Conflicts of Interest — Compliance Scenario

I’m an Electrician Who Builds Sheds on Weekends. My Employer Doesn’t Do Residential Work. Do I Have to Tell Them?

A real workplace compliance scenario — with three decision options and the right answer.

The Situation

You are a licensed electrician employed full-time by a commercial construction company. On weekends, you run a small side business building backyard sheds and handling minor electrical work for residential homeowners. You use your own tools, you only work on Saturdays, and your clients are homeowners — not commercial contractors. Your employer builds commercial properties and has never bid on residential jobs. You’ve never mentioned the side business to your employer because you figured there was no overlap.

Choice AContinue without disclosing. You’re not competing with your employer; you’re using your own tools and your own time, and your clients are completely different. There is no real overlap and no conflict to report.

Choice BDisclose the side business to your employer. Your employment agreement likely requires disclosure of outside work regardless of whether direct competition exists — and there are practical liability risks that aren’t immediately obvious.

Choice CStop the side business entirely. Any outside use of your trade skills creates a conflict of interest with your employer, regardless of the clientele or timing.

The Right Call

Choice B — Disclose the side business to your employer.

The absence of direct competition doesn’t eliminate the disclosure obligation. Most employment agreements include an outside employment clause requiring disclosure of any significant side work — particularly when it uses the same trade license and professional skills as your primary job. Disclosure lets your employer assess risks you may not have considered and protects you from termination if the situation is ever discovered. Choice C overcorrects — there’s no obvious reason to shut down a legitimate side business that isn’t currently competing. Choice A undercorrects — the employee is making a conflict assessment that isn’t theirs to make unilaterally.

No competition doesn’t mean no conflict.

The most common assumption about conflicts of interest is that they require competition — your outside work has to directly compete with your employer’s business for a conflict to exist. That’s not accurate. A conflict exists when a personal interest could influence, or appear to influence, your professional obligations. A licensed electrician running a side business creates liability exposure, reputation risk, and scheduling questions that are relevant to their employer, regardless of whether the clients overlap.

Your trade license is connected to your employer.

In many states, a licensed electrician’s work — even weekend residential work — is conducted under a license that may be tied to their employer’s contractor license. If a weekend job results in a safety issue, a warranty claim, or a liability dispute, your employer may be drawn in regardless of whether the work was disclosed. That risk is exactly what your employer’s outside employment policy is designed to assess. You can’t make that determination on your own.

Undisclosed doesn’t mean hidden — it means unprotected.

An employee who discloses a side business and receives employer acknowledgment is protected. If a conflict later develops — say, a residential client turns out to be a subcontractor who bids on your employer’s projects — the disclosure record shows good faith. An undisclosed side business that surfaces during an HR review or a legal dispute has no such protection. The risk of not disclosing is always greater than the risk of disclosing.

Do I have to disclose a side job if my employer doesn’t do that type of work?

In most organizations, yes — outside employment policies typically require disclosure of any significant side work, not just work that directly competes. The policy exists to allow your employer to assess risks that you may not be aware of. Check your employment agreement or employee handbook for the specific disclosure requirement. When in doubt, disclose.

What happens after I disclose a side business?

Most employers will review the disclosure and either approve it, ask for modifications to how you conduct the side work, or in some cases restrict it if a genuine conflict exists. For a side business that uses different clients and doesn’t compete, most employers will approve it with acknowledgment on file. The disclosure doesn’t mean the employer can stop you from having a side business — it means the employer has the information they need to manage any risks it creates.

Can I be fired for having a side business if I disclose it?

Disclosure is far safer than non-disclosure. An employer who terminates an employee for disclosing a non-competing side business is in a much more difficult legal position than an employer who discovers an undisclosed outside employment arrangement that the employee was required to report. Disclosure demonstrates good faith and gives the employer the opportunity to assess the situation rather than discovering it under worse circumstances.

Is using your own tools and working your own time enough to make a side business acceptable?

Using your own tools and time addresses the company resources issue — you’re not misusing company property. But it doesn’t address the disclosure obligation. Those are two separate questions. You can be fully compliant on the resources side and still have an undisclosed outside employment situation that your employer’s policy requires you to report.

What if my employment agreement doesn’t mention outside employment?

Check your employee handbook and Code of Conduct policy — most organizations address outside employment in at least one of these documents. If neither mentions it, ask HR directly. The absence of an explicit policy doesn’t mean the employer has no interest in the information. A direct conversation with HR is always a safer path than assuming silence means permission.

How to Use This Scenario in Training

Conflicts of interest and Code of Conduct training establish the policy. This scenario makes it stick.

Xcelus recommends this scenario for field and trade employees—the population least likely to associate the conflicts-of-interest policy with their own situation. The recognition skill is understanding that disclosure obligations apply to outside work regardless of competition, and that the absence of obvious overlap is not equivalent to the absence of risk.

More Compliance Scenarios

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Scenario-based training that helps employees at every level recognize conflicts of interest — including the subtle ones created by outside employment, personal relationships, and side businesses — before they create problems.

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