Advisory Opinion No. 1994-14

Outside Employment Of Revenue Examiner, Department
Of Revenue Services, Selling Deferred Compensation Plans

An employee in the Department of Revenue Services (DRS) wishes to sell deferred compensation plans to both state and non-state employees.  His position is that of Revenue Examiner I whose primary responsibilities are to conduct sales and use tax audits.  Mr. Bruce Chamberlain, a personnel administrator for DRS, has asked whether this outside employment is permissible under the Code of Ethics for Public Officials, Chapter 10, Part I, Connecticut General Statutes.

In general, the Code prohibits a state employee from accepting outside employment which would impair his independence of judgment as to official duties or require or induce disclosure of confidential information acquired in state service.  Conn. Gen. Stat. §1-84(b).  Additionally, a state employee may not use his public position or confidential information received through holding such position to obtain personal financial gain.  Conn. Gen. Stat. §1-84(c).  The Commission has previously held that “conflicts of interests, both real and apparent, are almost inevitable when a State employee accepts outside employment with an entity which can benefit from the employee’s official actions.”  See, e.g., State Ethics Commission Advisory Opinion No. 88-14, 50 Conn. L.J. No. 15, p. 1D (Oct. 11, 1988); Ethics Opinion No. 89-30, 51 Conn. L.J. No. 25, p. 1E (Dec. 19, 1989).

In theory, every individual in the state has the potential of being audited by DRS and, therefore, could potentially benefit from the state employee’s official actions.  However, the prohibition against doing work for those subject to regulation by a state employee’s agency was not intended to be so broad as to extend to every entity or individual theoretically regulated by an agency.  State Ethics Commission Advisory Opinion No. 89-30, supra.  It follows, therefore, that the substantial body of Commission rulings regarding this area only prohibit outside activity which is closely related to the state servant’s official duties or responsibilities.  See, e.g., State Ethics Commission Advisory Opinion No. 91-10, 52 Conn. L.J. No. 46, p. 1C (May 14, 1991) (Child day care registration supervisor with outside business activity as dog breeder may purchase dogs from or sell dogs to a day care provider).

In this instance, the outside activity is totally separate from the state employee’s public work.  Nevertheless, “when a state regulatory official engages in a private business transaction with a person subject to his or her official authority, the potential for impairment of judgment or misuse of office clearly still exists.”  Id.  Therefore, the state employee should not attempt to sell a deferred compensation plan to any individual which has been selected to be or is currently being audited by DRS.  Furthermore, the state employee should not sell to any individual who has either an ownership interest in or occupies a position which is involved in the audit process for an entity which has been selected to be or is currently being audited by DRS.  Otherwise, the state employee’s independence of judgment may be impaired by such individuals who may purchase a deferred compensation plan in order to improperly influence the state employee or because they believe that they may be treated favorably because the state employee may be able to influence co-workers at DRS.

Additionally, the state employee may not use information obtained through his state position to select potential clients who he may be able to identify as having a need for purchasing a deferred compensation plan.  See State Ethics Commission Advisory Opinion No. 89-16, 50 Conn. L.J. No. 52, p. 9C (June 27, 1989).  State Ethics Commission Advisory Opinion No. 89-30, supra.  Finally, in complying with the guidelines provided herein, it is permissible to sell deferred compensation plans to other state employees.   However, he should not attempt to sell such plans to his subordinates in DRS.  Otherwise, it would be a use of his state position for financial gain in violation of §1-84(c) since many may feel obligated to purchase a plan from their superior at work.

By order of the Commission,

Christopher T. Donohue
Chairperson