Filing Number: 07-01
Subject: Waiver of Post Employment Rules
Keywords: appointed official, compensation, conflict, contract, County Attorney, County official, waiver
Decision By: Commissioners: John McMahon, Kathryn Denhardt, Thomas Collins, Miguel Gonzalez, V. Eugene McCoy, Mark Murowany
Contact Email: admin@nccethics.org
 
Status: Active

Question:

            The County Attorney has requested a waiver of Section 2.03.103D's two year post-employment restriction to enable a recent employee to enter private employment involving two matters for which the employee was directly and materially responsible for during the course of official duties as a County employee.

Conclusion:

            The waiver request is granted. On balance, the undue hardship to the County in enforcing the post-employment provision exceeds the perceived personal benefit to the former employee. A Commission decision to waive the post-employment prohibition so that the former employee may represent the County while in the employment of the private attorney significantly ameliorates the obvious and immediate hardship to the County caused by that employee's resignation and advances the interests of the County in the both litigation cases.

Facts:

             A lawyer with the County Law Department is resigning. The Law Department has filed a written application for a waiver of the two-year post-employment restriction related to former employees. The County Attorney states that the law department is significantly understaffed and will have two vacant positions when the lawyer leaves. It is common knowledge that County departments are currently in a hiring freeze and replacement of the lawyer is not imminent. The County Attorney advises that that for the last several years the former employee had been assigned to assist in the areas of document production, discovery and depositions an outside attorney with whom the County has contracted for representation in two civil lawsuits. The County Attorney states that all other lawyers in his department are unfamiliar with the cases and one of the cases will be at a critical trial juncture within the next month. The other case has been stayed by the Court for an indeterminate period but all his attorneys have legal conflicts which prevent their assumption of representation in that case.
 
            Following resignation, the former employee, intends to accept a position in the small office of the private attorney who is under contract with the County to represent it in the two cases. As the result of a recent loss of the only other staff attorney, the private attorney urgently needs an associate to assist him in representing the County. The former employee would be compensated by the private lawyer and have no contractual relationship with the County. If granted a waiver, the former employee would continue to represent the interests of the County and use past knowledge acquired while in the employment of the County for its current benefit as its agent.
 
            The County Attorney believes that his department and the County's position in the lawsuits will suffer undue hardship if the former employee is barred from representing the County's interests as a member of the outside attorney's law firm. The Law Department does not know how long former employee's services would be needed but speculates that in the imminent trial case they would be in demand for about a year and for two or more years in the other case.

Code or Prior Opinion:

New Castle County Code Sections
            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."
 
           In this case, the retiring lawyer would be assisting a private enterprise, the contracted attorney, in matters in which the lawyer was directly and materially responsible during the course of official duties as a County employee.
 
            Section 2.03.105 A and B provide authority to the Commission to grant a waiver from the prohibition. 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.
 
State Ethics Code Interpretations
 
            Section 2.03.103 D and Section 2.03.105 A and B are substantially identical to the post-employment prohibition and waiver authority granted to the Delaware Public Integrity Commission (hereinafter "PIC") recited in the Delaware Code at Title 29, chapter 58.1 Since the County Ethics Code is required to be at least as strict as the State Code, interpretations by the PIC are informative. See, 29 Del.C. sec. 5802(4).
 
            The purposes of post-employment provisions have been discussed extensively. In PIC Ethics Bulleti
 
[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 Op. 96-75.
 
Conditions for Waiver
 
            New Castle County Council foresaw the probability that situations would arise which would militate against enforcement of the prohibition on post-employment contracts and provided waiver authority to the Commission in section 2.03.105A. A waiver may be granted on either of two standards:
 
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.
 
            If a waiver is granted, the Commission scrutinizes the conditions of a post-employment contract to see if they comport with the purpose of the Ordinance, to promote public confidence in the integrity of government. Those conditions must reflect arms length dealing between the Department and the former employee and avoid any appearance of favoritism or unfair dealing. Compensation must be reasonable for obtaining information acquired through former employment and the contract period must be limited to only that period of time necessary to ameliorate the undue hardship to the Department. However, in this case, there would be no post-employment contract since the retiring lawyer's post-employment salary would be paid by the private attorney under the representation contract previously negotiated in arms' length dealing with the County. Additionally, the length of the litigation and need for the retiring attorney's services cannot be quantified at this time, and could extend intermittently for a period in excess of two years.

Analysis:

             As described above, the public purpose of the Code 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 is capitalizing, for private benefit, on knowledge acquired in a public position. An employment contract granted shortly after retirement or resignation 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 alone since it would create a justifiable impression of unfair advantage or enrichment.
 
            However, a waiver request may be granted despite that possibility if the second standard, "undue hardship", is satisfied. "Undue hardship" has been defined by the PIC as "excessive hardship". This phrase means more than ordinary hardship for the County or the former employee. Ordinary hardship encompasses any loss of a productive, long-term employee which affects continuity and work flow in a government agency.
 
            As noted by the PIC, undue or excessive hardship is not created simply because it would be cheaper to hire a former employee or because continuity may be better maintained. In a number of opinions, the PIC 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 over other vendors. See, e.g., PIC Commission Op. 97-41. Additionally, waivers on the basis of cost or continuity raise the specter of favoritism and unfair dealing. Justifying a contract on such grounds would have the net effect of defeating the legislative purpose of the two year cooling off period, weakening public confidence by creating the impression that government encourages its officials and employees to trade upon their offices for future personal gain.
 
            A waiver may be granted in a situation where the hardship to the Department or to the County is out of the ordinary, even if it could be reasonably argued that the legislative purpose is imperiled by the personal gain to the former employee. For example, undue hardship could be found when the County is obligated to meet a longstanding court-imposed deadline and, because of events beyond its control, is without available resources to advance its position. Also, when there are no other adequate internal or external resources available to a Department to complete an important project without substantial negative impact to the public, undue hardship may exist. See New Castle County Commission Waiver 06-01.
 
            This case is unique in that the resigning employee will continue in the same posture in the new position - working for the direct benefit of the County. The only difference appears to be that the former employee will probably receive a higher salary in the new job for work similar to that done while in the County's employ.
 
            There is no question that the County would suffer undue hardship in the litigation that is scheduled for trial next month if a waiver is not granted. It would be impossible for anyone within the law department or without to acquire the extensive knowledge that has been gleaned from years of discovery, document production and depositions before the trial date.
 
            The stayed litigation is somewhat different. Although the stayed case may involve extensive discovery and briefing, a period of time might elapse in which another person might acquire sufficient knowledge to advance the County's interests and preserve the purpose of the post-employment provision. However, the time frame is unknown since the stay could be dissolved upon short notice and the law department's success in acquiring a new and legally nonconflicted employee seems very dim at this time of significant County budget deficits. In addition, the department may be prevented from securing such services outside the law department because of the contract it has already entered with the private attorney. A denial of a waiver in the second case may thus work an unavoidable and excessive hardship on the former employee as an associate in a two lawyer firm.
 
            On balance, the undue hardship to the County in enforcement of the prohibition exceeds the perceived personal benefit to the former employee. A Commission decision to waive the post-employment prohibition so that the former employee may represent the County while in the employment of the private attorney significantly ameliorates the obvious and immediate hardship to the County caused by that employee's resignation and advances the interests of the County in both civil cases.

Finding:

            A waiver of the two-year post-employment prohibition pursuant to the undue hardship standard is GRANTED.
 
            BY AND FOR THE NEW CASTLE COUNTY ETHICS COMMISSION ON THIS 13th DAY OF JUNE, 2007.
 
________________________
John McMahon, Chairperson
 
Decision: Unanimous

Footnotes:

1 29 Del. C. sec. 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. sec. 5708(a) Waivers of restrictions and advisory opinions. (in pertinent part)
(a)     Not withstanding the provisions of sec. 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.