, accomplishes much of what a non-competition agreement seeks to enforce, and is less difficult to enforce than a general prohibition against any commercial activity in the employer's industry. Non-disclosure and trade secret agreements are generally much easier to enforce. Any such agreement should not be in a policy handbook with other policies; rather, it should be a standalone agreement signed by both the employer and the employee.
In Texas, it would not violate any law to adopt a policy such as the following: "XYZ Company prohibits any activity or exchange of goods, property, or services that significantly promotes, supports, or enables any business activity of a competitor, unless such activity or exchange has been discussed and approved in advance by a designated supervisor. Such activities or exchanges would include, but not be limited to, working for the competitor as either an employee or a contractor, advertising the competitor in any way, becoming a creditor or landlord of the competitor, or entering into any other kind of contractual arrangement whereby the competing business could be furthered in any way."
This is a good example of the kind of policy it would be best to have reviewed by an experienced employment law attorney of the company's choice.
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