Conflicts of Interest (Employees) Policy 603

Policy 603 Approved: April 27, 2018
Conflicts of Interest Policy
Policy 603
Source of Authority: State Government Ethics Act, N.C.G.S. Chapter 138A;
N.C.G.S. §§ 14-234.1 & 14-243;
UNC Policy § 300.2.2, 300.2.2 [G]
Revision Authority: Board of Trustees

First Issued: February 17, 2011
Revised: April 27, 2018

Related Policies and Regulations: Additional Employment Regulation 601;
Conflicts of Interest (Board of Trustees) Policy 108;
Contracts & Authority to Sign Regulation 109;
Employment of Related Persons Regulation 608;
External Activities for Pay Regulation 610;
Facilities Use Policy 402;
Improper Relations Regulation 616;
Research Misconduct Regulation 120;
Secondary Employment Regulation 626
Responsible Offices: Chancellor
Effective Date: April 27, 2018

I. Purpose

This policy effectuates Board of Governors’ policy, provides guidance to faculty and staff to avoid conflicts of interest, and positions UNCSA to be eligible to apply for grants from certain federal funding agencies in the future.

II. Scope

This policy applies to all full and part-time UNCSA faculty and employees Exempt from the Human Resources Act (EHRA), including faculty and employees who are on leave if the leave is funded at least partially by UNCSA or UNCSA-related sources.

III. Definitions

A. “Business” means any corporation, partnership, sole proprietorship, firm, franchise, association, organization, holding company, joint stock company, receivership, business or real estate trust, or any other legal entity organized for profit or charitable purposes, excluding University-Related Entities.

B. “Conflicts of Commitment” relates to an individual’s distribution of efforts between obligations to one’s UNCSA employment responsibilities and one’s participation in other activities outside of one's UNCSA employment, including such generally encouraged extensions of professional expertise as professional consulting. A conflict of commitment occurs when the pursuit of such outside activities involves an inordinate investment of time that interferes with the employee’s obligations to students, colleagues, and to UNCSA’s missions. At UNCSA, conflicts of commitment are governed by the External Professional Activities for Pay Regulation 610.

C. “Conflicts of Interest” relate to situations in which financial or other personal considerations may compromise, or have the appearance of compromising, an employee’s professional objectivity in meeting the employee’s UNCSA duties or responsibilities, including decisions about personnel, the purchase of equipment and other supplies, the collection, analysis and interpretation of data, the selection of pieces for performances, and other artistic activities. A conflict of interest may occur when the employee, or any member of the employee’s immediate family or household, has a personal interest in an activity that may affect the employee’s decision making with respect to UNCSA teaching, research, service or administration.

D. “Covered Employee” is defined as any faculty or EHRA non-faculty person employed by the University of North Carolina School of the Arts.

E. “Financial Interest” is defined as:

1. Payment for services to the Covered Employee not otherwise defined as institutional salary (e.g. consulting fees, honoraria, paid authorship);

2. Equity or other ownership interest in publicly or non-publicly traded entities (e.g. stock, stock options, or other ownership interest); or

3. Intellectual property rights and interests upon receipt of income related to such rights and interests, held by the Covered Employee or members of his/her immediate family.

Income from investment vehicles, such as mutual funds and retirement accounts, in which the Covered Employee or member of his/her immediate family do not directly control the investment decisions and intellectual property rights assigned to the Institution and agreements to share in royalties related to such rights are excluded from the definition of Financial Interest. Covered Employees are required to disclose Financial Interests in a timely and accurate manner consistent with implementing policies of UNCSA.

F. "Immediate Family" means the employee’s spouse, domestic partner, children, parents, or siblings.

G. “Reviewing Officer” means the employee’s supervisor.

H. “UNCSA Employment Responsibilities” include both "primary duties" and "secondary duties." Primary Duties” consist of assigned teaching, scholarship, research, institutional service requirements, and other assigned employment duties. “Secondary Duties” consist of professional affiliations and activities traditionally undertaken by EHRA employees outside of the immediate University employment context that contribute to the benefit of the profession and to higher education in general. Such endeavors, which may or may not entail the receipt of honoraria or the reimbursement of expenses, include membership in and service to professional associations and learned societies; membership on professional review or advisory panels; presentation of lectures, papers, concerts or exhibits; participation in seminars and conferences; reviewing or editing scholarly publications and books; and service to accreditation bodies.

I. “University-Related Entities” means the University of North Carolina, UNCSA, or any other entity controlled by, affiliated with, controlling, or under common control with the UNCSA.

IV. Policy

A. General Overview

1. UNCSA employees must avoid conflicts of interest that have the potential to adversely affect UNCSA’s or UNC’s interests, to compromise objectivity in carrying out UNCSA responsibilities, or otherwise to compromise the performance of UNCSA’s responsibilities.

2. UNCSA employee’s personal activities and financial interests must be arranged so as to avoid conflicts of interest.

B. Permissibility of Conflicts

1. Category 1 conflicts are routinely allowable and disclosure is required. These are activities or relationships that may create technical conflicts of interest but which are allowable because they do not compromise the integrity of faculty-student interactions,the objectivity of research results, or other interests of UNCSA, a funding sponsor, or the public.

2. Category 2 conflicts may be allowable following disclosure to UNCSA. These are activities or relationships which suggest a possibility of a conflict of interest, but which may be permissible after disclosure, analysis, and the implementation of appropriate monitoring of the conflict.

3. Category 3 conflicts are presumptively prohibited. These consist of activities which create possible conflicts of interest or present obvious opportunities or inducements to favor personal interests over UNCSA’s interests. Before proceeding with such an endeavor which constitutes a Category 3 conflict, the employee must obtain a valid waiver of the conflict from UNCSA.

4. Category 4 conflicts are not allowable under any circumstance.

C. Disclosure of Conflicts

1. All UNCSA employees are required to complete and submit a Conflicts of Interest disclosure form on an annual basis on a schedule announced by the Provost and described in the Procedures. The Provost will remind all UNCSA covered employees to complete and return the disclosure forms on an annual basis.

2. Updated disclosure forms must be submitted throughout the year if a change arises that the employee believes may:

a. give rise to a potential conflict of interest;
b. eliminate a previously disclosed conflict of interest; OR
c. results in an affirmative answer to any question previously answered in the negative on a conflicts disclosure form.

3. Disclosure forms must be submitted to the appropriate reviewing officer.

D. Conflicts Management. Once a conflict of interest has been identified through either the submission of a disclosure form or otherwise, the reviewing official must collect all of the relevant information and decide how to address the conflict.

E. Appeals. An employee may appeal any decision under this policy and its associated;procedures regarding a conflict of commitment or interest pursuant to the procedures associated with this policy.

F. Record Keeping & Confidentiality

1. Completed Conflicts of Interest disclosure forms are confidential personnel records as defined by the State Human Resources Act and are treated as such.

2. Upon completion of the review process, the reviewing official will retain a copy of the disclosure and send the original for filing in the employee’s official personnel file.

G. Relevant Laws & Policies

1. Criminal Laws. UNCSA employees may be subject to criminal liability under N.C.G.S. 14-234 & 14-324.1 for actions involving conflicts of interest in contracting or the exploitation of certain confidential information.

2. State Government Ethics Act Requirements. Some covered positions must comply with the State Government Ethics Act by filing a statement of economic interest with the State Ethics Commission as required by law.

3. Certain Grants. Individuals receiving grants from certain federal agencies, such as the National Science Foundation and the National Institute of Health, must comply with all rules and regulations promulgated by the federal agency and the Board of Governors Policy 300.2.2[G].

H. Failure to Comply
1. Failure to comply with this policy, including the failure to file a necessary annual disclosure of conflicts, may constitute misconduct or neglect of duty, and may subject the employee to discipline, up to and including termination of employment.

V. Revision History
A. February 17, 2011 – Adopted by Board of Trustees as part of UNCSA Policy Manual
B. April 27, 2018 - Revised to align with University of North Carolina Board of Governors Policy 300.2.2 and Guideline 300.2.2[G].


Conflicts of Interest (Employees)

Procedures 603

I. Annual Review of Disclosure Forms and Approval of Waivers for all EHRA Employees

A. Description of Categories. All faculty and EHRA non-faculty employees must submit disclosures in accordance with the timelines identified in these policies and procedures and promulgated by the Provost. Conflicts are categorized as Category 1, Category 2, Category 3, and Category 4.

1. Category 1 Conflicts are activities or relationships that may create technical conflicts of interest but which are allowable because they do not compromise the integrity of faculty- student interactions, the objectivity of research results, or other interests of UNCSA, a funding sponsor, or the public. The examples cited below involve activities external to University employment, and thus may present the appearance of a financial conflict of interest, but have little or no potential for affecting the objectivity of the Covered Employee’s performance of Institutional Employment Responsibilities; at most, some such situations could prompt questions about conflicts of commitment. The activities below are representative, but not all-inclusive examples of activities constituting Category 1 Conflicts:

a. Receiving royalties from publications of books, music, scripts, films, choreography, designs or the licensure of intellectual property pursuant to UNC’s and UNCSA’s policies concerning intellectual property.

b. Having an equity or financial interest in a corporation, the exclusive function of which is to accommodate the employee’s external consulting activities.

c. Receiving nominal compensation, in the form of honoraria or expense reimbursement, in connection with services to professional associations, service on review panels, presentation of scholarly or artistic works, and participation in accreditation reviews.

2. Category 2 Conflicts are activities or relationships which may be permissible after disclosure and analysis. At times the permissibility hinges on creation of certain limitations or monitoring, and may result in the establishment of an approved management plan. The activities below are representative, but not all-inclusive examples of activities constituting Category 2 Conflicts:

a. Requiring or recommending one’s own or one’s immediate family member’s textbook or other teaching aids, materials or equipment to be used in connection with UNCSA programs, which produces compensation for the employee or family member.

b. Receiving compensation or gratuities (other than occasional meals, gifts, desk copies of textbooks, and the like) from any individual or entity doing business with the University or UNCSA. Honoraria in excess of customary business expenses or fees are deemed to be gifts.

c. Serving on the board of directors or scientific or artistic advisory board of an enterprise that provides financial support for UNCSA research, productions, performances, or other creative endeavors, and the employee or a member of his or her immediate family may receive such financial support for research or an artistic programming under UNCSA auspices.

d. Accepting support for UNCSA research or creative projects under conditions that require research results to be held confidential, unpublished, or inordinately delayed.

3. Category 3 Conflicts consist of activities that are generally not allowable or permitted unless an approved conflict of interest management plan is in place. The activities below are representative, but not all-inclusive, examples of activities constituting Category 3 Conflicts:

a. Participating in UNCSA research or creative activities involving technology or intellectual property owned by or contractually obligated to (by license or exercise of an option to license, or otherwise) a business in which the employee or a member of the employee’s immediate family has a consulting relationship, has an ownership interest, or holds an executive position.

b. Participating in UNCSA research or creative activities which are funded by a grant or contract from a business in which the employee or a member of the employee’s immediate family an ownership interest.

c. Assigning students, graduate students, or other trainees to UNCSA research or creative projects sponsored by a business in which the employee or a member of the employee’s immediate family has an ownership interest.

4. Category 4 Conflicts are not allowable under any circumstance. The activities below are representative, but not all-inclusive examples of activities constituting Category 4 Conflicts:

a. Making referrals of UNCSA business to an external business in which the employee or a member of the employee’s immediate family has a financial interest.

b. Associating the employee’s own name or work with an external activity with UNCSA in such a way as to profit financially by trading on the reputation or goodwill of UNCSA or UNC, or implying sponsorship or endorsement by UNCSA or UNC. Mere identification of UNCSA or UNC as one’s employer or of one’s position at UNCSA is permitted, provided that such identification is not used in a manner that implies sponsorship or endorsement by UNCSA or UNC.

c. Making unauthorized use of privileged information acquired in connection with one’s UNCSA employment responsibilities.

d. A Covered Employee signing agreements that assign Institution patent and other intellectual property rights to third parties without prior Institutional approval.

e. Any activity otherwise prohibited by law or university policy.

A. Initial Review. The reviewing official has the initial responsibility to review the submitted form and to determine compliance with this policy. They must determine if:

1. All of the appropriate information has been properly and fully submitted; AND

2. The information provided reveals any real or potential Category 2, 3, or 4 Conflict.

B. Review of Category 2 Conflicts. If the initial review determines that an employee has a Category 2 conflict, the following options are available, depending on the circumstances:

1. The employee may take necessary steps to eliminate the conflict through divestiture or severance of significant financial interest or through cessation of the activity; or

2. The reviewing official may grant a waiver with or without specified conditions, such as public disclosure of significant financial interests, modification of the project plan, or monitoring requirements, and may result in the establishment of an approved conflict of interest management plan.

C. Review of Category 3 Conflicts. If the initial review determines that an employee has a Category 3 conflict, the employee must, upon receipt of notice from the reviewing official, take immediate steps to eliminate the conflict or apply for a waiver:

1. In order to obtain a waiver, the employee must demonstrate that, in fact, neither the employee’s objectivity nor UNCSA’s interests would be adversely affected.

2. If the initial reviewing official decides to grant a waiver, with or without conditions, of a Category 3 conflict, the decision and the reasons for it must be forwarded to and reviewed by the next highest administrator who may accept, reject, or modify the decision. If deemed allowable, an approved conflict of interest management plan must be established.

D. Review of Category 4 Conflicts. Category 4 conflicts are not allowable under any circumstance.

E. Appeal. An employee may appeal the reviewing official’s decision to the Provost. In the event that the reviewing official was the Provost, the appeal will be heard by the Chancellor. The decision of the administrator hearing the appeal will be final.

II. Guidelines for Covered Employees Pursuing Certain Federally Funded Research
Certification of Compliance for Public Health Service Funding. Pursuant to 42 C.F.R. §
50.604(g), each application for Public Health Service funding must contain the following certification:

“The University of North Carolina School of the Arts has in effect a written and enforced administrative process to identify and manage, reduce, or eliminate conflicting interests with respect to all research projects for which funding is sought from Public Health Service.

Prior to UNCSA’s expenditure of any funds under the award, UNCSA will report to the Public Health Service awarding component the existence of a conflicting interest (but not the nature of the interest or other details) found by UNCSA and assure that the interest has been managed, reduced, or eliminated in accordance with 42 CFR Part 50; and, for any interest that UNCSA identifies as conflicting subsequent to the initial report under that award, the report will be made and the conflicting interest managed, reduced, or eliminated, at least on an interim basis, within sixty days of that identification.

Further, the University of North Carolina School of the Arts agrees to make information available, upon request, to the U.S. Department of Health and Human Services regarding all conflicting interests identified by UNCSA and how those interests have been managed, reduced, or eliminated to protect the research from bias. UNCSA will otherwise comply with 42 C.F.R., Part 50.