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HomeMy WebLinkAbout09-570 ConfidentialADVICE OF COUNSEL September 8, 2009 09 -570 This responds to your letter dated July 22, 2009, by which you requested a confidential advisory from the Pennsylvania State Ethics Commission. Issue: Whether a salaried solicitor to a [political subdivision] A would be considered a "public employee" subject to the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. § 1101 et seq., where the solicitor does not receive employee health insurance or holiday pay, sick pay, or vacation pay from the [political subdivision], but the [political subdivision] makes deductions from the solicitor's pay for withholding and matches FICA and Medicare contributions; and if so, whether the Ethics Act would impose any prohibitions or restrictions upon the solicitor with regard to contracting with the A to provide legal services as to the A's Bs, where the fees for the proposed legal services would be billed by the A as costs to persons involved in the B process; and whether, upon resigning from the aforesaid position, the former solicitor would be permitted to immediately enter into a contract with the office of the [political subdivision] A to provide legal services as to the A's Bs. Facts: As Solicitor to the Political Subdivision C A, you request a confidential advisory from the Pennsylvania State Ethics Commission based upon submitted facts that may be fairly summarized as follows. Political Subdivision C is a [class of political subdivision]. As Solicitor to the Political Subdivision C A, your duties are statutorily provided as follows: "[quote]." [cite]. You state that as Solicitor, you are removable at the will of the A, are responsible only to the A, and may act only pursuant to the A's authorization. As Solicitor, there is no specific total number of hours that you are required to work. In your position as Solicitor, you receive an annual salary of [dollar amount]; you do not receive employee health insurance, holiday pay, sick pay, or vacation pay. Political Subdivision C makes deductions from your paycheck for the following: Federal Withholding, Medicare, FICA, Pennsylvania State Income Tax, State Unemployment Insurance, Local Municipal Tax, and Local Services Tax. Political Subdivision C matches your FICA and Medicare contributions. You state that your counterparts in some [same type of political subdivision already perform legal services for Bs, which services may include, inter alia: [list of legal services]. You state that preparing such work product is outside the scope of the Confidential Advice, 09 -570 September 8, 2009 Page 2 statutorily defined duties of your position. You state that the fees for such legal services are not paid from public funds or tax dollars, but rather, are billed as costs to persons involved in the B process. You state that the above type of arrangement has been recommended at a Continuing Legal Education program, and that many attorneys have expressed to you their view that the above practice is legitimate. You have submitted a copy of correspondence from the Past President of the [professional organization] in support of your advisory request. Based upon the above submitted facts, you pose the following questions: (1) Whether, as Solicitor to the Political Subdivision C A, paid in the manner described above, you would be considered a "public employee" subject to the restrictions and penalties of the Ethics Act; (2) Whether, pursuant to the Ethics Act, it would be permissible for you, as Solicitor to the Political Subdivision C A, to contract with the A to provide legal services as to the A's Bs, where the fees for such legal services would not be paid from public funds or tax dollars, but rather, would be billed by the A as costs to persons involved in the B process; and Whether, in the alternative, you would be permitted to enter into such a contract following resignation from your position as Solicitor to the Political Subdivision C A, and if so, whether there would be an applicable "waiting period" for doing so. Discussion: It is initially noted that pursuant to Sections 1107(10) and 1107(11) of the Ethics Act, 65 Pa.C.S. §§ 1107(10), (11), advisories are issued to the requester based upon the facts that the requester has submitted. In issuing the advisory based upon the facts that the requester has submitted, the Commission does not engage in an independent investigation of the facts, nor does it speculate as to facts that have not been submitted. It is the burden of the requester to truthfully disclose all of the material facts relevant to the inquiry. 65 Pa.C.S. §§ 1107(10), (11). An advisory only affords a defense to the extent the requester has truthfully disclosed all of the material facts. The initial question to be addressed is whether, as Solicitor to the Political Subdivision C A, paid in the manner described above, you would be considered a "public employee" subject to the restrictions and penalties of the Ethics Act. Based upon the submitted facts that as Solicitor to the Political Subdivision C A, you receive a salary, and Political Subdivision C makes deductions from your pay for various categories of withholding and matches your FICA and Medicare contributions, the necessary conclusion is that you are an employee rather than a retained Solicitor. Therefore, you are advised that in your capacity as Solicitor to the Political Subdivision C A, you are a public employee subject to the Ethics Act. See, 65 Pa.C.S. § 1102; 51 Pa. Code § 11.1; P.J.S. v. State Ethics Commission, 555 Pa. 149, 723 A.2d 174 (1999). Compare, C.P.C. v. State Ethics Commission, 698 A.2d 155 (Pa. Commw. Ct. 1997), appeal denied, 550 Pa. 686, 704 A.2d 640 (1997) (Retained - -as opposed to employed- - solicitors are not public officials /public employees under the Ethics Act). (3) Section 1103(a) of the Ethics Act provides: § 1103. Restricted activities (a) Conflict of interest. - -No public official or public employee shall engage in conduct that constitutes a conflict of interest. Confidential Advice, 09 -570 September 8, 2009 Page 3 65 Pa.C.S. § 1103(a). The following terms are defined in the Ethics Act as follows: § 1102. Definitions "Conflict" or "conflict of interest." Use by a public official or public employee of the authority of his office or employment or any confidential information received through his holding public office or employment for the private pecuniary benefit of himself, a member of his immediate family or a business with which he or a member of his immediate family is associated. The term does not include an action having a de minimis economic impact or which affects to the same degree a class consisting of the general public or a subclass consisting of an industry, occupation or other group which includes the public official or public employee, a member of his immediate family or a business with which he or a member of his immediate family is associated. "Authority of office or employment." The actual power provided by law, the exercise of which is necessary to the performance of duties and responsibilities unique to a particular public office or position of public employment. "Business." Any corporation, partnership, sole proprietorship, firm, enterprise, franchise, association, organization, self - employed individual, holding company, joint stock company, receivership, trust or any legal entity organized for profit. "Business with which he is associated." Any business in which the person or a member of the person's immediate family is a director, officer, owner, employee or has a financial interest. 65 Pa.C.S. § 1102. Section 1103(a) of the Ethics Act does not prohibit public officials /public employees from having outside business activities or employment; however, the public official /public employee may not use the authority of his public position - -or confidential information obtained by being in that position - -for the advancement of his own private pecuniary benefit or that of a business with which he is associated. Pancoe, Opinion 89 -011. Examples of conduct that would be prohibited under Section 1103(a) would include: (1) the pursuit of a private business opportunity in the course of public action, Metrick, Order 1037; (2) the use of governmental facilities, such as governmental telephones, postage, equipment, research materials, or other property, or the use of governmental personnel, to conduct private business activities, Freind, Order 800; Pancoe, supra; and (3) the participation in an official capacity as to matters involving the business with which the public official /public employee is associated in his private capacity (Gorman, Order 1041; Rembold, Order 1303; Wilcox, Order 1306), or private client(s) (Miller, Opinion 89 -024; Kannebecker, Opinion 92 -010). In each instance of a conflict of interest, the public official /public employee would be required to abstain fully from participation. The abstention requirement would not be limited merely to voting, but would extend to any use of authority of office, including, but Confidential Advice, 09 -570 September 8, 2009 Page 4 not limited to, discussing, conferring with others, and lobbying for a particular result. Juliante, Order 809. Section 1103(f) of the Ethics Act provides as follows: § 1103. Restricted activities (f) Contract. - -No public official or public employee or his spouse or child or any business in which the person or his spouse or child is associated shall enter into any contract valued at $500 or more with the governmental body with which the public official or public employee is associated or any subcontract valued at $500 or more with any person who has been awarded a contract with the governmental body with which the public official or public employee is associated, unless the contract has been awarded through an open and public process, including prior public notice and subsequent public disclosure of all proposals considered and contracts awarded. In such a case, the public official or public employee shall not have any supervisory or overall responsibility for the implementation or administration of the contract. Any contract or subcontract made in violation of this subsection shall be voidable by a court of competent jurisdiction if the suit is commenced within 90 days of the making of the contract or subcontract. 65 Pa. C. S. § 1103(f). The following terms pertaining to Section 1103(f) are defined in the Ethics Act as follows: § 1102. Definitions "Contract." An agreement or arrangement for the acquisition, use or disposal by the Commonwealth or a political subdivision of consulting or other services or of supplies, materials, equipment, land or other personal or real property. The term shall not mean an agreement or arrangement between the State or political subdivision as one party and a public official or public employee as the other party, concerning his expense, reimbursement, salary, wage, retirement or other benefit, tenure or other matters in consideration of his current public employment with the Commonwealth or a political subdivision. "Governmental body." Any department, authority, commission, committee, council, board, bureau, division, service, office, officer, administration, legislative body, or other establishment in the executive, legislative or judicial branch of a state, a nation or a political subdivision thereof or any agency performing a governmental function. "Governmental body with which a public official or public employee is or has been associated." The governmental body within State government or a political subdivision by which the public official or employee is or has been employed or to which the public official or employee is Confidential Advice, 09 -570 September 8, 2009 Page 5 65 Pa.C.S. § 1103(g). or has been appointed or elected and subdivisions and offices within that governmental body. 65 Pa.C.S. § 1102. Section 1103(f) does not operate to make contracting with the governmental body permissible where it is otherwise prohibited. Rather, where a public official /public employee, his spouse or child, or a business with which he, his spouse or child is associated, is otherwise appropriately contracting with the governmental body, or subcontracting with any person who has been awarded a contract with the governmental body, in an amount of $500.00 or more, Section 1103(f) requires that an "open and public process" be observed as to the contract with the governmental body. Section 1103(f) of the Ethics Act also requires that the public official /public employee may not have any supervisory or overall responsibility as to the implementation or administration of the contract with the governmental body. In addressing your inquiry under the Ethics Act, it is initially noted that this Advice does not express a view as to whether the proposed legal services as to the A's Bs would be outside the scope of your statutory duties as Solicitor. Such a determination would require an interpretation of Code D and possibly the Rules of Professional Conduct, which the State Ethics Commission does not have statutory authority to interpret. You are advised that the Ethics Act would not prohibit you from contracting with the Office of the Political Subdivision C A to perform legal services outside the scope of your duties as Solicitor, subject to the condition that in so doing, you would fully comply with the restrictions and requirements of the Ethics Act. Pursuant to Section 1103(a) of the Ethics Act, you would be prohibited from using the authority of your position as Solicitor to the Political Subdivision C A, or confidential information accessed by being in that position, to secure contract work. As for Section 1103(f) of the Ethics Act, you are advised that the governmental body with which you are associated is the Office of the Political Subdivision C A. Cf., Yatron, Opinion 02 -008. Any contract valued at $500 or more between you and the Office of the Political Subdivision C A would be subject to the restrictions and requirements of Section 1103(f) of the Ethics Act as set forth above. In response to your final question, specifically, whether you would be permitted to enter into a contract to provide legal services as to the A's Bs following resignation from your position as Solicitor to the Political Subdivision C A, and if so, whether there would be an applicable "waiting period" for doing so, you are advised as follows. Section 1103(g) of the Ethics Act, 65 Pa.C.S. § 1103(g), imposes post - termination restrictions upon former public officials /public employees: § 1103. Restricted activities (g) Former official or employee. - -No former public official or public employee shall represent a person, with promised or actual compensation, on any matter before the governmental body with which he has been associated for one year after he leaves that body. Confidential Advice, 09 -570 September 8, 2009 Page 6 Generally, Section 1103(g) of the Ethics Act prohibits a former public official /public employee from contracting with the former governmental body during the first year following termination of public employment. See, Shaub, Order 1242; Confidential Opinion, 97 -008; Confidential Opinion, 93 -005. However, Section 1103(g) of the Ethics Act may not be applied to restrict an attorney's conduct insofar as it constitutes the practice of law, because the Supreme Court of Pennsylvania has the exclusive authority to regulate an attorney's conduct in that regard. Shaulis v. Pennsylvania State Ethics Commission, 574 Pa. 680, 833 A.2d 123 (2003). Therefore, following resignation from your position as Solicitor to the Political Subdivision C A, Section 1103(g) of the Ethics Act would not preclude you as an attorney from immediately contracting with the Office of the Political Subdivision C A to provide legal services as to the A's Bs. The propriety of the proposed conduct has only been addressed under the Ethics Act; the applicability of any other statute, code, ordinance, regulation or other code of conduct other than the Ethics Act has not been considered in that they do not involve an interpretation of the Ethics Act. It is expressly assumed that there has been no use of authority of office for a private pecuniary benefit as prohibited by Section 1103(a) of the Ethics Act. Further, you are advised that Sections 1103(b) and 1103(c) of the Ethics Act provide in part that no person shall offer or give to a public official/ public employee and no public official /public employee shall solicit or accept anything of monetary value based upon the understanding that the vote, official action, or judgment of the public official /public employee would be influenced thereby. Reference is made to these provisions of the law not to imply that there has been or will be any transgression thereof but merely to provide a complete response to the question presented. Specifically not addressed herein is the applicability of Code D or the Rules of Professional Conduct. Conclusion: Based upon the submitted facts that as Solicitor to the Political Subdivision C A, you receive a salary, and Political Subdivision C makes deductions from your pay for various categories of withholding and matches your FICA and Medicare contributions, you are advised that in your capacity as Solicitor to the Political Subdivision C A, you are a "public employee" subject to the provisions of the Public Official and Employee Ethics Act ( "Ethics At "), 65 Pa.C.S. § 1101 et seq. This Advice does not express a view as to whether certain proposed legal services as to the A's Bs would be outside the scope of your statutory duties as Solicitor. Such a determination would require an interpretation of Code D and possibly the Rules of Professional Conduct. The Ethics Act would not prohibit you from contracting with the Office of the Political Subdivision C A to perform legal services outside the scope of your duties as Solicitor, subject to the condition that in so doing, you would fully comply with the restrictions and requirements of the Ethics Act. Pursuant to Section 1103(a) of the Ethics Act, you would be prohibited from using the authority of your position as Solicitor to the Political Subdivision C A, or confidential information accessed by being in that position, to secure contract work. Any contract valued at $500 or more between you and the Office of the Political Subdivision C A would be subject to the restrictions and requirements of Section 1103(f) of the Ethics Act. Following resignation from your position as Solicitor to the Political Subdivision C A, Section 1103(g) of the Ethics Act would not preclude you as an attorney from immediately contracting with the Office of the Political Subdivision C A to provide legal services as to the A's Bs. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Act. Pursuant to Section 1107(11) of the Ethics Act, an Advice is a complete defense in any enforcement proceeding initiated by the Commission, and evidence of good faith conduct in any other civil or criminal proceeding, provided the requester has disclosed truthfully all the material facts and committed the acts complained of in reliance on the Advice given. Confidential Advice, 09 -570 September 8, 2009 Page 7 This letter is a public record and will be made available as such. Finally, if you disagree with this Advice or if you have any reason to challenge same, you may appeal the Advice to the full Commission. A personal appearance before the Commission will be scheduled and a formal Opinion will be issued by the Commission. Any such appeal must be in writing and must be actually received at the Commission within thirty (30) days of the date of this Advice pursuant to 51 Pa. Code § 13.2(h). The appeal may be received at the Commission by hand delivery, United States mail, delivery service, or by FAX transmission (717 - 787 - 0806). Failure to file such an appeal at the Commission within thirty (30) days may result in the dismissal of the appeal. Sincerely, Robin M. Hittie Chief Counsel