How to Use a Conflict of Interest Waiver to Improve Compliance

Identifying, defining and mitigating potential conflicts of interest are vital steps an organization must take to ensure that they maintain the necessary ethical transparency to compete in today’s business landscape. The first step in this process is to foster an environment where employees are able to disclose potential conflicts of interest, as well as all relevant context for the situation. But once a business is aware of an employee’s potential conflict of interest, what comes next? The answer to this question depends on whether the conflict is permissible or not. 

If you’re made aware of a potential conflict and have deemed it permissible, your next step may be to formalize your decision with a conflict of interest waiver. This waiver is a formal legal document serving as proof that an employee has made all necessary parties aware of the potential conflict. Its function in the workplace is to acknowledge and disclose conflicts of interest, obtain informed consent from all parties involved, and establish safeguards or mitigation strategies to ensure transparency and ethical decision-making when conflicts arise. 

If waivers aren’t part of your conflict of interest disclosure process, your COI management efforts could be suffering from a lack of accountability and proper documentation. 

When Are Waivers Needed?

Before you start rolling out a conflict of interest waiver in your organization, consider how you’ll be using them. The first step is identifying potential employee conflicts of interest, such as through a conflict of interest disclosure questionnaire distributed to employees. Employees should disclose the nature of the potential conflict (do they have a close relationship with a competitor? Do they have financial interests in another organization? Etc). They should also relate the timing and duration of the conflict, if applicable, any additional information that provides context, and the steps they can take to mitigate this conflict. 

Once all of this information is taken into account, the company may decide to provide a conflict of interest waiver, acknowledging that all parties are aware of the situation and allowing the employee to continue their work duties while recognizing and mitigating the issues the potential conflict may create.

Does Your Business Need a Conflict of Interest Waiver?

Benefits 

Your employees are the soul of your organization, and granting a conflict of interest waiver to employees with potential conflicts demonstrates that your organization values and trusts the people who work there. It also acknowledges the employee’s willingness to disclose the conflict, and seeks to find a solution that allows them to continue contributing their expertise to the company and remain in the role, reducing the risk of losing skills and knowledge vital to the organization.

By granting a conflict of interest waiver, the company doing so also openly acknowledges the conflict of interest while establishing a framework for managing it. Embracing transparency in this way helps maintain trust and credibility both internally and externally. In the spirit of this transparency, granting a waiver provides an opportunity for the organization and the employee to work together to develop a mitigation plan minimizing the conflict’s potential negative impact. This plan could include steps such as establishing additional oversight for the employee in question, or recusal from certain decision-making processes.

Risks

As in all things, there are also some potential risks and downsides to take into account when considering whether the use of a conflict of interest waiver is right for your organization. One potential risk is that granting a waiver may create a perception of favoritism or unequal treatment among other employees. If the waiver is not handled transparently or consistently, this could cause a potential erosion of trust in the organization’s commitment to ethical conduct and fairness. 

Additionally, even with a mitigation plan in place, conflicts of interest may still influence an employee’s actions or their decision-making process. If the steps outlined in the conflict of interest waiver are not followed to the letter, this bias may compromise the integrity and impartiality of the employee’s role within the company, potentially leading to adverse outcomes or even legal consequences. There are also risks to the organization if the conflict of interest becomes publicly known; besides the possibility for reputational damage, there could also be legal implications, such as potential fines or lawsuits, if the conflict violates regulatory or legal requirements. 

What’s in a Conflict of Interest Waiver?

Once you make the decision to provide an employee with a conflict of interest waiver, you want to ensure that the document is as clear and comprehensive as possible. Primarily, the waiver should clearly define what constitutes a conflict of interest, and outline disclosure requirements. The waiver should also explain the consequences of failing to disclose conflicts, or failing to act accordingly in the face of an existing potential conflict. The waiver should also include questions about what steps are being taken to monitor the existing conflict, and avoid any potential ethical or legal breaches. 

It should also emphasize the importance of maintaining confidentiality and the need for ongoing monitoring and review of conflicts of interest. Finally, the waiver should include a statement of acknowledgement and informed consent, indicating that all relevant employees understand the document’s outlined terms and conditions.

Get Started with ComplianceBridge

Recognizing and mitigating potential conflicts within an organization is a big task. ComplianceBridge recognizes that, and has the tools to help. Our easy-to-use compliance software makes creating the best conflict of interest waiver for your business as efficient and painless as possible. 

Use ComplianceBridge’s software to schedule recurring periods of conflict of interest disclosure, create custom question sets, coordinate dissemination, and track responses as they come in. Because our software automates everything, including distribution, you can be sure that no employees slip through the cracks, and that no information gets lost in the shuffle. 

See how ComplianceBridge is your best bet for monitoring conflicts of interest within your business and contact us for a demo today!