Ethics Advisory Opinion No. 2008-07
August 18, 2008
Issued By: City Attorney’s Office
May a company who has an employee whose spouse is an executive-level city employee contract with the city?
An executive-level city employee has inquired whether her spouse’s employer would be prohibited from seeking city contracts under the Ethics Code. The spouse has no ownership interest in the company.
III. The Ethics Code
A. The Employer of the City Executive’s Spouse is Not Prohibited from Seeking City Contracts
Section 141 of the City Charter and Section 2-52 of the Ethics Code prohibit city certain city officials and employees, their immediate family members and any businesses in which they hold a 10% or greater ownership interest from having a financial interest in a contract with the City. The employees subject to this restriction are any employees who are required to file financial disclosure statements pursuant to Section 2-73(a), which are in essence management and executive level employees.
A person subject to this provision is presumed to have a prohibited financial interest in a city contract if any of the following individuals or entities is a party to the contract:
1. the city officer or employee
2. his or her spouse, sibling, parent, child or other family member within the first degree of consanguinity or affinity;
3. a business entity in which the officer or employee, or his or her parent, child or spouse, directly or indirectly owns:
(A) ten (10) percent or more of the voting stock or shares of the business entity, or
(B) ten (10) percent or more of the fair market value of the business entity; or
4. a business entity of which any individual or entity listed above in (1), (2) or (3) is:
(A) a subcontractor on a city contract;
(B) a partner;
(C) a parent or subsidiary business entity.
In this inquiry, the spouse of the executive-level employee is merely an employee of the entity seeking the city contract. Neither the spouse, nor the employee nor any member of their family hold an ownership interest in the entity and so there is no presumed financial interest. Further, there is nothing within this inquiry to suggest that the city executive or her spouse will specifically benefit financially from this contract. Accordingly, this “prohibited interest in contracts” provision is not applicable, and the spouse’s employer may seek a contract with the city.
B. The City Employee May Not Participate in any Matter that May Affect the Financial Interests of her Spouse’s Employer
Section 2-43(a) of the Ethics Code provides in part:
Section 2-43 conflicts of interest
(a) General Rule. To avoid the appearance and risk of impropriety, a city official or employee shall not take any official action that he or she knows is likely to affect the economic interests of:
(1) the official or employee;
(2) his or her parent, child, spouse, or other family member within the second degree of consanguinity or affinity;
(5) the outside employer of the official or employee or of his or her parent, child (unless the child is a minor), spouse, or member of the household (unless member of household is a minor);
As discussed above, the employer of the city executive employee’s spouse is not prohibited from seeking a contract with the city. The employee, however, would have a conflict of interest and could not participate in any matter before the city that could affect that entity’s financial interests. Ethics Code Section 2-43(b).
The “prohibited interests in contracts” provisions of the City Charter and the Ethics Code is presumed to apply when a city officer or employee, their immediate family or the businesses in which they hold a 10% or greater ownership interest seek to become a party to a contract with the city. Mere employment by the would-be contractor would not trigger this provision, unless the employee stood to specifically benefit from the contract.
The executive employee, though, would have a conflict of interest and could not participate in any matter before the city that could affect that entity’s financial interests.