Advisory Opinion No. 1994-13

Application Of Code Of Ethics For Public Officials To
Individuals Hired Through Special Payroll Account Or
Under Personal Services Agreement

Rachel S. Rubin, Supervising Attorney at the State Ethics Commission, has asked how the requirements of the Code of Ethics for Public Officials, Conn. Gen. Stat. §1-79 et seq., affect the hiring of a state employee’s spouse under a personal services agreement, or through a special payroll account.  Secondly, Attorney Rubin has asked whether the Code is violated if a spouse/supervisor generally oversees the day-to-day work of a spouse hired in this manner, if the supervisor refrains from any other action with regard to employment-related decisions.

How the Code will apply to special payroll employees depends on whether such employees are considered “state employees” as that term is used in the Code.  If special payroll hirees are considered state employees, they would be subject to the outside employment and other conflict-of-interest restrictions of Conn. Gen. Stat. §§1-84(b) and 1-84(c), as well as the revolving door provisions of §§1-84a and 1-84b.  If the special payroll hirees are not state employees, the open and public process contracting requirements of §1-84(i) will have to be met if a proposed hiree is a member of a state employee’s immediate family.

Peter Rozantes, Personnel Services Section Chief at the Department of Administrative Services (“DAS”) indicates that higher education facilities are some of the only, if not the only, state agencies utilizing special payroll accounts.  Other state agencies use personal service agreements to accomplish similar goals; i.e., to obtain short-term assistance to complete a specific task or to fill a specific, limited need.  Mr. Rozantes states that DAS does not consider these individuals to be “state employees” as that term is defined by the State Personnel Act, Conn. Gen. Stat. §5-193 et seq.  These employees do not receive the same benefits as “state employees” nor do they fill a “position” under §5-196(u).  On the other hand, some special payroll hirees (for example, special payroll lecturers at the University of Connecticut), once hired, do become union members.  As such, they are paid at set union rates, receive certain benefits under the union contract (e.g., specific termination procedures, parking rights, limited sick leave), and must pay union dues.

The State Ethics Commission believes that, on balance, individuals hired on a special payroll account or under a personal service agreement are not state employees for the purpose of applying the Code of Ethics.  First, the state Personnel Division does not consider them to be state employees, which, while not dispositive, is significant.  Secondly, and more importantly, the intent of the Code is best served if these individuals are not considered state employees.  Special payroll accounts and personal service agreements appear to be administered on a more independent basis than contracts which are administered, for example, by DAS, and they appear more likely to be filled by word-of-mouth than through an open process.  Thus, if the immediate family member of a state employee or public official wishes to compete for the contract, the process should be opened to public scrutiny.

Also, applying the outside employment and revolving door restrictions to these individuals (which would occur if they are considered state employees) appears to be of secondary importance.  The temporary and often part-time nature of the work makes other employment more likely, and should limit the quantity and quality of insider conduct which the revolving door provisions are intended to curtail.  Of course, as independent contractors, individuals hired in this manner are subject to the restrictions of Conn. Gen. Stat. §1-86e, which prohibits such persons from:  (1) using their authority or confidential information gained under the contract to obtain financial gain for themselves, their own employees, or a member of their immediate family; (2) accepting another state contract which would impair their independence of judgment with regard to the performance of the first contract, and; (3) accepting anything of value based on an understanding that the actions of the person on behalf of the state would be influenced.

Turning then to Attorney Rubin’s specific questions, if a spouse of a state employee or public official wishes to be hired on a special payroll or under a personal services agreement, in the amount of $100.00 or more, the hiring must comply with the open and public process requirements of Conn. Gen. Stat. §1-84(i).  These requirements include prior public offer and subsequent public disclosure of all proposals considered and the contract awarded.  “Prior public offer” may be satisfied by posting an advertisement in an appropriate location or by placing such an advertisement in a newspaper or relevant trade publication, for example.  Of course, the spouse/state employee must refrain from any involvement in the hiring process.  See Conn. Gen. Stat. §1-84(c) and State Ethics Commission Advisory Opinion No. 88-8, “Relatives Employed As Faculty In The Same University Department,” 49 Conn. L.J. No. 48, p. 3D (May 31, 1988).

Finally, with regard to Attorney Rubin’s second question, oversight of the day-to-day work of a spouse, whether hired on special payroll, under a personal services agreement, or otherwise, is generally not appropriate, since the individual who supervises the spouse’s work is naturally the one most able to make recommendations or determinations regarding the financial situation of the spouse; e.g., renewal of contract, increase in contract price, etc.  Thus, whenever the spouse/supervisor is required to take any action which would significantly affect the financial interest of the spouse, the supervisor must avoid the potential conflict of interest by following the procedures laid out in Conn. Gen. Stat. §1-86(a).  See Advisory Opinion No. 88-8, above.

By order of the Commission,

Christopher T. Donohue
Chairperson