WAIVER 22-01
Date: May 11, 2022
Question
Whether the waiver requested by the Executive office of the two-year post-employment restriction, found in Section 2.03.103.D of the New Castle County Code, should be waived in order that it may contract with a former County employee to continue administering the New Castle County Scholarship Program?
Conclusion
The waiver request is granted but only if it is executed per the conditions set forth herein. On balance, the undue hardship to the County in enforcing the post-employment provision exceeds the personal benefit to the former employee. The work to be performed by the former employee is potentially life-changing for some County residents in wide-ranging and positive ways and, in turn, life in New Castle County may be enhanced for everyone.
Facts
The New Castle County Scholarship Program (the “Program”) provides scholarships in the amounts of $500 to $3,000 to New Castle County residents who are either current or recent high school seniors attending a college or university or adults who are returning to or attending a college or university. Persons hoping to receive a scholarship must submit a completed application along with proof of residence in New Castle County and attendance or intended enrollment in a college or university, and documents which demonstrate financial need. Along with the application, the applicants must submit an essay from a list of suggested topics, such as “who is your biggest influence and why?” and “how has your family background or adversity affected your outlook on the world?” The Executive office has established an independent board to determine to whom the scholarships will be awarded. Each applicant is interviewed by the board, after which the board chooses the scholarship winners. The 2022 Scholarship proceeds will be awarded on or about August 31, 2022.
The full-time, appointed County employee in the Executive office who has been administering the New Castle County Scholarship Program left County service on April 29, 2022, to take a job in the private sector. Practically speaking, this former employee was the person solely responsible for administering the Program including working with the applicants and facilitating the independent board. Although they are working full-time elsewhere, the former employee has agreed to assist the County with the 2022 scholarship process, contractually, and the Executive office has asked the Ethics Commission to waive the two-year post-employment restriction in the Ethics Code to allow for that. The former employee was being paid $47.51 per hour as an Executive office employee at pay grade 30, step 10. In its waiver request, the Executive office has asked to compensate the former employee $40.00 per hour, by contract, to complete the 2022 Scholarship Program. Further, the Executive office has asked that the waiver, if granted, extend until October 21, 2022, to cover the period during which the scholarships are awarded as well as some extra time in case of any needed follow-up by the County. The former employee is not expected to exceed more than 15 hours per week during the contract period. It is anticipated that the cost of this contract will be in the range of $10,000 to $15,000, from the Executive office budget.
Code or Prior Opinion:
New Castle County Code Sections
In this case, the Former Employee would be performing duties similar to those for which they had been directly and materially responsible during the course of their 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. …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 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. Because 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. 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 undue influence on their former colleagues. Commission Op. 96-75.
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 necessary to ameliorate the undue hardship to County government. The remuneration to the former employee must reflect arms' length dealing between the County and the former employee to avoid any appearance of favoritism.
Analysis and Discussion of Prior Opinions:
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 because 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.
Even if a former employee capitalizes on such knowledge, however, 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. Ordinary hardship encompasses any loss of a productive, long-term employee which affects continuity and workflow 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 retired 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.
When, however, undue hardship to the County has been shown to exist, the Commission has granted applications for waiver. In New Castle County Commission Waiver 14-01, the department stated that the retiree possessed unique and exclusive knowledge about the system he created. Thus, the retiree was the only source of consultation for the successor as to how to process certain financial aspect of grant funds. If the post-employment prohibition had been enforced, the hardship for the department and the public which relies on its services would have exceeded the perceived personal benefit to the retired employee, especially if he received only a moderate rate for his services.
In New Castle County Commission Waiver 11-01, the Commission granted a waiver where the department wanted to hire by contract a manager who had recently retired. The retiree had been responsible for implementing all of the medical and voluntary benefits, including pension benefits, for approximately 1450 employees and 1200 retirees. This employee had also been responsible for the Department budget closeout occurring at the time, the fiscal year start up, and financial reporting processes as well as heading up modifications to the County's pension plans pursuant to recently enacted ordinances. The department did not believe it could timely recruit and train a new employee to execute the retiring employee's duties without severe disruption to the pension program and its beneficiaries. It requested a 9-month window in which to contract with the retiring employee for her services in performing many of the tasks for which she was previously responsible. The department expected to require services from the retiree on a part time basis and proposed an hourly rate pegged at 80 to 85% of her former hourly salary, which gave the Commission pause. Due to the nature of the hardship facing the County at the time, however, the Commission granted the waiver.
And in New Castle County Waiver 17-01, a County department was attempting to evaluate the progress which had been made on a work plan which was created by the former employee when they were employed by the County in an appointed, full-time position. The department requested a waiver to hire by contract the former employee to complete that evaluation because achieving optimal and/or better efficiency and performance in that department was a critical need and a major objective of the County Administration. The Commission granted the waiver to the department to hire the former employee for those purposes at an hourly rate which was less than her employed rate, for a period of two months, at anticipated cost of $14,900. In granting the waiver, the Commission reasoned that the benefit to the County outweighed any potential benefit in enforcing the two-year prohibition in the Code. The former employee was better suited than anyone else to perform an evaluation of the status of the plan, as they had extensive knowledge of the evaluation program and practical experience in the administration of the evaluation.
Based upon the Commission’s prior opinions and the facts as provided by the Executive office in this matter, the Commission is persuaded that a waiver should be granted to allow the former employee to continue administering the 2022 Scholarship Program on a part-time, contractual basis, under the conditions set forth below. It should be noted that the public may have difficulty understanding why the Executive office cannot either transfer the former employee’s duties with respect to the Program to another employee or hire someone to replace the former employee in a relatively short period, negating the need for a waiver. On balance, however, the Commission is persuaded that the critical nature of the Scholarship Program to the current applicants, and the timing involved here, sufficiently mitigate against the reasons to not issue a waiver in this instance. As such, the granting of this waiver is limited to the following terms: (1) an hourly rate not in excess of $40.00; (2) the total hours per week not in excess of 15 hours; and (3) the waiver shall extinguish no later than October 21, 2022. In granting this waiver with these conditions, in addition to administering the 2022 Scholarship Program, it is anticipated that the former employee will use this opportunity to train another County employee so that someone else will be able to take over the responsibilities involved with the Scholarship Program. A request to extend this waiver likely would not be granted.
Finding
With the conditions and limitations as set forth above, a waiver of the two-year post-employment prohibition pursuant to the undue hardship standard is GRANTED under the facts and circumstances presented by the Executive office in this request and Commission decision.
In rendering this opinion, this Commission has applied the New Castle County Ethics Code, which establishes the minimum level of ethical conduct required of County officials and employees. It is the expectation of the Commission that all County officials and employees conduct themselves in a manner which exceeds the minimum standards set forth in the Ethics Code.
BY AND FOR THE NEW CASTLE COUNTY ETHICS COMMISSION
ON THIS 11TH DAY OF MAY, 2022.
____________________________________
Robert Ralston, Chairperson
New Castle County Ethics Commission
Decision: 3-1
