A former employee has requested that the Commission grant a waiver of the postemployment rule in two matters.
Conclusion:
The Commission finds that the hardship to the County exceeds the financial benefit to the requester and that waivers would not reduce public confidence in the fairness of the Department’s hiring practices. A limited waiver in the matter of the litigation is GRANTED only until the discovery phase of the case begins. A waiver is GRANTED in the contract matter for the duration of the arbitration.
Facts:
The County Law Department has recently undergone significant personnel changes. A former Assistant County Attorney who recently, and unexpectedly, entered private practice had worked on litigation for the County in that Department. The requester’s new employer, a private law firm, had previously been retained and currently functions as outside counsel by the County on one of the two matters for which a waiver is requested. In the other matter, the County wishes to retain the requester to perform essentially the same duties as the requester performed as a County employee.
The requester states that the new position with the outside counsel firm did not result from the previous County employment. The attorney states that a principal of the new firm previously worked with the requester in other employment and his knowledge of the caliber of the requester’s work was the basis for hiring. Additionally, the requester states that none of the compensation the requester receives from the new firm is dependent on or directly related to the number of hours the firm bills the County.
In the first matter, as outside counsel, the requester would be involved in a different capacity from the attorney’s prior function as a County employee, but decisions the attorney made as an employee affect the continuing scope of work of outside counsel.
The requester and the County state that the litigation is a major and complex case which is at a critical stage. The attorney who handled the case for the outside counsel firm left the employment of that firm and no other attorney in the firm is sufficiently familiar with the litigation. The requester had been intimately involved in resolving the case in the status of a County attorney and the County states that the delay necessary to bring another attorney up to speed, either for the County or the outside counsel firm, would jeopardize the possible resolution of the case to the significant detriment of the County.
The second of the matters pending with the County in which the requester was previously involved as an employee has a deadline of March 2013 for a decision which would significantly affect an existing contract. The County states that it previously had difficulty finding effective outside counsel to advance its position and, therefore, as a County employee, the requester undertook the job spending months reviewing contracts, correspondence, expert reports, and meeting with engineers and representatives of the other party to the contract. The County states that it would have a very difficult time finding a new attorney to handle this complex matter in the short time before a decision is required.
The former County attorney is requesting a waiver of the postemployment rule to permit employment on both matters as outside counsel.
Code or Prior Opinion:
New Castle County Code Sections
In this case, if a waiver is granted, the requester would be performing functions directly impacted by material decisions made by the requester during the course of County employment. Section 2.03.103D 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 2.03.105A 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 postemployment 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 2.03.103D and Section 2.03.105A and B are substantially identical to the postemployment 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. §5802(4).
The PIC has discussed the postemployment 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, postemployment 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 postemployment 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 postemployment 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. [Emphasis added]
In coming to a decision about a waiver, the Commission also must scrutinize the conditions of the postemployment contract to see if the contract comports with the goal promoting the public confidence in the integrity of County government. The contract period must be limited to only that period of time necessary to ameliorate the undue hardship to the Department.
Analysis:
An employment contract entered into shortly after an employee leaves their position 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 or the former employee 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 postemployment 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 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, 10-02 and 11-01 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, there is no undue hardship to the former employee. The requester states that the requester’s compensation does not depend on the status of the billable hours charged to the County. Thus, the only issue here is the question of undue hardship to the County. Because of events beyond the County’s control related to the litigation and the contract, the unexpected resignation of the requester, and the current status of the first matter and the March deadline in the second, the County is unable to train or hire a substitute for the requester in a timely matter.
In the first matter, the County would suffer potential harm if the requester is not permitted to advance its interests in resolution of the case. However, if the matter does not resolve and goes forward to the next stage, the County and/or the outside counsel firm would have time to train a replacement for the requester.
In the second matter, given the extremely short timeframe and the absence of any other individual who understands the complexity of the County’s position, if the postemployment prohibition is enforced, the hardship for the County would exceed the perceived personal benefit to the requester.
Granting a waiver to permit the requester to perform as the County’s representative in the first matter for the duration of that litigation’s current status and to become the County’s representative for the entire arbitration in the contract issue will enable the County to stave off significant adverse consequences. In these two urgent situations, hiring the former employee does not reduce public confidence in the Department’s employment practices.
However, in the matter in litigation, the employment should last only as long as the current emergency exists. In that case, the waiver should end when the status of the litigation changes to discovery and associated matters. After that point both the County and the outside counsel firm must find another attorney to handle the case.
Finding:
The Commission finds that the hardship to the County exceeds the financial benefit to the requester and that waivers would not reduce public confidence in the fairness of the Department’s hiring practices. A limited waiver in the matter of the litigation is GRANTED only until the discovery phase of the case begins. A waiver is GRANTED in the contract matter for the duration of the arbitration.
BY AND FOR THE NEW CASTLE COUNTY ETHICS COMMISSION ON
THIS 21st DAY of FEBRUARY 2013.
___________________________
Miguel Gonzalez, Vice Chairperson
New Castle County Ethics Commission
Decision: Unanimous
Footnotes:
1 29 Del. C. §5805 (d) Post-employment restrictions.
