(Pix © Larry Catá Backer 2016)
In Just Because it is Legal Doesn't Make it Right--The Extension of University Control of Employee "Outside Business Activity" I considered the way that the most pernicious aspects of the master-servant relationship tolerated in U.S. law has been creeping into the relationship between the university and its faculty. That creeping has been embedded in increasingly exploitative "conflict of commitment" and "Management of Teaching Services" rules that universities have begun to use as a means of controlling the productive capacity of its employees even beyond the scope of their contract periods. Three distinct aspects were noted: (1) Many research 1 universities have begun to seek to claim for themselves not just the fruits of the labor they paid for in hiring staff, but also to control and exploit all faculty productive capacity even beyond contract term periods. (2) At the same time, the university has begun to see in their faculty an extension of their brand--the objectification of the human being who serve as faculty..in a way that reduces them to factors in the production of university reputation ONLY, and thus amenable to control by the university at all times as if they were other sorts of property. (3) Lastly, the university sees in the aggregated work activities of faculty an enormous source of data that could be better exploited and thus view rules regulation work beyond that compensated through university contracts as a valuable information asset to be harvested.
These trends have not occurred in a vacuum. There is no disputing that individuals have taken advantage of the porous nature of the teaching-university relationship. These include multiple simultaneous full time teaching producing, in the most egregious cases multiple simultaneous tenured appointments. Outside consulting during the academic year can become so excessive that it interferes with compensated expectations for research, teaching and service. Outside activity might conflict with the interests of the university directly (I take as more hysterical, strategic, and overblown university efforts to create prophylactic rules that extend conflict beyond direct and substantial conflicts between faculty activity and university interests).
It has been in that context that universities have sought to protect their legitimate interests--and investment--in their faculty. And usually that has produced badly drafted and overblown regulatory efforts, usually drafted by lawyers or administrators with little experience regulatory drafting but enthusiastic to extend university authority to the full reach of the law. The result has been characterized by overreaching that at times might suggest that the now popular university ethics rules do not apply to its own regulatory activities. Worse, these regulatory efforts tend to become complex baroque affairs to collapse into incoherence by weight of their own overwrought cleverness--none of which provides real substantive benefit to the university. Compare typical variations on the conflict of interest, conflict of commitment and outside teaching and consulting policies: University of Georgia; University of Washington; University of Texas; University of Utah; University of Maryland; and Purdue University.
That is regrettable. But fairly easy to fix IF (the university is willing to take a reasonable position and faculty are willing to engage in outside activities judiciously and in good faith. To that end a simple rule that is easy to understand and easy to implement, a rule that is easy to monitor and apply might be the most useful mechanism to balance the interests of university and faculty- That simple rule ought to be respectful of the faculty's right to employ his own productive forces when he is not rendering service to the university, while protecting the university in its legitimate expectation that its employees will not shirk. The easiest approach is to provide a simple safe harbor rule for faculty consulting and teaching outside the university, one that is entirely focused on those time periods when the faculty member is employed by the university (usually under a 9 month contract), but relinquishes control when the university does not pay its faculty for services. At the same time, such a simple rule ought to be generous in permitting the university to harvest data about such activity--to the extent that such data is shared with those contributing information.
It has been in that context that universities have sought to protect their legitimate interests--and investment--in their faculty. And usually that has produced badly drafted and overblown regulatory efforts, usually drafted by lawyers or administrators with little experience regulatory drafting but enthusiastic to extend university authority to the full reach of the law. The result has been characterized by overreaching that at times might suggest that the now popular university ethics rules do not apply to its own regulatory activities. Worse, these regulatory efforts tend to become complex baroque affairs to collapse into incoherence by weight of their own overwrought cleverness--none of which provides real substantive benefit to the university. Compare typical variations on the conflict of interest, conflict of commitment and outside teaching and consulting policies: University of Georgia; University of Washington; University of Texas; University of Utah; University of Maryland; and Purdue University.
That is regrettable. But fairly easy to fix IF (the university is willing to take a reasonable position and faculty are willing to engage in outside activities judiciously and in good faith. To that end a simple rule that is easy to understand and easy to implement, a rule that is easy to monitor and apply might be the most useful mechanism to balance the interests of university and faculty- That simple rule ought to be respectful of the faculty's right to employ his own productive forces when he is not rendering service to the university, while protecting the university in its legitimate expectation that its employees will not shirk. The easiest approach is to provide a simple safe harbor rule for faculty consulting and teaching outside the university, one that is entirely focused on those time periods when the faculty member is employed by the university (usually under a 9 month contract), but relinquishes control when the university does not pay its faculty for services. At the same time, such a simple rule ought to be generous in permitting the university to harvest data about such activity--to the extent that such data is shared with those contributing information.
I have produced a model that is geared for Penn State but is easily applicable to other major research universities. It follows. Comments and reactions welcome. For a variation See Michigan State University. For an alternative consider Harvard's Statement.
Policy HR80 OUTSIDE BUSINESS ACTIVITIES and PRIVATE CONSULTING (formerly Private Consulting Practice)
POLICY'S INITIAL DATE: June 27, 1974
THIS VERSION EFFECTIVE:
Contents:
· Purpose
· Definitions
· Policy
· Appointment Period
· Required Prior Approval and Annual Reporting
· Administrative Reporting
· Responsibility for Private Consulting Services
· Use of University Facilities and Resources
· Involvement of Students and Staff
· Management and Oversight
· Noncompliance
· Rate of Compensation, Tax Consequences and Legal Advice
· Internal Consulting and Contracting
· Intellectual Property
· Cross References
PURPOSE
This Policy has two principal purposes. The first is to set out the rules under which Outside Business Activities, such as Private Consulting, that may be undertaken by University employees, including faculty, and administrative personnel during their respective Appointment Periods. The second is to provide a basis for reporting Outside Business Activities of faculty to the University.
This Policy is not intended to discourage Outside Business Activities and Private Consulting, but to ensure that all such activities do not conflict or materially interfere with any employee’s appointment with the University, with reference to the University’s mission. The University affirms the right of employees, including faculty, over their own personal autonomy, including their authority over their own labor and undertakings and affirm that the employment relationship between the University and its employees must be reasonably interpreted to balance the right of the University to the value of the employment services for which it has contracted against the fundamental right of individuals over their own persons, including their labor.
This Policy does not apply to Fixed Term II (FT2) faculty (see Policy HR103), staff, or graduate students. University staff are expected to follow all University Human Resource policies concerning time worked and time reporting applicable to staff. Permission to engage in Outside Business Activities by staff and how those hours are accounted for is not subject to this Policy. Engaging in Outside Business Activities by students and post-doctoral scholars or fellows is at the discretion of his/her supervisor or academic program and must comply with all applicable University policies related to his/her University employment or contractual agreement.
DEFINITIONS
Appointment Period
A faculty member’s academic appointment period (usually either 9 month or twelve month), including periods covered by supplemental University appointments, e.g., twelve week summer appointment constitute the Appointment Period. This Policy applies to Outside Business Activities that occur during the Appointment Period. Related policies may apply regardless of the appointment period, e.g., Use of Facilities and Resources, Involvement of Students (see Policy RP06, Disclosure and Management of Significant Financial Interests and Policy HR91, Conflict of Interest). This HR 80 does not otherwise limit or constrain the application of other university rules and policies.
Outside Business Activities
Entrepreneurial or professional service, paid or unpaid, that is in the general area of expertise for which the faculty member is employed by the University but is beyond the scope of the individual's University employment responsibilities. Each department, or other relevant unit, shall develop a listing of general areas of expertise. A faculty member shall declare his or her general area of expertise from such a listing which shall be available publicly. Such a declaration shall be updated as necessary within a reasonable time after modification is necessary.
Outside Business Activities do not include any of the following:
--Presentations at professional meetings and other similar gatherings;
--Peer review of articles and grant proposals;
--Leadership positions in professional societies;
--Preparation of scholarly publications;
--Unpaid scholarly collaboration at another institution of higher education (including collaboration pursuant to which an hororarium is provided);
--Editorial services for educational or professional organizations;
--Service on advisory committees or evaluation panels for governmental funding agencies, nonprofit organization, nonprofit foundations, or educational organizations in any capacity;
--Service with accreditation agencies;
--Conducting workshops for professional societies; or
--Musical and other creative performances and exhibitions, if there is an expectation in the faculty member's discipline that he/she will engage in such performances or exhibitions.
Outside Business Activities always include the following:
--Private Consulting (defined below);
---Teaching for an Entity Other than the University (defined below);
--Founding or co-founding a company or other third party entity;
--Outside Business Activities/Private Consulting for a third party entity in which the faculty member holds non-public equity;
--Assuming an executive or management position for a third party entity (e.g., as President, Chief Scientific Officer, etc.);
--Becoming an employee of a company or other third party entity;
Private Consulting
A form of Outside Business Activity that is intended to further the interests of a third party entity or person, usually evidenced by a contractual arrangement between the faculty member (as consultant) and a third party (as client), in return for compensation.
Teaching for an Entity other than the University
A form of Outside Business Activity which includes teaching engagements for semester length courses at a post secondary institution of higher education in the United States other than the University. Teaching engagements shorter than semester length courses are not subject to this HR 80, but may be addressed by Policy AD77 Engaging in Outside Professional Activities (Conflict of Commitment).
POLICY ON OUTSIDE BUSINESS ACTIVITIES
During an Appointment Period, a faculty member may engage in Outside Business Activities for no more than forty (40) hours per month calculated by averaging the total number of hours engaged in Outside Business Activities by the number of months in the Appointment Period. Thus, faculty with a thirty-six (36) week appointment may consult for an average maximum of forty (40) hours per month for the nine months of his/her appointment period, but no more than 360 hours total during that nine month period; and, faculty with a forty-eight (48) week appointment may consult for an average maximum of forty (40) hours per month for the twelve months of his/her appointment period, but no more than 480 hours total during that twelve month period.
Outside Business Activities engaged in beyond any Appointment Period are not subject to the annual hours limitations of this HR 80.
Any Outside Business Activities engaged in by faculty:
1. Shall not interfere with the performance of his/her University duties or other contractual obligations to the University (including non-classroom and non-research responsibilities expected of all faculty members);
2. Should strive to be consistant with his/her professional stature or academic proficiency;
3. Shall not violate this Policy or any other University policies or regulations including, but not limited to, policies or regulations related to intellectual property, conflict of interest, or use the University's name, logo, letterhead, or other resources;
4. Shall require prior approval as outlined below ("Required Prior Approval") if it exceeds the monthly time limits for Outside Business Activities engaged in during any Appointment Period;
5. Shall not involve routing remuneration for such services to the University or any University account (e.g., a gift account), unless it is considered to be within the scope of employment, e.g. College of Medicine faculty who are asked to serve as expert or fact witnesses in their role as physicians (policy HY____).
6. Shall comply with Policy RP06, Disclosure and Management of Significant Financial Interests.
REQUIRED PRIOR APPROVAL FOR OUTSIDE BUSINESS ACTIVITIES
With the approval of department or unit heads, which shall not be unreasonably withheld, a faculty member may exceed the annual hours limit of HR 80 (40 hours per month averaged over the Appointment Period), provided however, that such approval shall not cause Outside Business Activities to exceed sixty (60) hours per month averaged over the Appointment Period.
Such requests ordinarily shall be made by submitting an Outside Business Activities Request in the University’s electronic compliance system. Department heads and unit heads shall review all Outside Business Activities Requests in the electronic compliance system for approval to ensure the proposed Outside Business Activities do not violate this Policy and is appropriate in relation to the performance of the faculty member's regular University duties. Department heads and unit heads may request and require additional information or clarification from the faculty member regarding the proposed Outside Business Activities if such information or clarification is deemed necessary in order to make a decision to approve or disapprove the request. Such approvals will be completed within the University’s electronic compliance system. Where a department or unit heads declines to approve a request to exceed the 40 hour per month limit, the faculty member will receive a written explanation, outlining 1) the reason for denying the request, 2) the specific provision(s) of this policy potentially violated by the activity 3) a description for how the Outside Business Activity will have an adverse impact on the faculty member’s teaching, or service responsibilities to the University. The unit or department head will not withhold approval unless it can be clearly shown that the interests of the University are actually and substantially affected by the proposed Outside Business Activities for which the request is made.
In cases where the request seeks a waiver of the 40 hour monthly limit for purposes of engaging in Outside Consulting, or Teaching for an Entity other than the University, the request should be approved only for good reason and where it can be shown that the proposed activity enhances the University’s mission
In extraordinary circumstances, with an articulated University need, the Dean may request permission from the Provost to exceed the HR80 annual hours limit beyond sixty (60) hours per month during the Appointment Period. Outside commitments requiring extensive time may require a leave of absence pursuant to Policy HR16, Leave of Absence without Salary, and should be discussed and decided upon with the faculty member’s department/unit head or another cognizant University administrator. Leaves of absence are not governed by this policy.
Appeals Process. Any faculty member may appeal any action or decision taken under this HR 80 to the University Faculty Senate Faculty Rights and Responsibility Committee.
REQUIRED ANNUAL REPORTING
The University may require faculty to report on their Outside Business Activities undertaken during the Appointment Period. The University may request faculty, in their discretion, to also provide information about Outside Business Activities undertaken outside the Appointment Period.
Reports on Outside Business Activities shall be available from the University’s electronic compliance system upon request from the Office for Research Protections, and shall be distributed annually to department heads, chancellors, deans, and the Provost. Reports may be shared, as needed, with other University offices or officials, including the University Faculty Senate. Reports must be made available when they are the basis, in whole or in part, of university policies or decisions that affect, in any way, the faculty or any member thereof.
RESPONSIBILITY FOR PRIVATE CONSULTING SERVICES
The University assumes no responsibility for Outside Business Activities performed by members of its faculty. The name of the University is not in any way to be connected with the service rendered or the results obtained. The faculty member must make it clear that his or her Outside Business Activities are a personal matter. A faculty member shall not accept or retain employment which would bring him or her as an expert or in any other capacity, into material conflict or in competition with the interests and purposes of the University.
USE OF UNIVERSITY FACILITIES AND RESOURCES
Policy FN14 Use of University Tangible Assets, Equipment, Supplies and Services prohibits the use of University facilities and resources including specialized equipment, specialized software, supplies and services for Outside Business Activities. Faculty may access University facilities for Outside Business Activities in the same manner available to non-University personnel, with a written agreement executed through the appropriate channels. Faculty may not use the University’s name, logo, letterhead, or email in their Outside Business Activities. However faculty may, for identification purposes only, refer to their employment relationship with the University.
INVOLVEMENT OF STUDENTS AND STAFF
The involvement of students and staff in faculty Outside Business Activities should be undertaken with caution. Faculty cannot involve students or staff in Outside Business Activities within the scope of the student's or staff member's University duties. Faculty may hire students or staff to assist with faculty Outside Business Activities outside the scope of the student's or staff member's University duties. Such arrangements require the full knowledge and prior approval of the faculty's department head or unit head and the student's faculty advisor or dean of undergraduate or graduate education or the staff member's direct supervisor. There is a section on the Outside Business Activities Request form to request and document the required approval related to staff and students. Safeguards must be instituted on a case-by-case basis to ensure that the performance of University duties and the scholarly mission of the University are not compromised. In particular, faculty must avoid even the appearance of directing students into research activities that primarily serve their own personal interests at the expense of the students educational or scholarly interests and needs. Such arrangements with students may also require review and approval by the University's Individual Conflict of Interest Committee pursuant to the requirements outlined in Policy RP06, Disclosure and Management of Significant Financial Interests.
MANAGEMENT AND OVERSIGHT
In some situations, a plan for managing a faculty member’s Outside Business Activities, insofar as they interact with, or relate to, the faculty member’s University duties, may be developed by the relevant department head, dean, and/or Faculty Consulting Program, in collaboration with the faculty member. This coordination is encouraged where the Outside Business Activity and University’s interests might appear to conflict. Each department or unit, in coordination with their respective faculties, will develop reasonable policies to that end. Nothing provided herein shall be used to interfere with the conduct of Outside Business Activity otherwise permitted.
NONCOMPLIANCE
Any non-compliance with this Policy, including but not limited to a faculty member’s failure to obtain prior approval when required, or exceeding the time limits outlined above, shall be referred to the relevant department/unit head, dean or next highest level of authority, and the Provost, by the Faculty Consulting Program. Said University Administrators may consult with the Faculty Consulting Program to best determine any corrective or disciplinary actions to implement due to non-compliance with this Policy and shall be managed in accordance with all other applicable University policies and procedures. It is understood that de minimus non intentional failures of compliance shall in ordinary course be subject to correction but not discipline. Intentional noncompliance, however, shall be treated as a serious matter meriting discipline appropriate to the circumstances. Faculty aggrieved by abuses of discretion or administrative failures to apply this HR Policy in a reasonable manner under the particular circumstances may appeal to the Faculty Rights and Responsibility Committee for redress.
COMPENSATION, TAX CONSEQUENCES AND LEGAL ADIVCE
The University cannot comment on or offer input regarding the rate of compensation or the tax consequences associated with Outside Business Activities and Private Consulting. The University will not provide legal advice on the terms of any Outside Business Activities or Private Consulting or any disputes arising therefrom.
INTERNAL CONSULTING AND CONTRACTING
University employees cannot serve as paid consultants and/or contractors for University activities, either directly as private consultants, or through a third-party (for guidance, see Policy BS17, Use and Procurement of External Consultants). In situations where extra services are required from current employees, compensation must be as an employee, whether within the scope of their appointment or through supplemental compensation.
INTELLECTUAL PROPERTY
All faculty are required to sign the Penn State Intellectual Property Agreement which states that all faculty agree as a condition of employment by the University to abide by the University's Intellectual Property Policies and Procedures. It is possible, in certain circumstances, to assign Intellectual Property to outside entities, with advance written agreement through the Office of Technology Management. The University acknowledges and agrees that it has no claim on intellectual property produced by a faculty member in the course of Outside Business Activity that complies with this HR80 Policy.
CROSS REFERENCES
AD47 - General Standards of Professional Ethics.
AD77 - Engaging in Outside Professional Activities (Conflict of Commitment).
BS17 – Use and Procurement of External Consultants
FN14 - Use of University Tangible Assets, Equipment, Supplies and Services.
HR35 - Public Service by Members of the Faculty and Staff.
HR42 - Payment of Personal Compensation by a State Agency or Department of the Commonwealth.
HR91 - Conflict of Interest.
IP01 - Ownership and Management of Intellectual Property.
RP02 –Addressing Allegation of Research Misconduct.
RP06 – Disclosure and Management of Significant Financial Interests.
RPG01 - The Responsible Conduct of Research.
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