Filing Number: 14-01
Subject: Post Employment Restriction
Keywords: consultant, employee, post employment, training, undue hardship, waiver
Decision By: Commissioners: Johanna Bishop, James Keeley, Beatrice Patton Dixon, Sally Jensen, Eric Monzo, Christopher Simon
Contact Email: admin@nccethics.org
 
Status: Active

Question:

             A County Row Office has requested a waiver of the two year post-employment restriction found in New Castle County Code Section 2.03.103D in order to contract with a retired employee to perform certain of his former County duties on an on-call basis for a period of one year.    

Conclusion:

             The waiver is granted for a period of six months, with the opportunity to request renewal at that time; payment shall be at $40.00 per hour and shall be capped at $6,000.00. The Commission finds that the hardship to the Row Office and potential harm to the public exceed the financial benefit to the recently retired employee. The Commission also finds that a waiver would not reduce public confidence in the fairness of the Department’s hiring practices.

Facts:

            The Row Office is responsible for management of a sophisticated computer program which was designed and administrated by an employee who retired at the end of December. The program is critical to the operation of the Row office and has been adopted statewide by other agencies which perform similar duties. The retiree designed the program and possesses critical information which no other employee in the Row Office, because of its small staff, could have been cross trained prior to the retirement of its creator. The computer program controls reports and other data which is required by the State and Federal governments and which is subject to programming change at the direction of those outside entities.
 
            The Row Office is filling the vacancy left by the retiree and adding a new employee to work on the program but states that it needs to contract with the retiree to provide technology support to those persons on an as needed basis for a year as an on-call consultant. The Office indicates that there is no one else immediately available in the market place with the necessary expertise. The retiree has agreed to perform that duty as a vendor at $40.00 per hour, for a maximum of $12,000.00.

Code or Prior Opinion:

New Castle County Code Sections
 
     In this case, the retiree would be performing duties similar to those for which he had been directly and materially responsible during the course of her County employment. 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.”
 
            Sections 2.03.105 A and B provide authority to the Commission to grant a waiver from the prohibition:
 
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
 
             County Code 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. 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. §5802(4).
 
            The PIC has discussed the post employment provisions several times. In PIC Ethics Bulletin 007, issued May 22, 1998, that Commission described the State law and made reference to similar federal government provisions:
 
[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. §5802. It set a two–year “cooling off period” in areas where the former employee was “directly and materially responsible,” etc. 29 Del.C. §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 under County law
 
             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. The Commission may grant a waiver 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 Department or agency.
 
            In coming to a decision about a waiver, the Commission also must scrutinize the conditions of the post-employment contract to see if the contract comports with the goal of preventing unjust enrichment of the former employee and promoting the public confidence in the integrity of County government. 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. The remuneration to the employee must reflect arms’ length dealing between the Department and the former employee to avoid any appearance of favoritism.
 

Analysis:

             An employment contract entered into shortly after retirement merely because an official acquired special expertise in the course of paid County employment would not qualify for a waiver. Such a contract would create an impression of unjust enrichment to a former official who capitalizes, for private benefit, on knowledge acquired in a public position. However, even if it could be argued that a former official is capitalizing on such knowledge, a waiver request may be granted if the standard of “undue hardship” to the County 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 or easier to hire a former employee. 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 and the post employment bar would be meaningless. 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 grounds of cost would have the net effect of not only defeating the legislative purpose of the two year cooling off period but also weakening public confidence by creating the impression that government encourages its officials and employees to trade upon their offices for future personal gain at the taxpayer’s expense.
 
            However, when undue hardship to the County has been shown to exist, the Commission has granted applications for waiver. In New Castle County Ethics Commission Waiver 07-01, the County was obligated to meet a longstanding court-imposed deadline and, because of events beyond its control, was without available resources to advance its position. In New Castle County Commission Waivers 06-01, 08-01, 08-02, 09-01, 09-02 and 10-02 there were no other adequate internal or external resources available to a Department to complete an important project without substantial negative impact to the public.
 
            In this case, the Office states that there are no adequate internal or external resources for the required services other than the retiree. He possesses unique and exclusive knowledge about the system he created. Others have used his system but he has been the sole architect to sustain its existence. Thus, the retiree is the only source for training the new hire to maintain the system. If the post employment prohibition is enforced, the hardship for the Row Office and the public which relies on its services would exceed the perceived personal benefit to the retired employee, as long as he receives only a moderate rate for his services.
 
             The Commission is always concerned when a County employee’s retirement triggers a need for additional contract costs benefitting a retiree as a consultant. It believes that responsible management includes cross training for critical positions, especially when a known event is reasonably certain in the relatively near future. Of course, if an agency has a very small staff, cross training may be impossible despite responsible management. That appears to be the case in this situation since the Agency staff consists of only five persons. The Commission notes that the Agency has successfully sought funds to hire an additional person to manage this critical function in order to prevent a reoccurrence of this problem in the future.

Finding:

             The waiver is GRANTED for a period of six months, with the opportunity to request renewal at that time; payment shall be at $40.00 per hour and shall be capped at $6,000.00. The Commission finds that the hardship to the Row Office and potential harm to the public exceed the financial benefit to the recently retired employee. The Commission also finds that a waiver would not reduce public confidence in the fairness of the Department’s hiring practices.
 
BY AND FOR THE NEW CASTLE COUNTY ETHICS COMMISSION ON THIS 7th DAY OF JANUARY, 2015.
 
 
 
________________________________
Johanna P. Bishop, Chairperson
New Castle County Ethics Commission
 
 
Decision: Unanimous

Footnotes:

  1   29 Del. C. §5805 (d) Post-employment restrictions.