WAIVER 24-02
Date: May 9, 2024
Question
Whether the waiver requested by the Public Works Department 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 retiring County employee to perform inspections of stormwater management facilities?
Conclusion
Based upon the facts supplied, the waiver is granted under the conditions and terms set forth in this opinion. The undue hardship which the County will encounter without hiring the former employee on a temporary, contractual basis outweighs any potential unjust enrichment to the former employee. The Public Works Department (the Department or Requester) needs to overcome a gap in critical service while the County searches for permanent replacements to fill open inspector positions. The former employee who would be hired by contract to perform this work temporarily would receive no more per hour than he received as a full-time County employee. Such a contract will prevent cessation of important services with little or no negative net impact on the County’s resources, and without unjust enrichment inuring to the benefit of the former employee.
Facts
By legal mandate, the Department must perform inspections of the approximately 2,800 stormwater management facilities in New Castle County on a regular basis. The Department has only three (3) full-time County employees to perform this work. When it cannot be accomplished as required with the three County inspectors, the County has had to rely on people hired by the County by contract. One of the three County inspectors will be retiring soon but only due to a health condition which prevents him from working full-time. He is able to work part-time, however, and the Department would like to hire him by contract for such part-time work after he retires so that the County can meet its legal mandate while it endeavors to hire, and train, a full-time replacement. The Department is currently working to fill approximately eighty (80) vacancies. Thus, the Department anticipates that it could take anywhere from one to two years to find and train a suitable replacement.
If the waiver is granted by the Commission, the Department would hire the former employee to perform inspections at an hourly rate of $34.44 for up to twenty-one (21) hours per week, plus mileage for his trips to perform the inspections at the current County reimbursement rate. By comparison, the rate at which stormwater facility inspection work is paid by contract by the County is $62.15 - $89.11 per hour (including the 1.61 multiplier to cover overhead as required by the contract.) As such, the proposed contract involving the retiring employee will result in a real cost-savings to the County and the County tax payer as he would be paid approximately half of the cost of the same contract work.
If this waiver is granted, the Department will enter into a contract with the retiring employee for a period of one year. If a permanent employee is not hired to replace the retiring employee within that timeframe, the Department will again consult the Ethics Commission.
Code or Prior Opinion:
New Castle County Code Sections
In this case, the subject employee would be performing duties similar to those for which he had been directly and materially responsible during the course of his 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.
Similarly, the Delaware legislature sought to insure public confidence in the integrity of government. It set a two–year “cooling off period” in areas where the former employee was “directly and materially responsible,” etc. This limits the actual or perceived unfair advantage in subsequent dealings with a department or agency. … 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. … 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. See 29 Del.C. §5802.
As it reaches 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.
In Ethics Commission matter W20-02, the Commission was asked to issue a waiver in similar circumstances. The Requester asked for a waiver to hire by contract a former County employee to perform inspections of stormwater management facilities while the hiring to fill vacancies was hampered by the CoVid-19 pandemic. The Commission granted the request so that the Department could overcome a critical gap in service while the County searched for permanent replacements to fill open inspector positions. At the time, most hiring by the County had been suspended due to the state of emergency resulting from the CoVid-19 pandemic. The former employee who would be hired by contract to perform this work temporarily would receive less pay per hour than the current inspectors receive, and less than he received per hour when he left County employment. The granting of the waiver by the Commission prevented cessation of important services with little or no net impact on the County’s resources, and without unjust enrichment inuring to the benefit of the former employee.
In Ethics Commission matter W11-01, 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.
In Ethics Commission matter W14-01, the Commission granted a waiver of the 2-year prohibition. In that matter, a County Row Office requested a waiver of the two-year post-employment restriction in order to contract with a retired employee to perform certain of his former County duties on an on-call basis for a period of one year. In that case, the Office stated that there were no adequate internal or external resources for the required services other than the retiree. He possessed unique and exclusive knowledge about the system that he created. Other employees used his system, but he had been the sole architect to sustain its existence. Thus, the retiree was the only source for training the new hire to maintain the system. If the post-employment prohibition was enforced, the hardship for the Office and the public which relies on its services would have exceeded the perceived personal benefit to the retired employee, as long as he received only a moderate rate for his services.
Importantly, the Commission went on to state, however:
The Commission is always concerned when a County employee’s retirement triggers a need for additional contract costs benefitting a retiree as a consultant. It believes that responsible management includes cross training for critical positions, especially when a known event is reasonably certain in the relatively near future. Of course, if an agency has a very small staff, cross training may be impossible despite responsible management. That appears to be the case in this situation since the Agency staff consists of only five persons. The Commission notes that the Agency has successfully sought funds to hire an additional person to manage this critical function in order to prevent a reoccurrence of this problem in the future.
Analysis
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 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.
When, however, undue hardship to the County has been shown to exist, the Commission has granted applications for waivers. In New Castle County Commission W14-01, 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 aspects 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 the waiver request at hand, such undue hardship exists. The Department is attempting to prevent a failure of the inspection process of stormwater management facilities. Additionally, these inspections are merely desirable, they are mandated by law. The failure of the County to perform these necessary inspections could result in stormwater management problems throughout the county and it could also result in the imposition of financial penalties against the County by the regulating agencies. Without the granting of this waiver, essential services for County employees and County citizens may not be provided. Moreover, the human issues which exist in the recruitment and hiring process have no effect on the weather patterns and the maintenance of stormwater management facilities. The hiring of the retiring employee on a part-time basis at a rate of $34.44 per hour, plus mileage to and from inspection sites if made with a personal vehicle, for a term of one year, satisfies the conditions in the Ethics Code for the granting of a waiver.
Finding
The facts in this request present an example of the reason that the Ethics Code provides for a waiver of the two-year post-employment restriction. While such waivers are not favored, in this instance, the granting of a waiver is justified. A waiver of the two-year post-employment prohibition pursuant to the undue hardship standard is GRANTED for a period not to exceed one (1) year from its commencement, on a part-time basis, at a rate not to exceed $34.44 per hour, plus mileage to and from inspection sites if made with a personal vehicle, as presented by the Department in its request. The Commission emphasizes, however, that the granting of this waiver must not be interpreted as permission for the County government to refrain from doing its part to move forward as quickly as the circumstances allow to finalize the hiring process of permanent, full-time inspectors. Should the Requester need conditions which are not specifically granted in this waiver opinion, the Department must consult with the Ethics Commission again regarding any additional or continued needs along these same lines. The Commission commends the Requester for consulting the Ethics Commission about this waiver request and notes that the citizens of New Castle County can be reassured, by this example, that the public servants employed by their County government are committed to remaining within the parameters of the Ethics Code while providing quality service to County citizens. 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.
BY AND FOR THE NEW CASTLE COUNTY ETHICS COMMISSION
ON THIS 8TH DAY OF MAY 2024.
_________________________________________
Dr. Johanna Bishop, Chairperson
New Castle County Ethics Commission
