November/December 2018

On Ethics: You Be the Judge
Working 9–5 … and Then Some

A PE’s side business catches the attention of his employer.

What Do You Think?

What are Brush’s ethical obligations under the circumstances? What are Houston’s ethical obligations under the circumstances?

What the Board of Ethical Review Said

This case has similarities and differences to earlier BER cases. In the current case, unlike BER Case 99-3, there does not appear to be any lack of knowledge on the part of the employer regarding the engineer’s ownership and involvement in the enterprise software engineering firm.

Instead, the present case is more in line with BER Case 97-1, in which the employer was aware of and consented to the engineer’s outside activities. In BER Case 97-1, the Board concluded that it was ethical for the engineer to function in both capacities. The Board noted that both the state government agency and the engineering firm were aware of the engineer’s activities as a dual employee and did not object to these activities. The Board noted, however, that should a conflict of interest arise (e.g., where the engineer or the firm’s activities conflict with the governmental employer’s activities or interests), the engineer would need to carefully address those activities, consistent with NSPE Code of Ethics sections III.6.b., II.4.d., II.4.e., and other applicable provisions of the Code.

The Board is a bit troubled, however, by the Dynamo Company’s lack of a policy regarding an employee’s outside activities as well as the lack of a policy regarding contracting with current employees and their outside independent businesses. The Board does not wish to unduly restrict or limit the professional and business activities and opportunities for professional engineers or suggest business practices for engineering firms. But the lack of any policy guidance for employees could create an ethical vacuum under which an employee could easily run afoul of ethical principles relating to the obligation of employees to their employer or clients, such as the basic obligation to act as a faithful agent or trustee. In addition, there may be regulatory or legal obligations, depending on the Dynamo Company’s size and, whether the Dynamo Company is a closely held or public company, as well as to any public or private clients with whom the company is engaged. These obligations, of which the Dynamo Company and company president Tom Houston must be mindful, cover issues such as conflicts of interest, self-dealing, nepotism, and others.

Conclusion

It was ethical for Brush to function in both capacities as an employee and as a contractor to the Dynamo Company. However, should a conflict of interest or any adversarial relationship arise, Brush may need to recuse himself from any decisions relating to Arc Lite’s work with Dynamo or resign from Dynamo.

The Dynamo Company’s lack of any policy guidance for employees is concerning and could lead employees to run afoul of ethical principles relating to the obligation employees have to their employer or clients. The Dynamo Company and its president must also be mindful of possible additional regulatory or legal obligations covering issues such as conflicts of interest, self-dealing, and nepotism.

For more information, see BER Case No. 14-7.