HomeMy WebLinkAbout92-005 ConfidentialI. ISSUE:
STATE ETHICS COMMISSION
308 FINANCE BUILDING
HARRISBURG, PENNSYLVANIA 17120
OPINION OF THE COMMISSION
Before: James M. Howley, Chair
Daneen E. Reese, Vice Chair
Dennis C. Harrington
Roy W. Wilt
Austin M. Lee
Allan M. Kluger
DATE DECIDED: June 24, 1992
DATE MAILED: July 24, 1992
92 -005
Re: Conflict, Public Employee, Former Public Employee, Contract,
City, Governmental Body with which Associated, Person,
Represent, Sole Proprietorship.
This Opinion is issued in response to your request of April 3,
1992 for a confidential opinion.
Whether the Public Official and Employee Ethics Law imposes
any prohibition or restrictions upon a former director of labor
relations of a city whose firm seeks to provide labor consulting
services to that city within one year of termination of service.
II. FACTUAL BASIS FOR DETERMINATION:
A, the former B of C, terminated his public service by
resignation on February 28, 1992. During his employment with the
City, A represented the City administration in matters of
negotiations, contract administration and grievances with labor
unions. Following termination of service with the City, A
practiced labor contract arbitration. As a self - employed impartial
arbitrator, A is an D member. In addition, he is on a panel of
Confidential Opinion 92 -005
July 24, 1992
Page 2
labor arbitrators maintained by E. Following the formation of his
own labor consulting firm as a sole proprietorship, A intends to do
a limited amount of consulting on labor relations matters.
When the City administration learned that A contemplated
leaving public service, A was contacted to determine whether he
would be interested in performing certain services via contract
with the City on labor related matters. The City is in the process
of negotiating labor contracts since the existing contracts will
expire on June 30, 1992. Since the contract negotiations may be
difficult, the City administration would like to use A, who has
expertise and an unparalleled knowledged of City labor matters,
because he has a high level of credibility that has been developed
in his relationship with the leadership of City unions, which
relationship is based upon mutual respect and trust that A and the
labor unions have established over the last eight years.
It is contemplated that A would perform services that focus on
the issues and problems that arise out of the current collective
bargaining agreements and that he would function as a resource to
both labor and management whereby information would be provided to
the parties as to the history and background of City labor
agreements and the meaning and intent of certain provisions. A
would act as a neutral to the parties in the roles of a
conciliator, mediator, arbitrator, or fact finder. In addition, A
would assist the City administration in establishing F and would
train and orient administration officials on the principles and
practices of collective bargaining.
A is interested in performing the services which are similar
to what he performed prior to his February 28 resignation except
that he would no longer be functioning as an advocate for the
employer but would be operating as an impartial problem solver for
both sides as well as an expert in dispute resolution. In order
for A to act as an advocate, he would have to withdraw as a D which
he is unwilling to do.
The. City Law Department has analyzed the above matter under
various ethics laws and has concluded that no provision of the City
Ethics Code or G would preclude such an arrangement between the
City and A. However, because a decision could not be reached as to
the application of the Ethics Law, an Opinion of this Commission is
requested.
After referencing Section 3(g) of Act 9 of 1989 and
acknowledging that. is a public employee and that the entire City
is the governmental body with which he has been associated, the
question is posed as to whether the negotiation and execution of
such a consulting contract by A would constitute a prohibited
Confidential Opinion 92 -005
July 24, 1992
Page 3
"representation ". The view is expressed that the proposed contract
should not be precluded by Section 3(g) of the Ethics Law on the
theory that the City is merely seeking to extend A's service with
the City beyond the date of his resignation. In particular, if A
had not resigned, the City would not be seeking to contract with
him or any other person for such services and hence it is asserted
that the matter involves simply a change in A's status from
employee to contractor which is far from the main concern of
Section 3(g) as to a former public employee's use of his past
association with the public entity for an undue benefit of a
private entity.
After referencing Confidential Opinion 89 -019 and our
discussion regarding Section 3(a) of the Ethics Law, it is asserted
that A's sole role in this matter was to tender his resignation
followed by a favorable response to the City's inquiry regarding
performing these contractual services. The conclusion is proffered
that there can be no use of authority of office or confidential
information by A for a private pecuniary benefit in this case.
Opinion 89 -019 is further referenced concerning the
application of Section 3(f) as to the requirement of an open and
public process when a public employee /official seeks to enter into
a contract valued at $500 or more with his governmental body. It
is argued that the Confidential Opinion is distinguishable in that
the contract negotiation and execution by A in this case was done
after he left City employment.
Finally, Opinion 89 -019 is analyzed regarding the application
of Section 3(g) of the Ethics Law. In particular, it is argued
that the linchpin of our holding in that case was that the former
public employee was representing a private corporation. In that
regard it is asserted that the phraseology of both Section 3(g) as
well as the definition of the term "represent" clearly indicate
that such activity must be made on behalf of "any other person" so
as to exclude the former public employee himself. Thus, it is
argued that through negotiating and executing a contract solely on
behalf of himself, A would not be engaged in the act of
representation as defined in Section 2 of the Ethics Law.
The following cases of this Commission are cited for the
general proposition that the Ethics Law-does not prohibit a person
from leaving employment with a governmental body followed by that
person's working for that body either as an employee or under
contract: Teets, Advice 85 -542; Watson, Advice 85 -583; Knafelc,
Advice 87 -508; Hagen, Opinion 84 -019; Pinto, Opinion 84 -021; Gray,
Advice 83 -596; Cohen, Opinion 79 -045; and DeNinno, Advice 81 -562.
Through a footnote, the following prior precedent is cited as
yielding a "contrary" result: McClellan, Advice 86 -551; Andress,
Confidential Opinion 92 -005
July 24, 1992
Page 4
Advice 88 -648; Confidential Opinion, 89 -019; and Krieger, Order
595.
Because it is argued that the prior precedent of this
Commission reflects a policy of interpreting the Ethics Law to
permit a governmental body to retain or reacquire the services of
a valued employee following resignation, there should be no bar to
the City retaining A under contract for consulting services. After
taking issue with Confidential Opinion 89 -019 wherein we rejected
reliance upon prior precedent decided under Act 170 of 1978 and
wherein we- noted' changes in Act 9 of 1989 regarding both the
section on the one year representation restriction as well as the
definitions, it is argued that the only change in Section 3(g)
relates to the insertion of the language "promised or actual
compensation" which permits unpaid representation and as such is
irrelevant in both Confidential Opinion 89 -019 and the instant
matter. Further, it is argued that the definitions of
"governmental body" and "represent" are no different than as
previously interpreted by the Commission in prior opinions and
regulations before the passage of Act 9 of 1989; accordingly, it is
concluded that the foregoing is no basis to vitiate the prior
precedent of this Commission.
After concluding that Act 9 of 1989 could not effect any
change in post- employment restriction as to pre -1989 precedent
relative to a city's ability to retain expertise of an employee
following resignation, it is requested that this Commission
reconsider the result in Confidential Opinion 89 -019 if that is
necessary to reach a favorable determination in the instant matter.
III. DISCUSSION
As B of C, A was a public employee as that term is defined
under the Public Official and Employee Ethics Law of June 26, 1989,
Act 9 of 1989. Accordingly, he is subject to the provisions of the
Ethics Law and the restrictions therein apply to him.
Section 3(a) of Act 9 of 1989 specifically prohibits a public
official /employee from engaging in conduct that constitutes a
conflict of interest which is defined to be a use of authority of
office or confidential information to obtain a private pecuniary
benefit for himself, a member of his immediate family, or a
business with which he or a member of his immediate family is
associated.
In addition, Sections 3(b) and 3(c) of the Ethics Law provide
in part that no person shall offer to a public official /employee
anything of monetary value and no public official /employee shall
solicit or accept anything of monetary value based upon the
Confidential Opinion 92 -005
July 24, 1992
Page 6
matter, we have A acting as an impartial mediator between two
groups, the City and the labor unions. In such a unique factual
context, A is not involved in a representational activity by
serving as an arbitrator. This particular activity does not fit
within the representation restriction of Section 3(g).
Because it is significant to note that we are not dealing here
with a typical situation where a former public official /employee
leaves governmental service and seeks to enter into a consulting
contract to perform services for his former governmental employer,
it is necessary to state that our decision does not constitute an
acceptance of or agreement with the proffered arguments which we
need not address in reaching our determination.
Although it is sufficient to resolve the issue presented by
determining that the contemplated activity is not prohibited by
Section 3(g) of Act 9 of 1989, several other postscripts are
necessary.
First, our determination that the activity is not prohibited
by Section 3(g) should not be construed to be indicative of an
approval of the legality of this consulting contract. We question
how A may serve as an impartial mediator between two parties when
he is paid by one of the parties to the bargaining process.
However, that determination is clearly beyond the scope of our
review.
Secondly, A may become a public employee in this activity
since the factual submission indicates that he would provide the
services that he performed prior to his resignation. If A provides
the same service and once again is paid by the City, it may be
argued that he would be a public employee given the limited change
in his status between his position prior to resignation and his
position as a consultant. Since the foregoing question has not
been presented, we will not address that issue.
Finally, the instant decision does not overrule Confidential
Opinion 89 -019 wherein we held that if a public employee terminated
municipal service and then contracted to provide consulting
services to the municipality through a business with which he was
associated, such activity would be prohibited under Section 3(g) of
Act 9 of 1989. Confidential Opinion 89 -019 is distinguishable from
the issue before us because in the instant matter A will provide
consulting services as an impartial arbitrator and will not
therefore be acting in a representational capacity.
The propriety of the proposed conduct has only been addressed
under the Ethics Law; the applicability of any other statute, code,
ordinance, regulation or other code of conduct other than the
Confidential Opinion 92 -005
July 24, 1992
Page 5
understanding that the vote, official action, or judgement of the
public official /employee would be influenced thereby.
The foregoing commentary regarding Sections 3(a), (b) , and (c)
of Act 9 of 1989 is offered not to suggest that there has been any
improper use of public office or confidential information or any
improper understanding but merely to provide a complete response to
your inquiry.
Following the resignation of A on February 28, 1992, he became
a former public employee subject to the restrictions of Section
3(g) of the Ethics Law which provides:
Section 3. Restricted activities
(g) 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.
65 P.S. S403(g).
The Ethics Law defines the following terms:
The following words and phrases when used in this
act shall have, unless the context clearly indicates
otherwise, the meanings given to them in this section:
"Person." A business, governmental body,
individual, corporation, union, association,
firm, partnership, committee, club or other
organization or group of persons.
"Represent." To act on behalf of any
other person in any activity which includes,
but is not limited to, the following:
personal appearances, negotiations, lobbying
and submitting bid or contract proposals which
are signed by or contain the name of a former
public official or public employee.
65 P.S. 5402.
In applying the provisions of Section 3(g) of Act 9 of 1989
quoted, we conclude that the activity of A in providing consulting
services to the City through his firm which is designated as a sole
proprietorship is not prohibited by Section 3(g). In the instant
Confidential Opinion 92 -005
July 24, 1992
Page 7
Ethics Act has not been considered in that they do not involve an
interpretation of the Ethics Law.
IV. CONCLUSION:
Section 3(g) of Act 9 of 1989 does not prohibit a former B of
the City within one year of termination of service from entering
into a consulting contract in the unique factual context of
providing services as an impartial arbitrator between his former
governmental body, the City, and the labor unions. The propriety
of the proposed conduct has only be addressed under the Ethics Law.
Pursuant to Section 7(10), the person who acts in good faith
on this opinion issued to him shall not be subject to criminal or
civil penalties for so acting provided the material facts are as
stated in the request.
such.
This letter is a public record and will be made available as
Finally, any person may request the Commission to reconsider
its Opinion. The reconsideration request must be received at this
Commission within fifteen days of the mailing date of this Opinion.
The person requesting reconsideration should present a detailed
explanation setting forth the reasons why the Opinion requires
reconsideration.
By the Commission,
41160 woe AV
James M. Howl
Chair