August 14, 2015

Conflict of Interest in Professional and Business Practices

1. Introduction

All employees are expected to adhere to the highest ethical standards in their professional and business practices. In order to meet these obligations, all faculty and staff should avoid conflicts of interest that may exist between outside activities and obligations to the university.

The objective of this policy is to encourage the full professional development of faculty and staff while minimizing the risk of unacceptable behavior in potential conflict situations.

This policy represents one aspect of the university’s commitment to address and manage conflicts of interest. The university also has a Conflict of Interest in Research policy that applies to all university faculty, staff, other employees, and students who propose, conduct or report research on behalf of the university, and that addresses conflicts of interest related to the conduct of such research. In addition, employees who are healthcare practitioners must comply with USC’s Relationships with Industry policy, particularly the sections of the policy that address consulting and services arrangements, receipt of gifts, and the conduct of research sponsored by pharmaceutical companies, medical device companies, health care suppliers, and their employees or agents.

2. Scope

2.1  This policy applies to all Covered Employees and their Close Relations.

2.2  A “Covered Employee” means all faculty members (including part-time and visiting faculty), staff and other employees, postdoctoral scholars, and students (including graduate students) employed or otherwise engaged by the university. This policy continues to apply to Covered Employees while on sabbatical or other leaves or on vacation, while visiting other institutions, and while consulting with external entities.

2.3  A “Close Relation” means spouses, domestic partners, and parents, children, siblings and each of their respective spouses or domestic partners.

3. Policy

3.1  Each Covered Employee owes professional loyalty to the university and will be alert to the possibility that outside obligations, financial interests, employment, and certain family or intimate relationships can affect that commitment. Therefore, all Covered Employees are responsible for determining whether they, or their Close Relations, have a Conflict of Interest or Commitment (as such terms are defined below) covered by this policy. Because no policy can anticipate the full range of outside relationships and activities that may give rise to Conflicts of Interest or Commitment, Covered Employees must disclose any outside relationship or activity that may give the appearance of a conflict as soon as feasible after discovery of the conflict.

3.2  The university must determine whether a Conflict of Interest and/or Commitment is manageable before a Covered Employee may undertake the activity giving rise to the conflict. The Covered Employee must comply with all measures put in place to manage, reduce, or eliminate conflicts of interest. This includes any requirement that the Covered Employee provide a follow-up disclosure at a reasonable time interval after his or her initial disclosure to provide an update on the status of the Conflict of Interest or Commitment, and the Covered Employee’s compliance with the measures put in place to manage it.

3.3  All disclosures as well as decisions on how to manage the conflict should be documented and maintained by the person or committee to whom disclosure is made, as provided for in this policy. This policy does not preclude the senior vice president, Provost or dean, as appropriate, from requiring a Covered Employee to provide additional Conflict of Interest or Commitment information from time to time, or to do so on a more frequent basis (e.g., semi-annually).

3.4  If a Covered Employee has any questions about whether an outside activity must be disclosed, the Covered Employee should consult with his or her manager (if staff) or dean (if faculty), or contact the Office of Compliance for guidance. Managers, department chairs and deans who become aware that Covered Employees under their supervision have Conflicts of Interest or Commitment covered by this policy are obligated to ensure that the conflict is appropriately disclosed.

4. Professional Conflict of Interest

4.1 Definitions

4.1.1 “Professional Conflict of Interest”:  Under this policy, actual or potential conflicts arise when (a) financial, professional or personal considerations compromise, or have the appearance of compromising, a Covered Employee’s professional loyalty and responsibility to the university, or professional judgment and ability to perform his or her duties and responsibilities to support USC’s best interests, or (b)  a Covered Employee’s financial, professional or personal activities compete (or have the appearance of competing) with the university, or are of such nature that they would adversely impact the prestige of the university, or the teaching, research, service, or patient care missions of the university, or the quality of services provided by USC to its students, alumni, patients, donors, and others.

A Professional Conflict of Interest includes, but is not limited to:

Financial Interests

4.1.1 (a) Referring, negotiating, conducting, or overseeing any contracts, agreements, or other business relationships to or with an entity: (1) from which the Covered Employee or Close Relation receives any compensation for services performed; (2) in which the Covered Employee or Close Relation holds an equity interest (i.e. stocks, options, warrants), with the exception of equity interests managed by a third party such as a mutual fund; or (3) in which the Covered Employee or Close Relation has a management role (director, officer, supervisor, or any other position that has significant decision-making authority).

These provisions also include situations where a faculty or staff member in the Covered Employee’s chain of command maintains any of the relationships described above with an outside entity, and the Covered Employee has actual knowledge of the relationship at the time he or she is soliciting or conducting university business with the outside entity.

4.1.1 (b) Soliciting or conducting university business with, or referring university business to, a university trustee, officer, or “Disqualified Person” without Board of Trustee approval. A “Disqualified Person” means anyone in a position to exercise substantial influence over USC’s affairs, currently or within the last five years. This includes officer and directors/trustees, family members of officers and directors/trustees, and entities more than 35% controlled by the above individuals, alone or in combination.

4.1.1 (c) Soliciting or conducting university business with, or referring university business to, a member of the Board of Councilors, or any other advisory board within the Covered Employee’s school.

Consulting Relationships and Management Roles

4.1.1 (d) Maintaining an external management role or consulting or other business or employment relationship, regardless of compensation, with a vendor, competitor or supplier of the university.

4.1.1 (e) Serving in a management role or on a board or advisory committee of an entity that currently conducts business with the university, or that seeks to conduct business with the university. Note that under USC’s Relationships with Industry policy, Covered Employees who are healthcare professionals must disclose to their department chair or designee all contemplated consulting relationships with pharmaceutical suppliers and device manufacturers, including relationships that contemplate serving on a board or advisory committee. A Covered Employee with such a consulting relationship need only comply with the Relationships with Industry policy in order to meet his or her disclosure obligation to the university. The Relationships with Industry policy provides more detail regarding the assessment the department chair will make once a disclosure has been made.)

Students

4.1.1 (f) For faculty, employing or seeking to employ or otherwise utilize a student’s services in connection with a business venture when the faculty member has an academic or advising relationship with the student(s).

4.1.2 The “Professional Conflict Review Committee” (PCRC), or a subcommittee, meets on an ad hoc basis and is charged with reviewing Conflict of Interest disclosures and, as appropriate, formulating recommendations to manage, reduce, or eliminate Professional Conflicts of Interest. The PCRC consists of:

  • The Vice Provost for Academic and Faculty Affairs or his/her designee;
  • A representative from Human Resources;
  • A representative from the Comptroller;
  • The Assistant Vice President for Financial Services or his/her designee;
  • A representative from Purchasing Services;
  • A representative from the Office of General Counsel;
  • A representative from the Office of Compliance;
  • A representative from the Academic Senate, as appointed by its President; and
  • Such other members as may be appointed from time to time by the Senior Vice President, Administration.

4.2 Procedure

4.2.1 All Professional Conflicts of Interest must be disclosed to the Professional Conflict Review Committee (PCRC) as follows:

4.2.1 (a) Covered Employees must disclose potential conflicts through “diSClose”, USC’s online system for conflict disclosure (https://disclose.usc.edu).  Disclosures should be made as soon as feasible after discovery of the potential conflict.

4.2.1 (b) A Covered Employee must notify the PCRC in writing if there is any significant change in the nature of the outside activity. This notification should be made as soon as is practical after the Covered Employee becomes aware of the change. If a disclosure relates to current research, disclosure must be made to the Office of Compliance in the manner described in the Conflict of Interest in Research policy.)

4.2.2 The PCRC will make an initial assessment of whether it will review the disclosure, or instead refer the disclosure to a Covered Employee’s manager (in the case of a staff employee), to the Provost’s designee (where so provided in the Faculty Handbook), a department chair or dean (in other cases involving a faculty employee), or to an authorized committee (e.g., the Value Analysis Committee for purchases of physician preference items) for resolution.

4.2.3 For disclosures it reviews, the PCRC will consult with the manager, chair or dean, as appropriate, to assist in developing a plan to manage, reduce, or eliminate any conflict.   The manager, chair or dean, or designee as appropriate, is responsible for implementing the plan put in place by the PCRC.

4.3 Management

4.3.1 There are three possible outcomes of the disclosure process:

  • Permitted as is;
  • Permitted contingent upon the implementation of one or more actions for managing the Professional Conflict of Interest;
  • Unacceptable, and thus prohibited.

4.3.2  The Covered Employee is responsible for following each item of the management plan put into place with regard to the conflict. Management of a Professional Conflict of Interest could include, among other things:

  • Appropriate disclosure of the Professional Conflict of Interest to parties involved in a transaction;
  • Recusal from participating in certain negotiations, decisions, or transactions;
  • Recusal from managing or supervising particular faculty members, staff or student employees, consultants, temporary agency employees, volunteers, or others engaged by the university;
  • Recusal from managing or overseeing certain business transactions;
  • Severance of outside relationships that pose conflicts;
  • Appropriate monitoring and oversight by university management, including but not limited to the PCRC;
  • Referral of professional conflicts involving soliciting or conducting university business with a university trustee, officer, or “Disqualified Person” to the Office of General Counsel for resolution;
  • Obtaining approval required by the Faculty Handbook, staff employment policies, or other relevant university policies; or
  • Updating the disclosure on at least an annual basis, which must address compliance with the management plan imposed and provide an update on the current status of the relationship giving rise to the conflict.

5. Personal Conflict of Interest

5.1 Definitions

5.1.1 A “Personal Conflict of Interest” under this policy arises when a Covered Employee seeks to participate directly or indirectly in or influence directly or indirectly any employment or academic decision that involves a direct benefit or detriment to the Covered Employee or to a Close Relation of the Covered Employee. An employment or academic decision includes decisions relating to initial appointment or hire, retention, termination, promotion, compensation, benefits, leave of absence or decisions on admission, grades or academic advancement. A Personal Conflict of Interest also arises when the Covered Employee is in a senior leadership position (e.g., principal investigator, chair, director, dean, vice president, senior vice president) and the Close Relation of the Covered Employee seeks employment in the same department, unit or school.

5.1.2 Having a family or other intimate relationship to a Covered Employee will not be a bar to equal opportunity in education or employment. At the same time, Covered Employees should take all reasonable steps to avoid a conflict of interest or the appearance of a conflict of interest in their USC work that could arise from such a relationship. Accordingly, Personal Conflicts of Interest are unacceptable unless managed pursuant to this policy.

5.2 Procedure

5.2.1 For Covered Employees who are faculty, all Personal Conflicts of Interest must:

  • Be disclosed in writing to the faculty member’s dean prior to hire of or academic decision relating to the Close Relation (if the Personal Conflict of Interest involves the dean, the disclosure should be made in writing to the Provost or Provost designee);
  • For new hires, include documentation that there has been an adequate open search and that the Close Relation is the most qualified for the position. For certain new faculty hires, satisfaction of the open search requirement can be met through other means (e.g., faculty with outstanding qualifications and expertise who can fill a special need; dual career hires). Consult with the Vice Provost for Academic and Faculty Affairs for additional guidance;
  • Include a proposed plan for how the conflict will be managed, which at minimum, should include the elements in Section 5.3 of this policy; and
  • Be approved in writing by the dean and the Provost’s designee. The dean and/or Provost’s designee may modify the proposed management plan at their discretion.

5.2.2 For Covered Employees who are staff, all Personal Conflicts of Interest must:

  • Be disclosed in writing to the staff member’s manager prior to hire of the Close Relation;
  • Present documentation that there has been an adequate open search and that the Close Relation is the most qualified for the position;
  • Include a proposed plan for how the conflict will be managed, which at minimum, should incorporate the elements in Section 5.3 of this policy; and
  • Be approved in writing by the Covered Employee’s manager and the Senior Vice President for Administration’s designee. The manager and/or the Senior Vice President for Administration’s designee may modify the proposed management plan at their discretion.

5.3 Management

5.3.1 All Personal Conflicts of Interest are not permitted unless managed consistent with Section 5.3.2. In addition, a Covered Employee and Close Relation should not have a direct reporting or evaluation relationship. Direct reporting relationships are deemed unacceptable absent written approval from the Provost or Provost designee if the Covered Employee is a faculty member or the Senior Vice President for Administration or designee if the Covered Employee is a staff member.

5.3.2 Personal Conflicts of Interest require that:

  • The initial salary of the Close Relation be determined through reference to a market survey performed by the Compensation Office, or (for faculty) an analysis of comparable USC salaries performed by the Vice Provost for Academic and Faculty Affairs;
  • Performance evaluations and any associated merit-based pay increase, or academic decision, be made or reviewed by an independent committee or a designee of the Provost (for faculty) or applicable senior vice president (for staff).
  • Individuals with complaints or concerns about the proposed reporting relationship have a formal procedure to raise issues, which includes having concerns raised directly with Human Resources Administration or the Vice Provost for Academic and Faculty Affairs.
  • The Covered Employee submits reports at least annually regarding continued compliance with the approved management plan. If the Covered Employee is a faculty member, the reports should be submitted to the dean and Provost designee. If the Covered Employee is a staff member, the reports should be submitted to the manager and the Senior Vice President for Administration designee. Approval of the conflict can be revoked at any time at the discretion of the Provost or Senior Vice President for Administration or their designees.

6. Conflict of Commitment

6.1 Definitions

6.1.1 A Conflict of Commitment under this policy relates to a Covered Employee’s distribution of effort between his/her university employment and his/her participation in an outside activity. Although participation in outside activities is encouraged, activities that interfere with the Covered Employee’s primary professional responsibility to the university create a Conflict of Commitment.

6.1.2 Faculty members who engage in outside activity must also adhere to Section 3-I of the Faculty Handbook. This includes, but is not limited to, Sections 3-I(3) and 3-I(4) which provide that outside consulting is a conditional privilege granted by the university, and also limits a faculty member’s engagement in such activity to no more than one day per week on average during the contract period of service. For additional requirements regarding conflicts of commitment, researchers should refer to the Conflict of Interest in Research policy, and Keck School of Medicine faculty should refer to the General Provisions for Keck School of Medicine.

Outside activities include, but are not limited to:

  • Consulting activities
  • An ownership interest or a management role in any outside entity
  • Employment by another institution or employer
  • Participation (including roles as a principal investigator, co-principal investigator, paid consultant, or paid staff member) on projects supported by government or private grants, contracts, or gifts at another entity.
  • Conducting clinical practice or performing clinical services outside the scope of university full-time employment
  • Involvement in any activity that requires regular or extensive absence from the university during times when the Covered Employee is required or expected to perform the duties and responsibilities of his or her university employment

6.2 Procedure

6.2.1 For Covered Employees who are staff, disclosures of Conflicts of Commitment must be made in writing to the Covered Employee’s manager prior to undertaking the activity giving rise to the Conflict of Commitment.

6.2.2 For Covered Employees who are faculty, disclosure must be made as provided in the Faculty Handbook, Section 3-I (“Outside Activities of Faculty Members”), with respect to the following activities:

  • Consulting activities, if these activities exceed the limits under the Faculty Handbook or would take place at a time when the faculty member is expected to perform university duties and responsibilities
  • Simultaneous appointment at another educational institution
  • Activity as an educator with an outside institution
  • Holding tenure simultaneously at two institutions
  • Engaging in course creation on behalf of or through any outside entity
  • Participation on sponsored projects at another entity, except that faculty located at CHLA are not required to make a disclosure for research conducted at CHLA
  • Other activities mentioned in Section 6.1

6.2.3 Participation as a principal investigator, co-principal investigator, co-investigator, paid consultant or paid staff member on sponsored projects at another entity (as distinct from research collaborations with other entities via a subcontract or subaward to USC) must be disclosed to the appropriate dean and the Vice President for Research and are prohibited unless specially approved by the dean and the Vice President for Research.

6.2.4 To the extent that any faculty-related Conflict of Commitment is not specifically addressed by the Faculty Handbook or this policy, disclosure should be made to the department chair and dean.

6.3 Management

6.3.1 There are three possible outcomes of the disclosure process:

  • Permitted as is;
  • Permitted contingent upon the implementation of one or more actions for managing the Conflict of Commitment;
  • Unacceptable, and thus prohibited.

6.3.2 Management of a Conflict of Commitment could include, among other things:

  • Appropriate disclosure of the Conflict of Commitment to parties involved in a transaction;
  • Severance of outside relationships that pose conflicts;
  • Appropriate monitoring and oversight by university management, including but not limited to the PCRC;
  • Imposition of an unpaid leave of absence;
  • For faculty, limiting outside professional activity to no more than one day per week on average during the contract period of service, and also ensuring that it does not interfere with the duties and responsibilities of his or her university employment, create a conflict or an appearance of a conflict with any USC program, or dilute USC’s academic stature;
  • Obtaining written approval before acting as an educator at another college or university while holding a USC faculty full- or part-time appointment, and ensuring that the concurrent teaching does not interfere with the duties and responsibilities of the faculty member’s USC employment, create a conflict or an appearance of a conflict with any USC program, or dilute USC’s academic stature. Approval for full-time faculty in special or emergency cases as provided in the Faculty Handbook is granted by the dean. Approval in other situations is granted by the Provost or Provost’s designee;
  • For faculty, requiring him/her to obtain approval from his/her dean before engaging in instruction or course creation for other outside entities where doing so interferes with the duties and responsibilities of his/her USC employment, creates a conflict or an appearance of a conflict with any USC program, or dilutes USC’s academic stature.

6.3.3  For Covered Employees who are staff, the staff employee’s manager is responsible for putting into place measures for managing the conflict of commitment. For Covered Employees who are faculty, the faculty member’s department chair and/or dean are responsible for putting into place measures for managing the conflict of commitment.

6.3.4 A faculty member must obtain written approval from his or her dean after consultation with the Vice President for Research before participating as a principal investigator, co-principal investigator, co-investigator, paid consultant or paid staff member on sponsored projects at another college or university, or other entity not affiliated with USC.

6.3.5 Additional compensation beyond a staff member’s base salary (or beyond a faculty member’s core salary from his or her primary department) by a second department requires review (for staff) by the Compensation Office and (for both staff and faculty) approval in advance by the dean or appropriate vice president of both the employee’s home department and the second department. Compensation for such employment must comply with university policies and procedures concerning compensation, overload payments, and overtime compensation. Reimbursement by the second department to the primary department is generally preferred to the payment of additional compensation by the second department to the individual. Additional compensation for research activity (excluding supplemental summer salary) is not allowed unless special permission is obtained from the Vice President for Research.

6.3.6 An individual who performs both staff functions and teaching activities is considered a full-time staff employee with a concurrent part-time faculty appointment and title, and is governed by all staff employment policies. Payments to staff employees for teaching activities cannot be made without prior written approval of the Senior Vice President, Administration. Full-time faculty members with administrative duties may receive an additional stipend with approval of the Provost.

7. Unacceptable Conflict

7.1 Definitions

An Unacceptable Conflict is a Conflict of Interest or Commitment maintained by a Covered Employee or Close Relation that is never acceptable and therefore, should not occur. Immediate action must be undertaken to eliminate any Unacceptable Conflict. Unacceptable Conflicts include:

Gifts and Reimbursements:

7.1(a)  Soliciting or receiving anything of value (i.e. personal gifts, special favors) on behalf of or as a representative of USC in exchange for any advantage or other action by the Covered Employee in favor of the outside entity or individual.

7.1 (b) Soliciting or receiving personal gifts or special favors from individuals or entities that provide, or seek to provide, services or supplies to the university. This does not include occasional gifts of nominal or modest value (less than $50.00 in value or isolated invitations to lunch or dinner). Under USC’s Relationships with Industry policy, Covered Employees who have influence over the prescribing, dispensing, or purchasing of products or services from pharmaceutical companies, biotechnology companies, device and medical equipment manufacturers and other healthcare suppliers (“Industry”), may not accept any gift from Industry, regardless of value.

7.1 (c) Receiving reimbursements for travel, accommodations, meals, or other incidentals from actual or potential vendors above what is incidental to and of modest value for attendance at meetings or conferences. Certain units and departments do not permit the receipt of any reimbursement from an actual or potential vendor. Consult Senior Business Officer for further guidance.

7.1 (d) Personally receiving, or receiving on behalf of or as a representative of the university, anything of value from an existing or prospective vendor or vendors in exchange for any advantage or consideration given to the vendor.

Financial Interests and Consulting Relationships:

7.1 (e) Participating in any negotiation or transaction between the university and a business entity in which the Covered Employee or his or her Close Relation has a Financial Interest or Consulting Relationship (See Sections 3.4 and 3.5, respectively).

Use of University Proprietary Information and Resources:

7.1 (f) Unauthorized use of confidential, privileged or proprietary information obtained in connection with a Covered Employee’s university position, or use of such information for a Covered Employee’s personal benefit or the benefit of another person or entity.

7.1 (g) Assigning USC-owned intellectual property to a third party without USC approval. See USC’s Intellectual Property policy.

7.1 (h) Using university resources or supplies (except for incidental use) outside the scope of a Covered Employee’s employment (e.g., in support of personal business ventures) without the express written approval of the Provost (for faculty), or the Senior Vice President, Administration (for staff), or their designees

Participation in Employment Decisions:

7.1 (i) Participating directly or indirectly in an employment decision (such as decisions concerning initial appointment, retention, termination, promotion, compensation, benefits or leave of absence) that involves either a direct benefit or detriment to a Close Relation of the Covered Employee, unless the conflict of interest is managed pursuant to Section 5 of this policy.

Endorsements:

7.1 (j) Any action that may seem to commit the university to an endorsement (e.g., of a business, private practice, commercial product, or political position) unless expressly authorized in advance by the Provost or his or her designee. This does not preclude a Covered Employee from making solely factual representations about the quality of a good or service, provided the Covered Employee includes a disclaimer that his or her views do not represent those of the university. A faculty member may state his or her academic position for identification in the media, or as part of a biographical note.

7.1 (k) Associating a Covered Employee or his or her Close Relation’s name with the university in a way that suggests that the Covered Employee’s views or opinions represent the views of the university.

Competing with the University:

7.1 (l) Competing with the university as an individual, or by serving as an employee, officer, manager, board member, or contractor of another entity that competes with the university, or through a separate entity owned or operated by a Covered Employee or his or her Close Relation that competes with the university. Competition includes, for example, solicitation by the entity or its affiliate of any contracts, research awards or grants that the university would also be eligible to solicit from a source, governmental or private. Competition also includes using or allowing the use of courseware created and/or owned by a faculty member in a manner that competes with or diminishes its value to the university. (For further detail on ownership and appropriate uses of courseware created by a faculty member, see USC’s Courseware policy.)

Dual Appointments:

7.1 (m)  Holding tenure simultaneously at two institutions, unless specially authorized by the President of the university based on extraordinary circumstances; holding an untenured faculty appointment at another institution as well as a USC appointment, unless doing so in connection with an approved leave, or approved educational work, or as otherwise approved by the Provost.

8.0 Relationship with Other University Policies

8.1 Covered Employees who are healthcare professionals must also comply with USC’s Relationships with Industry policy. Those obligations may apply even if a disclosure is not required under this policy.

8.2 Covered Employees who are participating in research must comply with USC’s Conflict of Interest in Research policy.

9.0 Enforcement

9.1 Failure to report a Conflict of Interest or Commitment, refusal to cooperate in the management of a disclosed conflict, or engaging in an unacceptable conflict may be cause for disciplinary action and/or termination of a vendor/supplier relationship, as applicable. Possible violations of this policy include, but are not limited to, failure to file an appropriate disclosure or furnishing false, misleading, or incomplete information in a disclosure. Violations of this policy by a faculty member amount to serious misconduct, and sanctions for faculty will observe all provisions of the Faculty Handbook. Sanctions for violations of this policy for staff or other non-faculty employees will observe all provisions of the staff employment policies. Sanctions for violations of this policy for students will observe all provisions of the policies contained in SCampus.

9.2 Any disciplinary action against a faculty or staff employee under this policy must take into account the scale of the offense and the degree of wrongdoing.

Related Policy and Additional References

Responsible Office

Office of Compliance

ooc.usc.edu
complian@usc.edu
(213) 740-8258

Issued by

Michael Quick, Provost and Senior Vice President, Academic Affairs
Todd R. Dickey, Senior Vice President, Administration
University of Southern California