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Conflict of Interest Guidelines

(revised 3/20/14)

As a general rule, all UNM employees (faculty, staff, and student) should be paid through Payroll for work that they perform for the University.  If questioned by the IRS, we must have strong documentation to justify paying a current employee as an independent contractor. 

However, per Policy 3720 “Conflicts of Interest” there may be situations where it is appropriate to pay an employee through the Purchase Requisition process, in effect treating them as an “independent contractor”.  If it is determined that this method is appropriate, in addition to submitting the Purchase Requisition, the department must also submit the “Disclosure of Direct or Indirect Financial Interest” form to the appropriate Financial Services accounting office PRIOR to work being done.   

Special considerations for different employee types: 

  • Faculty:  When considering payment to a faculty member for “extra” work, please consult the Faculty Contracts Office BEFORE initiating any aspect of the transaction, as there are specific requirements regarding this in the Faculty Handbook, and Faculty Contracts will determine the appropriate payment method. 
  • Exempt (monthly) Staff:  If determined to not be appropriate via the Purchase Requisition process, “extra work” payment requests for exempt staff should be submitted via the Non-Standard Payment process PRIOR to the commencement of services.  If the nature of the services falls within the parameters of Policy 3500 “Wage and Salary Administration” section 7, as determined by Human Resources, this is the appropriate payment method.  If the work is not within the parameters of the policy, then the department must establish a separate, on-call assignment for the employee.  Your Human Resources consultant can provide more information on which method would apply.

 Non-exempt (bi-weekly) Staff:  If determined to not be appropriate via the Purchase Requisition process, “extra work” payment requests for non-exempt staff should be submitted via timesheets, either as overtime, or as a separately established on-call assignment, depending on the circumstances.  Your Human Resources consultant can also provide more information on this.

 Student employees:  “Extra compensation” cannot be paid through the Student Employment Office.  Students should be paid the appropriate hourly rate for hours worked, via their timesheet.  In situations where a student employee is being asked to give some type of special performance, such as a musical or dance performance at a graduation ceremony, it will generally be permissible to submit this on a Purchase Requisition.  However, before attempting to pay a student employee for “extra” work, please consult with the Student Employment Office.

Graduate students:  Please contact the Office of Graduate Studies for guidance on how to pay graduate students for “extra work”.

To help you determine the situations when a Purchase Requisition or Payroll may be the appropriate payment method, here are some general guidelines.  Keep in mind that the determination for each particular case is based on the specific facts.

If the employee works for a different department than is trying to hire him/her as an independent contractor, and the scope of work is different than the scope of employment, it may be okay to submit a PR.  The transaction must be “arms-length”, as defined in Policy 3720, and generally, there must be documentation that the employee separately runs a business performing the services for which a UNM department wishes to contract.

    • For instance, a transaction with an employee that operates a week-end catering business and caters a reception for a college in which the employee is not employed might be considered “arms-length”.

 If the employee works for a different department than is trying to hire him/her as an independent contractor, and the scope of work is the same as or similar to the scope of employment, it must again be determined if the transaction is “arm’s-length”.  Payment via the Non-Standard Payment process, or timesheets, may be the most appropriate method of payment in this situation.

 If the employee works for the same department that is trying to hire him/her as an independent contractor, and the scope of work is different than the scope of employment, it may be okay to submit a PR, although this is unlikely, as the transaction may very likely not be “arm’s-length” due to the employment and extra work being for the same department.  The best payment method may be through Payroll via the Non-Standard Payment process, or timesheets.

 If the employee works for the same department that is trying to hire him/her as an independent contractor, and the scope of work is the same as or similar to the scope of employment, this would generally not be allowed; the employee’s regular pay would generally cover this work.  Depending on the situation, a timesheet may need to be submitted.

 Importantly, and as noted in Policy 3720, section 6, contracts with firms or individuals, including sole proprietorships, in which individuals who were University employees within the preceding twelve (12) months have a financial interest are prohibited unless they are approved under the rules set forth in this policy, as if the individual were still employed by the University.