Employee's Failure To Inform Employer Of New Employment With Empoyer's Vendor

It is not uncommon when an employee changes positions for conflicts of interest to arise in the performance of the engineer’s professional duties. The subject of conflict of interest has been considered by the NSPE Board of Ethical Review on a number of occasions. For example, BER Case No. 75-10 involved Engineer A who was employed on a full-time basis by a radio broadcast manufacturer as a sales representative. In addition, Engineer A performed consulting engineering services to organizations in the radio broadcast field, including analysis of their technical problems and, when required, recommendation of certain radio broadcast equipment as may be needed. Engineer A’s engineering reports to his client were prepared in form for filing with the appropriate governmental body having jurisdiction over radio broadcast facilities. In some cases, Engineer A’s engineering reports recommended the use of broadcast equipment manufactured by his employer. After reviewing previous BER cases relating to conflicts of interest (see BER Case Nos. 72-9 and 74-4), the Board concluded that Engineer A may ethically provide consulting services as described only if there is full disclosure of all the facts and circumstances to his client. In reaching its conclusion, the Board noted that it would have been preferable if the client could rely on the technical judgment and recommendations of an engineer without any financial interests in the equipment of any manufacturer, but it is understood that under some circumstances, the client may wish to retain the services of an engineer with an apparent conflict of interest. In the later instance, the client must have full knowledge of all the circumstances -- otherwise the client has been defrauded.

The departure of an employee to an allied company can raise ethical concerns as can the situation when an employee moves over to a competing company. Although on the surface, the departure of the employee might provide both companies with benefits by allowing the two companies to strengthen their relationship and enhance communications between the two companies, there are also conflicts that can arise in the arrangement. The facts in this case identify a clear conflict, or at least the appearance of a potential conflict, faced by the employee involved in the transition.

Under the facts, Engineer A’s primary obligation was to FGH Construction and not to LMN Supplies during the two-week period prior to his departure to LMN Supplies. Engineer A had a basic obligation to not do anything that would unduly prejudice the interests of either FGH Construction or LMN Supplies. However, by failing to provide full disclosure to FGH Construction, Engineer A’s actions have the effect of prejudicing the interests of both FGH Construction and LMN Supplies.

By not informing FGH Construction, Engineer A’s actions will most probably raise some doubt in the minds of the supervisors and perhaps owners of FGH Construction about whether Engineer A’s continued negotiation and approval of bids submitted by LMN Supplies were somehow tainted and could have resulted in inflated costs to FGH Construction or other unearned competitive advantages for the benefit of Engineer A’s new employer, LMN Supplies. Also by failing to disclose the material conflict that exists concerning his new employment with LMN Supplies, Engineer A may have unwittingly planted “seeds of doubt” with FGH Construction and potentially damaged the goodwill that might have existed between FGH Construction and LMN Supplies. Based upon the facts as presented, FGH Construction might wrongly conclude that LMN Supplies somehow persuaded Engineer A not to disclose his new position with LMN Supplies during the two-week period in order to gain some advantages. Engineer A’s failure to fully disclose his new position with LMN Supplies, and to continue to negotiate and approve LMN Supplies’ bids to his current employer, was not in accordance with the spirit or the intent of the NSPE Code. His actions want for the highest standards of honesty and integrity expected of engineers, and were not circumspect.