A department head has requested that the Commission grant a waiver of the post-employment rule.
Approved. The waiver is granted until August 31, 2012, at 80% the retiree's former salary. The Commission finds that the hardship to the Department and potential negative affect on a broad range of entities exceeds the financial benefit to the recently retired employee. The Commission finds that in this emergency situation a waiver would not reduce public confidence in the fairness of the Department's hiring practices.
A unit of the Department processes over 53,000 payroll checks annually along with submitting proper tax documents and payments to the Federal government, State of Delaware, municipalities, and the credit union, among others. In addition, the unit works closely with the PeopleSoft software system used to process payroll and maintain deductions and exemptions. At this time of year, the unit’s workload also experiences an increase because of processing a large number of seasonal employees to assist in parks maintenance and employees for the summer youth employment program
The unit in question is normally staffed with one supervisor and three support staff. Last week one employee experienced a premature delivery and has requested 12 weeks of leave when she had earlier requested only six weeks, and another member of the support staff was unexpectedly hospitalized and has not indicated a return date. These absences leave the unit with only the supervisor and a support staffer with only six months of experience. Given the critical nature of the entire Department’s work, and the ongoing strictures imposed in the County budget, there are no other trained County employees available to fill in for the absent employees.
This sudden reduction staffing has created a crisis in the daily operations of the unit: delayed payments, reconciliations, submission of reports and payroll withholding distributions. The Department is urgently requesting a waiver to permit it to hire a person who retired in December, 2011, to work until August 31, 2012, for 25 hours a week at 80% of his former hourly rate.
Code or Prior Opinion:
New Castle County Code Sections
In this case, the contracted official would be performing duties similar to those 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 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. 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 postemployment 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. 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 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 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 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, 10-02 and 11-01 there were no other adequate internal or external resources available to a Department to complete important projects without substantial negative impact to the public. In this case, the unexpected absence of half the unit's employees has rendered the Department unable keep up with the flow of work. If the post-employment prohibition is enforced, the hardship for the Department, County employees, and other entities would clearly exceed the perceived personal benefit to the reemployed retiree. Granting of a waiver to hire one former employee who will not require training will enable the Department to adequately perform its duties until it returns to full staffing. In this emergency situation, hiring the retiree does not reduce public confidence in the Department's employment practices. The proposed salary level is in accord with prior Commission waiver decisions.
The requested waiver is GRANTED until August 31, 2012, at 80% the retiree’s former salary. The Commission finds that the hardship to the Department and potential negative affect on a broad range of entities exceeds the financial benefit to the recently retired employee. The Commission finds that in this emergency situation 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 13th DAY of JUNE, 2012.
Gerald Turkel, Chairperson
New Castle County Ethics Commission
129 Del. C. §5805 (d) Post employment restrictions.