Advisory Opinion No. 1999-26

Application of Conn. Gen. Stat. §1-86e to Connecticut Institute for the Blind

Donald Romanik, General Counsel for the Connecticut Institute for the Blind/Oak Hill ("CIB"), has asked the State State Ethics Commission a number of questions designed to clarify the application of a series of recent advisory opinions to CIB. Attorney Romanik indicates that CIB is a private, not-for profit corporation which contracts with the Department of Mental Retardation ("DMR") to provide, among other services, residential and vocational supports to persons with mental retardation and other disabilities.

The State Ethics Commission has issued seven opinions regarding the application of Conn. Gen. Stat. §1-86e to private agencies that contract with DMR. Under Conn. Gen. Stat. §1-86e(a)(1), "no person hired by the state as a consultant or independent contractor shall . . . use the authority provided to the person under the contract, or any confidential information acquired in the performance of the contract, to obtain financial gain for the person, an employee of the person or a member of the immediate family of any such person or employee…" "Person" is defined by the Code as "an individual, sole proprietorship, trust, corporation, union, association, firm, partnership, committee, club or other organization or group of persons." Conn. Gen. Stat. §1-79(i).

Turning to CIB’s first question, Attorney Romanik asks the Commission to identify the legal basis for determining that CIB is an independent contractor under §1-86e. Attorney Romanik argues that the term "independent contractor" should be interpreted as applying to individuals only, and not to private agencies which contract with DMR. The Code’s broad definition of "person" does not allow for the narrow interpretation suggested by CIB. Combining the two relevant Code provisions, the restrictions of §1-86e apply to any individual, sole proprietorship, trust, corporation, union, association, firm, partnership, committee, club or other organization or group of persons hired by the state as a consultant or independent contractor.

As Attorney Romanik correctly points out, CIB "acts as a vendor of services," contracting with DMR to provide a variety of human services, including services performed both currently and formerly by state employees. This work fits squarely into the commonly understood definition of an independent contractor as a provider of services performed outside the role of employee, whether provided by a single individual or by a group of individuals working together. To apply §1-86e in any other way would not only ignore the clear statutory language of the Code but would also result in an unfair application of §1-86e to individual contractors, but not to other private agencies providing the same services on a larger scale.

It is important to note that, under this ruling and the others issued by the Ethics Commission, independent contractors and consultants are not subject to the far more restrictive provisions of the Code of Ethics that apply to state employees and public officials. Rather, they are subject to the narrow restraints of §1-86e, which prohibits use of state authority or confidential information for financial gain for a limited number of persons. As the Commission has stated previously, "the application of §1-86e to independent contractors and consultants is not intended to interfere with their business, but rather to prevent a private entity from using state money to, for example, hire immediate family members without appropriate oversight from DMR. A conflict of interest exists only if there is a nexus between the facts in question and the state money and authority granted to the independent contractor or consultant by contract." Advisory Opinion No. 99-14, 61 Conn. L. J. 2, p.7C (7/13/99).

CIB next asks how to determine to whom a family member must be related in order to be subject to the restrictions of §1-86e, since CIB is a nonprofit corporation "without owners." As a preliminary matter, "immediate family" is defined by the Code of Ethics to include an individual’s spouse or child, and also includes a dependent relative residing in the individual’s household. Conn. Gen. Stat. §1-79(f). No other family member is covered by §1-86e. Under that section, an independent contractor may not use authority provided under the state contract to obtain financial gain for, among others, a member of the immediate family of an employee of the independent contractor. That category is self-explanatory: financial gain for any spouse, child or dependent relative residing in an employee’s household is covered by §1-86e.

Section 1-86e also covers a member of the immediate family of the independent contractor itself. As a nonprofit Connecticut corporation, CIB is controlled by a board of directors, who may or may not also appoint officers to run the corporation. Conn. Gen. Stat. §§33-1080, 33-1109. Since CIB employees and their immediate family members are already subject to §1-86e, it is logical that CIB board members and officers, if any, and their immediate family members are also covered.

The application of §1-86e to the hiring of immediate family members has already been addressed by the Commission in Advisory Opinion No. 99-14. In that opinion, the Commission held that if an independent contractor is considering hiring or subcontracting with an immediate family member under circumstances which will result in state payment or reimbursement for the work in question, DMR must be notified in writing of the possibility, and the independent contractor must demonstrate why the individual is appropriate for the job. "DMR must then determine whether this person is qualified for the job and also whether the compensation is market rate. If necessary, DMR may require the independent contractor to document a job search, analogous to the open and public process requirements of Conn. Gen. Stat. §1-84(i). That section requires a state employee or public official who wishes to contract with the state to go through an open and public process, including prior public offer of the contract opportunity and subsequent public disclosure of the contract awarded (emphasis added)." Advisory Opinion No. 99-14.

CIB has now asked how it can meet the requirements outlined in Advisory Opinion No. 99-14 and still protect the privacy of job applicants. First, the opinion does not necessarily mandate public advertisement of a particular job, but even if DMR should require such an advertisement, no privacy issues are raised. With regard to the remaining requirements of §1-84(i), disclosure to DMR is sufficient to allow that agency to determine whether the hiring creates a problem under §1-86e. Such disclosure does not appear to create a problem under the personnel file statutes cited by Attorney Romanik, which state in part that disclosure is appropriate when made to comply with state laws or regulations. Conn. Gen. Stat. §31-128f(5).

Private agencies should keep in mind that this application of §1-86e allows for such hirings to take place, provided that DMR approval is obtained. Although the strict language of the statute certainly does not dictate that the Commission interpret §1-86e to allow for any financial gain to an immediate family member, the Commission has recognized that such a strict reading of the law could create hardship, especially for a small private provider.

CIB also argues that seeking DMR approval for the hiring of an immediate family member will delay its hiring process and could jeopardize its ability to "hire qualified employees who are familiar with the organization and committed to its mission." However, the addition of a simple check-off box on an employment application will alert CIB to a potential §1-86e issue. Furthermore, with regard to the need for quality applicants, Advisory Opinion No. 99-14 allows the private agency to demonstrate that an immediate family member is qualified to hold a certain position.

Next, CIB asks whether the State Ethics Commission retains jurisdiction over the application of §1-86e even though the advisory opinions on the subject outline a procedure to help DMR apply the law. Although the State Ethics Commission has ultimate jurisdiction over the implementation of §1-86e, one of the duties of DMR as the contracting public agency is to determine that state funds are used appropriately. There may be many occasions when the application of §1-86e, as interpreted by State Ethics Commission advisory opinions, is straightforward, and the resolution may be reached without resorting to further Ethics Commission involvement. Nonetheless, if any interested party questions the application of §1-86e to a particular situation, final authority at the administrative level rests with the State Ethics Commission.

Finally, CIB asks this Commission to define the procedure to be followed if CIB, or any other provider, questions the protocols implemented by DMR. Again, if a question arises regarding an interpretation of §1-86e, the issue may be raised with the Ethics Commission. However, nothing in the Code of Ethics prohibits DMR from developing more stringent protocols than might be required by §1-86e alone.

By order of the Commission,

Stanley Burdick,
Chairperson