Filing Number: 06-02
Subject: Waiver of Post Employment Rules
Keywords: appointed official, attorney, contract, County Attorney, County official, post employment, public purpose, waiver
Decision By: Commissioners: John McMahon, Kathryn Denhardt, V. Eugene McCoy, Ernest Price, James R. Soles
Contact Email: admin@nccethics.org
 
Status: Active

Question:

            The County Attorney has requested a waiver of Section 2.03.103D's post employment restrictions to enable the Department to enter into a contract with a recent retiree for short term legal services.

Conclusion:

            A waiver of the post employment restriction is granted to the Law Department in this case. Literal enforcement of the provision would create an undue hardship to the Law Department and the County in this matter because the timing of the Court order was not at the instigation of or within the control of the Department and there is no other law department employee or other potential contract attorney who could reasonably acquire sufficient knowledge to craft a defense of the County treasury in the allocated period. The Commission reviewed the contract terms, found them to reasonable and to reflect arms length dealing, as well as limited in time and scope to the production of the Answering brief.

Facts:

            In the Department's written application for the waiver on May 23, 2006, the County Attorney stated that prior to the former employee's retirement he had been assigned to defend extensive civil litigation filed by a citizen. Shortly after the employee retired, the citizen filed an appeal to the Delaware Supreme Court contesting an award of attorney fees in favor of the County. The Supreme Court answering brief is due June 14, 2006. The County Attorney stated that other attorneys within his office were not sufficiently familiar with the case to write the answering brief within the period imposed by the Court for answering the appeal. He also stated that outside attorneys available for contract would also be unable to master the issues within that period. He asks the Commission to take notice that the Supreme Court is extremely hostile to continuance requests and will most assuredly deny such an application by the County. He asks for a waiver to contract with the former employee for the limited purpose of briefing the County's answer to the appeal. The proposed contract terms are to pay the former employee the same hourly rate he earned prior to retirement, without any benefits, to prepare the brief.1

Code or Prior Opinion:

            Section 2.03.103 D of the New Castle County Code prohibits a person who has served as a County employee or County official from
 
represent[ing] or otherwise assisting any private enterprise on any matter involving the County for a period of two (2) years after termination of employment or official status with the County, if the person gave an opinion, conducted an investigation or otherwise was directly and materially responsible for such matter in the course of official duties as a County employee or official. Nor shall any former County employee or County official disclose confidential information gained by reason of public position nor shall the person otherwise use such information for personal gain or benefit."
 
            Section 2.03.105 A and B provide authority to the Commission to grant a waiver from that section. It states:
 
A. Notwithstanding the provisions of this Division, upon the written request of any County Department or of any individual who is or was a County employee or County official, the Commission may grant a waiver of the specific prohibitions governing post-employment restrictions if the Commission determines that the literal application of such prohibition in a particular case is not necessary to achieve the public purposes of this Division or would result in an undue hardship on any current or former employee, official or County Department. Any such waiver may be granted only by written decision of the Commission. All requests of waivers will be handled in an expeditious manner by the Ethics Commission.(sic) Any person who acts in good faith reliance upon any such waiver decision shall not be subject to discipline or other sanction hereunder with respect to the matters covered by the waiver decision provided there was a full disclosure to the Commission of all material facts necessary for the waiver decision.
 
B. Any application for a waiver, any proceedings and any decision with respect thereto shall be maintained confidential by the Commission provided that:
1. Public disclosure shall be made by the Commission upon the written request of the applicant;
2. The Commission may make such public disclosure as it determines is required in connection with the prosecution of any violation of this Division;
3 The Commission shall report to appropriate Federal and State authorities substantial evidence of any criminal violation which may come to its attention; and
4 In the event that a waiver is granted, the waiver decision and the record of all proceedings thereto shall be open to public inspection.
 
            Section 2.03.103 D and Section 2.03.105 A and B are substantially identical to the post employment prohibition and waiver authority found in the Delaware Code at Title 29, chapter 58.2 In the context of the State Code, the purposes of such provisions have been discussed extensively. In Public Integrity Commission Ethics Bulletin 007, issued May 22, 1998, the Delaware Commission described the purposes of the State law and made reference to similar federal government provisions as follows:
 
[L]ike other conflict of interest statutes, post employment provisions are meant to insure public confidence in the integrity of the government. It is said public confidence in government has been weakened by a widespread conviction that government official use their office for personal gain, particularly after leaving the government. There is a sense that a "revolving door" exists between industry and the government [which] leads to a suspicion that personal profit was the motivation. There also is public concern that former employees may use information, influence, and access acquired during government service for improper and unfair advantage in later dealings with that department or agency. Reflecting that concern, post employment laws set a "cooling off period" in certain areas which the ex-employee dealt with while working at the agency. [Citations omitted]. Similarly, the Delaware legislature sought to insure public confidence in the integrity of government. 29 Del. C. sec. 5802. It set a two-year "cooling off period" in areas where the former employee was "directly and materially responsible," etc. 29 Del. C. sec. 5805(d). This limits the actual or perceived unfair advantage in subsequent dealings with a department or agency. Commission Op. No 97-18. Thus, this Commission has held that Delaware's post-employment provision is an attempt to eliminate concerns that when a State employee moves from State employment to private employment that they do not use their former State position to get a "leg-up" on others in the private sector who also seek to deal with the government. Commission Op. No 97-11. Additionally, it is to avoid the risk that after a State employee moves to the private sector that they will not exercise undo influence on their former colleagues. Commission Opinion 96-75.

Analysis:

Former Employee represents a Private Enterprise
 
            A contract with a former employee is considered to be a contract with a private enterprise. In Public Integrity Commission Opinion 94-10, the State Commission held that the broad definition of "private enterprise" as used in the statute similar to NCC Code Section 2.03.103 D encompassed private contracts with former employees. Thus, if the former employee proposes to enter a contract regarding for matters on which he formerly gave an opinion, conducted an investigation, or was directly and materially responsible as a County employee, such a contract would be prohibited for a period of 2 years.
 
Standards for Waiver
 
            County Council foresaw the probability that situations would arise which would justify not enforcing the prohibition on post employment contracts. Waivers of the provision may be granted on either of two grounds:
 
1)     if literal application of the prohibition is not necessary to achieve the public purpose of the ordinance, or
2) if application of the prohibition would result in undue hardship to the former employee or the Department.
 
            As described above, the public purpose of the post employment ordinance is to avoid a justifiable impression that the public trust is being violated by giving unfair advantage and unjust enrichment to a former employee who capitalized on his public position for his future private benefit. A post employment contract granted shortly after retirement merely because an employee acquired special knowledge in the course of paid County employment could create such an impression.  Thus, a waiver should not be granted on such a basis because it would defeat the public purpose.
 
            However, even though a waiver request fails on the basis of the need to effect the public purpose, it may be granted if there will be "undue hardship" to a Department if the ordinance is enforced. The State Commission has defined the term "undue hardship" as "excessive hardship". This means more than ordinary hardship for the Department. Any loss of a productive, long term employee is a hardship to continuity and work flow in a government agency. But, as noted by the Public Integrity Commission, undue or excessive hardship is not created because it would be cheaper to hire a former employee or that continuity may be better maintained. Former employees generally possess an understanding of department policies and procedures greater than non employees and can probably always do the work faster and cheaper than a new hire or a competitor. In a number of opinions, the Public Integrity Commission found that if waivers were granted on grounds of cheaper cost or continuity, a former employee would always have a "leg up" and be at a competitive advantage. See, e.g., Commission Op. 97-41. Furthermore, waiving the prohibition on such grounds would have the effect of defeating the legislative purpose of a cooling off period and would weaken public confidence by creating the impression that government employees use their offices for future personal gain. Finally, waivers on the basis of cost and continuity raise the specter of favoritism and unfair dealing.
 
            Waivers can be granted in those situations where the hardship to the Department is out of the ordinary, for example, where there are no other adequate internal or external resources available to the Department. Undue hardship can exist when the former employee is the sole source of vital information or when a Department project will be impossible to complete or severely delayed with substantial negative impact to the public if the Ordinance is enforced.
 
            If a waiver is to be granted, the Commission must scrutinize the conditions of the post employment contract to see if they comport with the purpose of the Ordinance -- to promote public confidence in the integrity of government. The conditions must reflect arms length dealing between the Department and the former employee and should avoid the appearance of favoritism or unfair dealing. Compensation should be reasonable for obtaining information acquired through former employment and the contract period should be limited to only that period of time necessary to ameliorate the undue hardship to the Department.
 
            In this case the Commission was provided with information about the terms of the agreement and a copy of the purchase order. It determined that the cost reflected arms length dealing and a limited duration of contract.

Finding:

            The Commission finds that literal enforcement of the Ordinance would create an undue hardship to the Law Department and the County in this matter because the timing of the Court order was not at the instigation of or within the control of the Department and there is no other law department employee or other potential contract attorney who could reasonably acquire sufficient knowledge to craft a defense of the County treasury in the allocated period. The contract terms reflect arms length dealing, are more than fair to the County, and are properly limited to the production of the Answering brief.
 
DECISION
 
            The waiver request is GRANTED.
 
            BY AND FOR THE NEW CASTLE COUNTY ETHICS COMMISSION ON THIS 14th DAY OF JUNE, 2006.
 
_________________________
John McMahon, Chairperson
 
Decision: Unanimous

Footnotes:

1 On May 23, 2006, the Chair granted a tentative waiver to the County Attorney because of the emergency nature of the request. The Answering brief was due on June 14, 2006, and the Commission's meeting was not scheduled until that date. When granting tentative approval, the Chair reserved the full Commission's right at the June 14 meeting to withdraw the tentative waiver without prejudice to the County Attorney, to endorse the waiver, or to change the conditions of the waiver.

2 29 Del. C. §5805 (d) Post-employment restrictions.
No person who has served as a state employee, state officer or honorary state official shall represent or otherwise assist any private enterprise on any matter involving the State, for a period of 2 years after termination of employment or appointed status with the State, if the person gave an opinion, conducted an investigation or otherwise was directly and materially responsible for such matter in the course of official duties as a state employee, officer or official. Nor shall any former state employee, state officer or honorary state official disclose confidential information gained by reason of public position nor shall the person otherwise use such information for personal gain or benefit.

29 Del. C. §5708(a) Waivers of restrictions and advisory opinions. (in pertinent part)
(a) Not withstanding the provisions of §§ 5805 and 5806 of this title, upon the written request of any state agency or of any individual who is or was a state employee, state officer or honorary state official, the Commission may grant a waiver to the specific prohibitions contained therein if the Commission determines that the literal application of such prohibition in a particular case is not necessary to achieve the public purposes of this chapter or would result in an undue hardship on any employee, officer, official or state agency. Any such waiver may be granted only by written decision of the Commission. Any person who acts in good faith reliance upon any such waiver decision shall not be subject to discipline or other sanction hereunder with respect to the matters covered by the waiver decision provided there was a full disclosure to the Commission of all material facts necessary for the waiver decision.
(b) Any application for a waiver, any proceedings and any decision with respect thereto shall be maintained confidential by the Commission provided that:
(1) Public disclosure shall be made by the Commission upon the written request of the applicant;
(2) The Commission may make such public disclosure as it determines is required in connection with the prosecution of any violation of this subchapter:
(3) The Commission shall report to appropriate federal and state authorities substantial evidence of any criminal violation which may come to its attention; and
(4) In the event that a waiver is granted, the waiver decision and the record of all proceedings relating thereto shall be open to public inspection.