May a city department contract with a business for which

a city employee serves as an agent?

I. Factual Background

A city department issued a request for proposal (RFP) for real estate brokerage services, to which a realty company responded. Within its proposal, the realty company listed a city employee as one of its agents. The city employee works for this company outside of his city duty hours.

The department has inquired whether the Ethics Code would prohibit or restrict the city from contracting with the realty company because of the employee’s position as one of that company’s agents.

II. The Ethics Code Provisions

A. Conflicting Outside Employment

Section 2-48 of the Ethics Code states that a city employee cannot solicit, accept or engage in concurrent outside employment which could impair or interfere with the employee’s official duties. From the information provided in the inquiry, there is nothing to indicate that the city employee’s work as a real estate agent for the realty company impairs or undermines his work for the city. Assuming that this outside work does not interfere with his work for the city, there is no violation of this provision of the Ethics Code.

In addition, under the Municipal Civil Service Rule XXIV, an employee must obtain written approval from his department director before engaging in the outside employment. Assuming that the outside employment will not interfere with the employee’s work for the city and assuming the director has approved the additional employment in writing, the employee may participate in the outside employment.

B. Prohibited Interest in Contracts

Section 141 of the City Charter and Section 2-52 of the Ethics Code bar a city officer or employee from having a financial interest in a contract with the city or its agencies. In general, a city employee is an individual listed on the city payroll. However, for purposes of Section 141 of the City Charter, the definition of “employee” is limited to employees who are required to file a financial disclosure statement under Section 2-73. Ethics Code, Section 2-52(e)(1).

Accordingly, an employee who files a financial disclosure statement may not have any interest, direct or indirect, in a contract with the city. Such an employee would also have a prohibited financial interest if he owned 10% or more of a business that had a contract with the city. Ethics Code Section 2-52(b). A willful violation of this provision results in the employee’s forfeiture of his position with the city and the contract becomes voidable by the City Manager or the City Council. City Charter Section 141, Ethics Code Section 2-52(a).

The employee of this inquiry is not subject to the financial disclosure statement requirements under Section 2-73. Therefore, the “prohibited interest in contracts” provisions do not apply to him. The realty company may seek and obtain a contract with the city without creating a prohibited interest for the employee in violation of these provisions.

C. Prohibition against Improper Economic Benefit

Section 2-43 of the Ethics Code addresses conflicts presented when action by city officials or employees may affect personal financial interests. Section 2-43(a) states in relevant part:

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;

(3) his or her outside client;

(5) the outside employer of the official or employee or of his or her parent, child (unless the child is a minor), or spouse;

(6) a business entity in which the official or employee knows that any of the persons listed in Subsections (a)(1) or (a)(2) holds an economic interest;

(7) a business entity which the official or employee knows is an affiliated business or partner of a business entity in which any of the persons listed in Subsections (a)(1) or (a)(2) holds an economic interest;

(8) a business entity or nonprofit entity for which the city official or employee serves as an officer or director or in any other policy making position; or

Section 2-43(b) addresses the requirement of recusal:

(b) Recusal and Disclosure. A city official or employee whose conduct would otherwise violate Subsection (a) must recuse himself or herself. From the time that the conflict is, or should have been recognized, he or she shall:

(1) immediately refrain from further participation in the matter, including discussions with any persons likely to consider the matter; and

(2) promptly file with the City Clerk the appropriate form for disclosing the nature and extent of the prohibited conduct.

In addition:

(3) a supervised employee shall promptly bring the conflict to the attention of his or her supervisor, who will then, if necessary, reassign responsibility for handling the matter to another person; and

(4) a member of a board shall promptly disclose the conflict to other members of the board and shall not be present during the board’s discussion of, or voting on, the matter.

Under Section 2-43 of the Ethics Code, the employee must recuse himself from participation of any kind on any matter he knows could affect his personal financial interests or the financial interests of the outside company for which he works. The employee can have no involvement in the decision to award the contract in his capacity as a city employee.

D. Unfair Advancement of Private Interests

Section 2-44 prohibits the use of a city employee’s position to unfairly advance or impede the private interests of another or to grant or secure for any person, including the employee himself, any form of special consideration beyond that which is lawfully available to other persons. Again, should some issue regarding the realty company come up for consideration before the city, the employee could not participate in any related action, nor use his position to influence others who work for the city.

E. Representation of Private Interests

Section 2-47 prohibits a city employee from representing any individual or entity for compensation, other than himself, his spouse, or minor children, before the city. Representation before the city includes actions by word or conduct made to induce either the City Council or city staff to take action on behalf of the outside entity. Therefore, pursuant to this provision, the employee cannot ask City Council or city staff to take action on behalf of an outside company that compensates him for that representation.

III. Conclusion

The Ethics Code would not preclude the employee from engaging in outside employment, so long as his outside employment did not interfere or undermine his work for the city. In addition, the realty company for which he works as an agent may seek contracts with the city because the “prohibited interests in contracts” provisions apply only to officials or employee required to file a financial disclosure statement. Since this employee is not in this category, the prohibition would not apply. The employee, though, should remain cognizant of the other obligations and responsibilities imposed upon him by the Ethics Code as discussed in this opinion.