The Chairman of the Human Relations Commission has requested an opinion as to whether the agency's Chief Hearing Examiner (the Hearing Examiner) may be listed as an arbitrator on the labor relations panel list of the American Arbitration Association.
The Human Relations Commission (the HRC) is authorized under Article 49B, Annotated Code of Maryland, to adjudicate cases involving alleged discrimination. Its jurisdiction covers employment situations, as well as discrimination in housing and public accommodations, and relates to improper actions based on race, color, sex, religion, national origin, and marital or handicapped status. In addition to those involved in housing and public accommodations, any person employing 15 or more persons is potentially subject to HRC's authority. The Hearing Examiner indicates that most respondents are represented by counsel; complainants are represented by HRC staff.
The HRC action involves a two-stage process beginning with a preliminary investigation and conciliation phase. Only if there has been a determination of probable cause and conciliation has failed is a case certified by the Chief Counsel to the Office of the Hearing Examiner for a public hearing. The Chief Hearing Examiner either assigns the case to himself or the other Hearing Examiner. He states that, though he has administrative personnel authority over the other hearing examiner, he does not in any way supervise or control her activities regarding a case once it is assigned to her. HRC hearing examiners conduct adjudicatory hearings, make findings of fact and draw conclusions of law in cases assigned to them. They issue "provisional" orders, which become final orders of the HRC in 30 days unless appealed. Appeal of a provisional order is to a panel of HRC members. The Hearing Examiner indicates that the hearing process takes approximately 4 months from the time of certification of a case for public hearing. He states that 2% or fewer of the cases involve labor issues that could go to arbitration, and that they seldom involve union participation.
The Hearing Examiner is an attorney who wishes to be able to be on the panel list as an arbitrator for the American Arbitration Association (AAA). This organization is a private non-profit organization that serves many functions. A key function of its administrative branch is to provide impartial arbitrators to parties in a variety of fields, each of which involves a separate panel list. The Hearing Examiner's interest is in being on the labor relations panel list. Inclusion on the panel list depends upon meeting substantial professional standards. Arbitration services are provided from this list to parties based on inclusion in labor contracts of a provision for arbitration through the AAA. The process involves the provision of a list of several names, along with a brief biographical sketch, to both parties (union and management), each having the right to strike those that are unacceptable. This process may result in the identification of one arbitrator who will always be called to hear disputes, or a list of names ranked in order of preference.
The Hearing Examiner would be on a panel operating out of AAA's Philadelphia Office, and would be potentially providing arbitration services in a region including Maryland and several other states in this geographical area. Apparently AAA fulfills a middleman, facilitator type of role in this process, but is not a party to the actual arbitration arrangements. Arbitrators set their own fees and per diem rates and are paid directly by the parties to the arbitration. Thus, the Hearing Examiner would actually not be employed by AAA; he would have a contractual relationship with each of the parties to particular arbitration proceedings. Labor agreements involving State employees and the State government provide for use of AAA arbitrators in some circumstances.
The primary legal issue in this request is application of the outside employment provisions of §3-103(a) of the Public Ethics Law (Article 40A, §3-103(a), Annotated Code of Maryland, the Ethics Law). This section prohibits an official or employee from being employed by or having an interest in an entity that contracts with or is under the authority of his agency (§3-103(a)(1)(i)), or from having any other employment relationship that would impair his impartiality or independence of judgment (§3-103(a)(1)(ii)). Both of these provisions bar absolutely the existence of the particular employment or contractual relationship. In applying the first, subsection (a)(1)(i), we have generally looked to the facts to determine, as a technical matter, whether the private relationship constitutes "employment" or involves an interest, and whether the private entity is under the authority of or contracts with the individual's agency. As we have generally concluded that an individual's provision of intermittent consultant-type services on a contractual basis constitutes an interest or employment relationship for purposes of §3-103(a), we believe that the relationship between the Hearing Examiner and parties to arbitration in which he participates, is an employment relationship intended to be covered by §3-103(a).
This request presents difficult issues in evaluating the agency/private entity relationship, however, based on some substantial unknowns in the facts. The potential authority of the HRC is vast; it includes every employer of 15 or more persons, every restaurant or hotel operation, and every housing provider. Thus, the likelihood is strong that any Maryland firm for which the Hearing Examiner was an arbitrator would be at least potentially subject to HRC jurisdiction. Obviously, however, the number of these entities to actually come before the Hearing Examiner or his agency is substantially less. In evaluating the authority relationship in this type of situation, the Commission has on one occasion found that inclusion in a regulatory program with potential actual appearance did result in an authority relationship. (Opinion No. 80-13, involving the Board of Well Drillers.)
However, Opinion No. 80-13 involved an agency that had regulatory and licensing authority over the entity, in addition to its potential adjudicatory responsibilities. We believe that the issue raised here is more properly resolved by our Opinion No. 80-19, which involved the Property Tax Assessment Appeals Board (PTAB). Like the HRC, this entity is an adjudicatory body having vast potential authority (over any real property whose tax assessment is subject to appeal to the PTAB). In that case we held that the individual's private interest was not under the Board's authority unless and until an appeal was actually filed regarding the property. Applying this result to the circumstances presented by the Hearing Examiner, we conclude that a potential arbitration client would not be viewed as under the authority of HRC unless there were actually a proceeding involving the client pending before the agency. The Hearing Examiner indicates that he would confirm the absence of such a case prior to accepting any arbitration, and also indicates that arbitration proceedings are generally short and not continuing in nature. He thus believes he would be able to ensure that he would not be handling any arbitrations for parties who are involved in matters pending before HRC.
We therefore conclude that the Hearing Examiner's proposed listing on the AAA Labor Relations Panel List would not violate §3-103(a)(1)(i) of the Ethics Law.1 Moreover, we do not believe that the situation presented here would, as described to us, constitute a violation of the more general inconsistent employment provisions of §3-103(a)(1)(ii). Application of this provision involves consideration of less technical criteria in determining whether proposed outside employment would impair a person's impartiality or independence of judgment. We have considered this provision frequently. (See, most recently, No. 82-22, and also Opinion No. 82-21, and the opinions cited therein.) The provision has generally been read as a complement to the more technical application of subsection (a)(1)(i). The approach has been to look at the total circumstances of a particular situation, considering whether a relationship exists between official duties and outside activities which, even though not within the authority and contractual restrictions of §3-103(a)(1)(i), would result in a conflict of interest intended to be addressed by the Ethics Law.
In applying this inconsistent employment provision, we have generally looked for relatively clear relationships that would raise serious and justified concerns as to the existence of an actual or apparent conflict of interest. In this situation, given the potentially large populations served by the Hearing Examiner's official and private activities, it is conceivable that there would never be an overlap as to particular entities, and in any case that such overlap would be avoided by his refusal of arbitration cases involving entities with pending HRC cases. Thus, we do not believe that the general situation here presents such clear and serious potential conflicts as to warrant application of §3-103(a). The actual occurrence of concurrent jurisdiction as to particular entities could be significantly smaller than the potential coverage, and the Hearing Examiner also points out that in both his official and his proposed private roles, he serves as an impartial adjudicator of facts within a prescribed policy framework; in neither role is he or would he be expected to be an advocate or policy-maker.
Another provision of the Ethics Law that could be of concern in this request is the prohibition in §3-104 against intentional use of the prestige of one's office for one's own personal gain or that of another. In our Opinions No. 80-7 and No. 80-8 we recognized that the provision could be applied in circumstances where an employee accepted a fee for outside work "directly and immediately related" to his official duties. We do not believe that arbitration work by the Hearing Examiner must be viewed as related in this way to his official duties, even though his current position and substantive State experience would necessarily be included in any resume or qualifications statement. In our view, it is not, as a general matter, intentional use of prestige of office for a person to refer to State-developed experience and expertise in seeking employment. Thus, we advise the Hearing Examiner that inclusion of his HRC position and experience as a standard and ordinary item in a resume or biographical sketch would not constitute intentional use of prestige in violation of §3-104 of the Ethics Law.
Herbert J. Belgrad, Chairman
Jervis S. Finney
Reverend John Wesley Holland
Betty B. Nelson
Barbara M. Steckel
Date: August 25, 1982
1 The Hearing Examiner should be aware, however, that if an arbitration matter is pending and the same parties become involved in an HRC proceeding, he would have to discontinue his private activity or risk violation of §3-103(a)(1)(i).