Employees Entering Government
March 31, 2017
Individuals who join the executive branch may be required to take actions, either before becoming an employee or shortly thereafter, in order to comply with ethics laws and regulations concerning conflicting financial interests and impartiality. Executive branch agencies are required to educate every new employee about these and other ethics provisions within 90 days of the employee's entry on duty. Moreover, many new employees are required to file a financial disclosure report within 30 days of entering on duty.
Disqualification Required by Conflict of Interest Statute
A criminal conflict of interest statute, 18 U.S.C. § 208, prohibits an employee from participating personally and substantially, in an official capacity, in any "particular matter" that would have a direct and predictable effect on the employee's own financial interests or on the financial interests of:
- the employee's spouse or minor child;
- a general partner of a partnership in which the employee is a limited or general partner;
- an organization in which the employee serves as an officer, director, trustee, general partner, or employee; or
- a person with whom the employee is negotiating for or has an arrangement concerning prospective employment.
A "particular matter" is virtually any Government matter to which an employee might be assigned, including policy matters and matters involving specific parties, such as contracts or grants. (A few matters in Government, however, may be so broad in scope that the conflict of interest law does not require an employee's disqualification even though the employee's own or "imputed" financial interests are among those affected by the matter.) Disqualification ("recusal") is mandatory in the circumstances specified in the statute. Moreover, disqualification is often the appropriate way to prevent a conflict of interest in the long term, unless an "exemption" applies or the circumstances warrant the use of other means of resolving the conflict of interest. Example: John owns stock in ABC Corporation when he joins Government. John may not work personally and substantially on any particular matter that would have a direct and predictable effect on the financial interests of ABC Corporation unless an exemption applies or the potential conflict of interest is resolved in another way, such as by requiring John to sell the stock.
Disqualification Warranted Due to Impartiality Concerns
An executive branch-wide regulation recognizes that a reasonable person may believe that an employee's impartiality can be influenced by interests other than the employee's own or those that are imputed to the employee by the conflict of interest laws. Under 5 C.F.R. § 2635.502, employees are required to consider whether their impartiality would be questioned whenever their involvement in a "particular matter involving specific parties" might affect certain personal or business relationships. The term "particular matter involving specific parties" refers to a subset of all "particular matters" and includes Government matters such as a contract, grant, permit, license, or loan. If a particular matter involving specific parties is likely to have a direct and predictable effect on the financial interests of a member of the employee's household, or if a person with whom the employee has a "covered relationship" is or represents a party to such matter, the employee must consider whether a reasonable person would question the employee's impartiality in the matter. An employee has a covered relationship with:
- a person with whom the employee has or seeks a business, contractual, or other financial relationship;
- a person who is a member of the employee's household or is a relative with whom the employee has a close personal relationship;
- a person for whom the employee's spouse, parent, or dependent child serves or seeks to serve as an officer, director, trustee, general partner, agent, attorney, consultant, contractor, or employee;
- any person for whom the employee has within the last year served as an officer, director, trustee, general partner, agent, attorney, consultant, contractor, or employee; or
- any organization (other than a political party) in which the employee is an active participant.
If the employee concludes that participation in such a matter would cause a reasonable person to question the employee's impartiality, the employee should not work on the matter pending possible authorization from the appropriate agency official. Moreover, an employee should not work on any matter if the employee is concerned that circumstances other than those expressly described in the regulation would raise a question regarding the employee's impartiality. The employee should follow agency procedures so that the agency can determine whether participation is appropriate. Example: Susan was president of XYZ Corporation until she joined the Government. Susan's agency learns about her prior employment during the hiring process (and possibly from her financial disclosure report). The agency will decide if she should be disqualified for one year from some or all matters involving XYZ Corporation.
Disqualification Required Due to Extraordinary Payment
Under 5 C.F.R. § 2635.503, an individual must be disqualified for two years, in certain circumstances, from any particular matter in which the individual's former employer is a party or represents a party. The disqualification requirement applies if, prior to joining the Government, the individual received a special severance payment or other benefit in excess of $10,000 from the former employer (and provided certain other factors are present).
Disqualification Required by Executive Order 13770
Executive Order 13770 requires every full-time political appointee, appointed on or after January 20, 2017, to sign an Ethics Pledge. Under the Ethics Pledge, if an appointee served as a registered lobbyist at any time during the two years prior to appointment, the appointee is subject to a two-year disqualification from the particular matters on which the appointee lobbied. In addition, all full-time political appointees must be disqualified for two years from particular matters involving specific parties in which a former employer or former client is or represents a party. This restriction generally prohibits an employee from having a meeting or communication with a former employer or former client concerning any matter unless the meeting involves multiple parties. The President or his designee may waive one or more of these restrictions.
Restriction on Holding Specified Property
An agency may, by supplemental agency regulation, prohibit or restrict all or a group of agency employees from holding certain financial interests. For example, some regulatory agencies prohibit employees from owning stock in any regulated entity. A few agencies extend such restrictions to the employee's spouse and minor children. Also, employees of some agencies are subject to statutory provisions that restrict the holding of certain financial interests.
Payment Prohibited by Criminal Conflict of Interest Statute
Under a criminal conflict of interest law, 18 U.S.C. § 209, an employee may not receive any salary or supplementation of salary, from any person other than the Government, as compensation for services as a Government employee. Issues under this statute can arise, for example, if a former employer makes a payment to a Government employee and there is an indication that the payment is intended to compensate the employee for doing his Government job rather than to compensate the person for past service to the former employer (or for some other reason unrelated to Government service).
Note: Some ethics provisions discussed above apply differently to an employee who qualifies as a "special Government employee" (SGE), or do not apply at all.
The information on this page is not a substitute for individual advice. Agency ethics officials should be consulted about specific situations.