Faculty Handbook
July 1999

Appendix E General Policies on Conflict of Interests

The following policy on conflict of interests, effective March 1, 1992 and revised September 22, 1995, is Fiscal Policy Statement 05, Section 015, Part 01 of the Fiscal Policy Statement of The University of Tennessee.

General Policy

  1. Purpose Objectivity and integrity are essential qualities for employees of any organization, and particularly for those who are engaged in the service of a comprehensive public university. If a public university is to carry out its missions in the areas of instruction, research, and public service with unquestioned credibility, its employees must maintain the highest levels of integrity and objectivity as they perform their duties. The purpose of this policy is to provide guidelines to help the faculty and staff of The University of Tennessee maintain these qualities in situations that may involve conflicts of interest.
  2. Definitions. For the purpose of this policy, an employee's financial interest includes the interest of the employee's spouse (whether or not they commingle assets) and the interest of the employee's dependent children (including step- and foster children). In any given circumstance, an employee's financial interest also may include the interest of nondependent children and parents.

    Note: A dependent child is under 24 and unmarried; a nondependent child is 24 and older or married.
  3. General Principles. Faculty and staff of The University of Tennessee are expected to take all reasonable precautions to ensure that their outside financial interests do not place them in conflict with carrying out their duties and responsibilities as employees of the University. Generally a conflict of interests exists when an employee:
    1. Allows outside financial interests to interfere with or compromise judgment and objectivity with respect to duties and responsibilities to the University and sponsoring organizations.
    2. Makes University decisions or uses University resources in a manner that results in or is expected to result in:
    3. Personal financial gain or financial gain for his or her relatives; or
    4. An unfair advantage to or favored treatment for a third party outside the University
    5. Allows outside financial interests to affect the design, conduct, or reporting of research.
  4. State Law. Certain conflicts of interests violate State law and may result in criminal and civil penalties (see Appendix A (of this policy on conflict of interests) for applicable sections of Tennessee Code Annotated below).
  5. Related Policies. The university has additional policies addressing conflicts of interests. Such policies are in effect for the Board of Trustees and for consultants to the University (see Fiscal Policy Statement 05, Section 130).
  6. Note: Failure to comply with this policy may result in disciplinary action, which could include termination.

Examples of Conflicts of Interest

In accordance with the principles stated above, the following situations are examples of prohibited conflicts of interests and do not constitute an all-inclusive list of prohibited conflicts.

  1. Serving as a member of the board of directors for, serving as a consultant to, or holding an office or a management position in an outside entity and:
    1. The employee procures or influences the procurement of goods or services from that entity for the University;
    2. The employee uses his or her University position to obtain favored treatment for or to provide unfair advantage to that entity.
  2. Holding more than 5 percent financial interest (or 5% combined interest of the employee, spouse, and dependent child) in an outside venture and:
    1. The employee procures or influences the procurement of goods or services from that venture for the University; or
    2. The employee uses his or her University position to obtain favored treatment for or to provide an unfair advantage to that venture.
  3. Soliciting or accepting gifts, gratuities, benefits, or favors of monetary value from a person or an entity:
    1. In return for influencing an employee in the discharge of his or her University duties, or
    2. While being in a position to obtain favored treatment for or provide an unfair advantage to that person or entity.
  4. Selling any products or services to the University or other State agency while an employee or within six months after termination of active employment with the University.

    This prohibition applies to sales by:
    1. The employee,
    2. A business in which the employee is the sole proprietor,
    3. A business in which the employee is a partner, or
    4. A business in which the employee has ca controlling interest (owns or controls the largest number of outstanding shares owned by any single individual or business).

      Note: If the sole-source exception allows an employee to sell products or services to the University, the employee's interest must be publicly acknowledged at the time of the sale.
  5. Using confidential or official University information in any manner that results in or is expected to result in personal financial gain or financial gain for the employee's relatives or that provides financial gain or an unfair advantage to a third party.

Employee Reporting Requirements

All employees are required to take the initiative and report in writing (e.g., memo, etc.) to their immediate supervisor any conflict of interests between their University duties and responsibilities and their outside interests. In addition, employees (except term and students) will be notified annually to disclose outside interests on the form provided by the University (see Appendix B. located on the home page of the University-wide Administration of The University of Tennessee (www.utenn.edu). This form requires the disclosure of specific outside interests that may or may not represent conflicts of interests. Also employees may be required periodically to complete a disclosure form whether or not they have interests or activities to disclose.

  1. All faculty and staff must have a completed disclosure form on file whether or not they have interests or activities to disclose.
  2. All employees (except term and student) will receive an annual notification to disclose outside interests and activities. Once an employee discloses any outside interests or activities, he or she must file a disclosure form annually as long as the interest or activity exists.
  3. New employees (except term or student) are required to complete and file a disclosure form within 30 days of their effective employment date whether or not they have interests or activities to disclose.
  4. Senior administrative personnel designated by the President or the Executive Vice President and Vice President for Business and Finance are required to file a disclosure form with the General Counsel's Office by July 30 each year (see Appendix C, located on the home page of the University-wide Administration of The University of Tennessee (www.utenn.edu).
  5. Employees involved in research (e.g., PIs, co-PIs, researchers, administrators, etc.) must have disclosed outside interests that may be affected by the research before proposals are submitted to funding agencies. Employees must keep their disclosures updated for the duration of the project. Examples of such interests include, but are not limited to, receiving payments for services exceeding $10,000, having equity interest exceeding 5 percent, or $10,000, and holding intellectual property rights.
  6. Although not necessarily prohibited, certain outside interests or activities may be conflicts and must be disclosed, such as:
    1. Engaging in a partnership, consulting relationship, employment relationship, or other outside venture with other University employees or students. Note: Personnel Policy 122 prohibits University supervisory staff from hiring employees in their line of authority for personal services.
    2. Engaging in University research sponsored by an organization in which the employee has more than a 5 percent or $10,000 financial interest.
    3. Having a financial interest (including, but not limited to, receiving payments for services exceeding $10,000, having equity interest exceeding 5% or $10,000, and holding intellectual property rights) in an outside venture that would reasonably appear to be affected by any research conducted by the employee.

Campus/Unit Requirements

Chief Business Officers are responsible for ensuring that their campuses or units:

  1. Present and discuss this policy with new employees during their orientation.
  2. Require all faculty and exempt staff to have an outside interests disclosure form on file whether or not they have interests or activities to disclose.
  3. Notify employees annually of their obligation to disclose outside interests and activities and of where to file the disclosure form.
  4. Provide instructions to department heads and supervisors to ensure that they understand their responsibilities in reviewing and identifying conflicts of interests.
  5. Establish a committee(s) to review the information disclosed by employees; determine whether a conflict of interests exists; and notify employees of the results of the review.
  6. Maintain employees' disclosure forms in their personnel files.
  7. Work with employees to prevent or resolve conflicts. Resolution can include eliminating such conflicts or managing conflicts that cannot be eliminated. Conflicts can be managed through independent reviewers, reassignment of responsibilities, modifying the research plan, or other methods to reduce or minimize the effects of a conflict.
  8. Inform the Executive Vice President for Business and Finance of conflicts of interests in the following ways: (1) report annually any conflicts if interests that were disclosed or became known over the past twelve months and their resolution and (2) report immediately any conflicts of interests that cannot be resolved.
  9. Document the review of information disclosed by employees and the actions taken to resolve any conflicts (see Appendixes B and C, located on the home page of the University-wide Administration of The University of Tennessee (www.utenn.edu). For sponsored programs, all documentation related to disclosures and the elimination or management of conflicts must be maintained for three years either after the close of the related awards or any government action involving these records.
  10. Report immediately any conflicts of interests that cannot be resolved to the sponsoring organizations according to their requirements.
  11. Provide sponsoring organizations with required certifications that, for example, the University's conflicts of interests policy was implemented, disclosures were made, and identified conflicts are being managed satisfactorily, etc.

Appendix A: State Laws on Conflicts of Interests

In addition to the general policies described above, State laws and regulations also prohibit the following:

  1. Accepting rebates, gifts, or other things of value. Tennessee Code Annotated section 12-3-106 prohibits employees who are responsible for initiating requisitions from directly or indirectly accepting or receiving any rebate, gift, money, or other thing of value from any person, firm, or corporation to whom a contract for the purchase of materials, supplies, or equipment may be awarded. This statute also prohibits accepting or receiving any promise, obligation, or contract for future rewards or compensation from a contractor.
  2. Having a personal interest in any contract in which the University is or may be interested. Tennessee Code Annotated section 12-4-101 prohibits employees who are in a position to select a contractor, to oversee work under a contract, or in any manner to superintend a contract in which the University is or may be interested from being directly interested in the contract. An employee is directly interested if the contract is with:
    1. The employee,
    2. A business in which the employee is the sole proprietor,
    3. A business in which the employee is a partner, or
    4. A business in which the employee has a controlling interest, i.e., owns or controls the largest number of outstanding shares owned by any single individual or corporation.

      Violation of this statute carries a civil penalty requiring forfeiture of all pay and compensation received under the contract, dismissal from employment, and ineligibility for the same or a similar position for ten years.

      Exceptions:
    5. Any interest that does not fall within the definition of a direct interest is an indirect interest and is allowed if it is publicly acknowledged at the time of contracting.
    6. If the employee, proprietorship, partnership, or corporation is the sole supplier of required goods or services in the county, the employee's interest is allowed if it is publicly acknowledged at the time of contracting.
  3. Selling goods to the University or any other State agency. Tennessee Code Annotated section 12-4-103 prohibits all University employees from bidding on, selling, or offering to sell any merchandise, equipment, material, or similar commodity to the University or any other State agency. This applies to sales by:
    1. The employee,
    2. A business in which the employee is the sole proprietor,
    3. A business in which the employee is a partner, or
    4. A business in which the employee has a controlling interest (see 2 above).

      This prohibition continues for six months after employment with the University terminates.

      Violation of this statute carries both civil and criminal penalties:
  4. Civil. The employee must refund to the University or the State all amounts paid for the goods, plus 8 percent interest.
  5. Criminal. Violation of section 12-4-103 is a Class E felony.

    Exceptions:
  6. Sales by a business in which an employee owns less than a controlling interest are allowed if the employee's interest is publicly acknowledged at the time of the sale.
  7. If the employee, proprietorship, partnership, or corporation is the sole supplier of required goods in the county, the sale is allowed if the employee's interest is publicly acknowledged at the time of the sale.
  8. Providing contracted personal, professional, or consultant services to the University or any other State agency. Tennessee Code Annotated section 12-4-109 requires that all personal, professional, and consultant services to the University and other State agencies be procured as prescribed by the State Department of Finance and Administration. Under those regulations, all employees are prohibited from contracting with the University or another State agency to provide personal, professional, or consultant services. This applies to contracts with:
    1. The employee,
    2. A business in which the employee is the sole proprietor,
    3. A business in which the employee is a partner, or
    4. A business in which the employee has a controlling interest (see 2 above).

      This prohibition continues for six months after employment with the University terminates.
  9. Nepotism. Tennessee Code Annotated section 8-31-103 prohibits employees who are relatives from working within the same direct line of supervision whereby one relative is responsible for supervising the job performance or work activities of the other. "Relative" means a parent, foster parent, parent-in-law, child, spouse, brother, foster brother, sister, foster sister, grandparent, grandchild, son-in-law, brother-in-law, daughter-in-law, sister-in-law, or any other family member who resides in the same household.