The Community Services Department has requested a waiver of Section 2.03.103D's two year post-employment restriction to enable it to contract with a retired employee to perform certain of her former County duties for a six month period.
The waiver request is granted. On balance, the undue hardship to the County in enforcing the post-employment provision exceeds the personal benefit to the retiree. In this case, the Department does not appear to have adequate internal or external resources to accomplish the fiscal goals aside from contracting with the retiree. A six month contract at the retiree's former salary rate may prevent a potentially significant impact on the County treasury.
A Community Services employee retired in March 2008. In her almost 30 year employment with the County, she had been responsible for numerous aspects of reporting to the federal government on the expenditure of millions of dollars of federal funding for a variety of department programs. If this reporting is not both accurate and timely, the department is penalized by loss or reduction in federal funding. After she told her department she was retiring, its administrators immediately drew up plans for appointing and training her successors and successfully implemented most of the training before the employee left. However, as a result of the timing of certain fiscal reports, the department was unable to fully train a successor in one very financially significant process in which the retiree had unique expertise. The Commission granted the department a waiver (and an extension of that waiver) to contract with the retired employee until March of 2009 at her former hourly rate to perform her prior duties and train successors.
The department now finds that the retired employee's successor requires assistance in the performance of some of the retiree's former duties. Although the successor is fully trained, the department received unexpected and unplanned federal stimulus amounting to about an addition of one-third to its current annual budget for housing programs. The department states that the successor is unable to perform both the regular annual duties and those associated with the new stimulus funds and that it needs the assistance of the retired employee to train an as yet unidentified assistant. The department also notes that it suffered the employment loss of another employee familiar with federal stimulus money administration and has been unable to fill that position. The department believes that it will need the services of the retired employee for a period of six months.
Code or Prior Opinion:
New Castle County Code Sections
If contracted, the retiree would be performing some of the same duties for which she 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:[/code] [code]1. Public disclosure shall be made by the Commission upon the written request of the applicant;[/code] [code]2. The Commission may make such public disclosure as it determines is required in connection with the prosecution of any violation of this Division;[/code] [code]3. The Commission shall report to appropriate Federal and State authorities substantial evidence of any criminal violation which may come to its attention; and[/code] [code]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 58.1 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 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. 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 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.
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.
An employment contract granted shortly after retirement or resignation on the basis of expediency, merely because an employee acquired special expertise in the course of paid County employment, would not qualify for a waiver since the reasoning underlying the prohibition would be contravened. Such a contract would create an impression of unjust enrichment to a former employee who capitalizes, for private benefit, on knowledge acquired in a public position to the disadvantage of competitors for the position.
However, even if a former employee capitalizes on such knowledge, a waiver request may be granted if the "undue hardship" to the County standard 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 such grounds 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 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 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 Department does not appear to have adequate internal or external resources to accomplish the fiscal goals. The federal stimulus funding was not a planned receipt and because of its extremely large size compared to the department's annual budget, it has created an impossible administrative burden for the department. Only one department employee, previously trained by the retiree, has the necessary skills to perform the duties related to the stimulus money. That employee does not have the time to train another employee because he or she is fully involved with performing the duties related to the annual budget funds.
As a result of the sum of money at issue, there is no question of a significant negative financial impact to the public if the appropriate federal reporting is not timely and accurately filed. It is also clear that under the conditions related by the Department, no one other than the retiree is available to assist the successor with administering these new funds and train additional employees. A decision to waive the post-employment prohibition so that the County may contract with the former employee significantly ameliorates the obvious and immediate hardship to the County and advances the interests of the public. On balance, the undue hardship to the County in enforcement of the prohibition exceeds the perceived personal benefit to the former employee, who will earn only her former hourly rate under a County contract.
A waiver of the two-year post-employment prohibition pursuant to the undue hardship standard is GRANTED for a period of six months under the contract terms described by the department.
BY AND FOR THE NEW CASTLE COUNTY ETHICS COMMISSION ON THIS 14th DAY of OCTOBER 2009.
Thomas P. Collins, Sr., Chairperson
1 29 Del. C. sec. 5805 (d) Post-employment restrictions.