Guidance for Standard IV: Duties to Employers

Employers invest in their staff, entrust them with confidential information and answer for their conduct. Standard IV sets out what members owe in return: loyalty while employed and when leaving, transparency about outside pay that could conflict with the employer's interests, and, for those who manage others, real efforts to prevent and detect misconduct. It also marks the limits of loyalty: no employer can demand that clients or markets be harmed.

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What you will learn

1. Apply Standard IV(A) Loyalty to an employer, including independent practice, the protection of confidential information and the limits of loyalty such as whistleblowing.

Act for the benefit of the employer; do not withhold skills, disclose confidential information or cause harm.
Independent practice that competes requires notice (services, compensation, duration) and employer consent before starting.
Loyalty never requires harming clients or markets, or taking part in illegal conduct.
Whistleblowing to protect clients or markets, not for personal gain, can be justified.
Independent contractors owe similar duties under their contracts.

2. Apply Standard IV(A) to preparing to leave an employer, distinguishing permitted preparation from solicitation and misappropriation of employer property.

Preparing a competing business on one's own time is allowed if it does not breach loyalty.
Before leaving, do not solicit the employer's clients or take client lists, research or other records.
Work records, including electronic files and emails, belong to the employer.
After leaving, former clients may be contacted using public or remembered information, unless a valid agreement forbids it.
Skills and experience gained on the job are not employer property.

3. Apply Standard IV(B) Additional Compensation Arrangements to outside pay, client performance bonuses and directorships, and distinguish it from the gift rules in Standard I(B).

Outside compensation that competes or may conflict with the employer's interest needs written consent from all parties.
The employer must know the nature, approximate amount and duration of the arrangement, before it is accepted.
Client bonuses tied to future performance and paid directorships typically require consent.
Email or other documented communication counts as written consent.
Thank-you gifts for past service fall mainly under I(B); future-linked rewards fall under IV(B).

4. Apply Standard IV(C) Responsibilities of Supervisors, including the need for adequate compliance systems and the response required when a violation is suspected.

Make reasonable efforts to ensure everyone you supervise complies with laws, rules and the Code and Standards, members or not.
Reasonable efforts require an adequate compliance system: procedures, training, monitoring and enforcement.
If procedures are inadequate, decline supervisory responsibility in writing until they are fixed.
When a violation is suspected, investigate promptly and restrict or monitor the employee meanwhile; assurances are not enough.
Delegating tasks does not delegate responsibility.

Module at a glance

IV(A): act for the employer's benefit; protect its confidential information and do not compete without consent.
Independent practice requires notice of services, pay and duration, and consent, before starting.
Loyalty has limits: never harm clients or markets; whistleblowing to protect them can be justified.
Prepare to leave on your own time; do not solicit clients or take records before leaving.
IV(B): outside compensation that may conflict needs written consent from all parties, in advance.
IV(C): reasonable efforts for everyone you supervise; adequate systems, prompt investigation, no reliance on assurances.

This free module has 4 lessons, 14 practice questions with full explanations.

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