A request has been presented to the Ethics Commission concerning whether an individual may be employed as an examiner by the Board of Cosmetologists if he is an owner of and teacher in a school of beauty culture.
This request was presented by the Chairman of the Board of Cosmetologists (the Board) and involves an individual who is seeking to be employed by the Board as an examiner. The Board is established in Article 56, §489, Annotated Code of Maryland, and its basic mandate is summed up in Article 56, §481: Before any person may practice or teach beauty culture or act as a demonstrator or manage a beauty shop or enroll as a student in any school of beauty culture or serve as an apprentice in a beauty shop, such person shall file with the Board a written application for registration, accompanied by a health certificate issued by a registered licensed physician Maryland, under oath, on a form which shall be prescribed and supplied by such Board and shall deposit with the Board the registration fee, and, except as provided in §484 of this subtitle, an examination fee, and pass an examination as to fitness to practice or teach beauty culture or to be a demonstrator or manage a beauty shop, as hereinafter provided in this subtitle.
Article 56 also establishes requirements regarding certification as a teacher of beauty culture (§482) and defines the requirements for beauty culture and postgraduate schools (§485).
Regulations established in COMAR 09.22 further define the substantial requirements applied to licensees, including provision that to be eligible for examination, an applicant must, among other things, have completed a certain number of hours at a certified school of beauty culture, or a certain period as an apprentice in an approved beauty salon. Further, COMAR 09.22.02 sets forth substantial requirements regarding schools of beauty culture, requiring certificates of registration and establishing minimum criteria as to the school premises and equipment, staff, student admission requirements, sanitation and curriculum requirements for all aspects of certification. The curricula relate to subject matters addressed in the examination for licensure and a school is forbidden from offering a course of instruction unless the Board has approved a curriculum covering the course. The Board also has inspection and enforcement authority ( §495 and 499).
The examinations for the various types of licenses are both written and practical. The written portion is developed and monitored by regular full-time Board staff. The practical examinations are conducted by examiners hired by the Board on a part-time per diem basis. The examiners are required to be licensed as teachers of beauty culture, they are hired and paid as regular State employees, but do not receive employee benefits such as retirement, health and insurance benefits or leave. There are approximately seven examiners who conduct approximately 4000 examinations per year. Each examination involves two or three examiners working together, and at least two examiners must agree if an applicant is going to be failed. The Executive Director of the Board indicates that the examiners, because they are doing the testing and are in touch with the problems encountered in the licensing and teaching part of the program, are involved in program evaluation and policy decisions. Examiners know the name of the applicant being tested. They are not officially notified of the school attended by the applicant, though individuals may bring equipment or wear clothing that would necessarily reveal their school.
An individual who is an owner/teacher at a school of beauty culture in the Baltimore area wishes to be considered for examiner positions at the Board. He has been advised of the Board's policy not to hire as examiners individuals who are currently active teachers (though they must have a teachers license). The Board and its staff have in the past taken the view that use of active teachers as examiners would result in a conflict of interest. They continue in this view, as does the Commissioner for Occupational and Professional Licensing. The Commissioner indicates that the practical part of the exam is highly subjective. She expresses the concern that an examiner who is also an owner or active teacher would have a private economic interest in the examination process, even if he were not examining his own students. She states that though the agency may have occasionally had problems finding examiners, these difficulties have not been significant enough to warrant using active teachers as examiners.
This request raises issues under the outside employment and financial interest prohibitions of §3-103(a) of the Public Ethics Law (Article 40A, §3-103(a), Annotated Code of Maryland). This section prohibits an employee of an executive agency from being employed by or having a financial interest in an entity under the authority of or contracting with his agency. (Subsection (a)(1)(i).) It also bars any other employment that would impair an individual's impartiality or independence of judgment. (Subsection (a)(1)(ii).) The Board's examiners are State employees and an individual's teaching and ownership affiliations with a school would constitute both an employment and interest relationship as contemplated under §3-103(a). As schools are significantly and substantially regulated by the Board, these employment and interest relationships would be barred by subsection (a)(1)(i) unless an exception applies.
Authority for exception from this prohibition is set forth in the introduction to §3-103(a), which provides that the prohibition applies "except as permitted by regulation of the Commission where such interest is disclosed or where such employment does not create a conflict of interest or appearance of conflict." This exception provision was added to the Ethics Law in 1981 partly based on our recommendation that flexibility be added to the absolute prohibitions in §3-103(a), to avoid situations where a violation would result from purely technical application of the elements of §3-103(a) even where there is no conflict or appearance of conflict between the private interest or employment and official duties. In developing exception criteria implementing this provision (COMAR 19A.02.01 and 19A.02.02), we sought to define circumstances where the relationship between an employee's agency's activities and the private employment or financial interest are so remote that the possibility of a conflict of interest or the appearance of conflict is unlikely.
If all of these regulatory standards of remoteness are met then employment would be allowable or the interest could be retained, despite the existence of authority or contractual links between an individual's State and private employers. The criteria include findings that:
1) The financial interest has been disclosed.
2) The State duties do not significantly impact on the private entity or a contract between the entity and the agency.
3) The employee is not directly supervised by a person whose duties significantly impact on the private entity or a contract between the entity and the agency.
4) The employee does not supervise a person whose duties significantly impact on the private entity or a contract between the entity and the agency.
5) The employee is not affiliated with the specific unit in the agency that exercises authority over or contracts with the private entity.
6) The employee has complied with other relevant sections of the Ethics Law.
7) The outside employment or financial interest involves no non-ministerial duties significantly relating to the agency's authority over the entity.
8) The employee's private duties or financial interest do not involve negotiating or carrying out a contract between the agency and the entity (except for broad fixed reimbursement contracts).
9) The private employment compensation is not directly funded by the State contract.
10) State contracts with the entity do not exceed: 20% of the entity's CY gross income, 1/3 of the entity's capitalized value, or a CY value of $5,000.
11) The specific employment circumstances do not otherwise create a conflict of interest or the appearance of a conflict.
Individual beauty school teachers and school owners are subject to considerable authority of the Board. In addition to their own personal licenses, they are involved in assuring that the school itself complies with the considerable requirements imposed by the Board on beauty schools. They are also directly engaged in training individuals to pass a licensing examination conducted by the Board, and would thus appear to have a significant economic stake in the examination process. Given these circumstances and the description of examiners' responsibilities within the agency, we believe that issues are raised under several of the items in the exception regulations. Under items 2) and 6), for example, issues arise from the position of examiners in developing Board policies, and given their ability to acquire information regarding examination policies and practices. Moreover, items 3) and 4) present questions based on the examiners' placement in the agency and relationships to individuals responsible for regulating their school and for examining students from their school, and the individuals' duties at the school would present issues under item 5) regarding nonministerial responsibilities for complying with Board regulations.
Item 11 further provides for consideration of the circumstances of the particular situation to determine whether there would be a conflict of interest or the appearance of conflict. Under this item, we have applied the general principles of the regulations, considering whether the relationship between private affiliations and agency activities is sufficiently remote to warrant application of the exception. We have considered this and other aspects of the exceptions on several occasions. For example, in a similar situation involving potential outside employment with an entity regulated by and teaching students to be tested by his department, we prohibited a Motor Vehicle Administration employee from working as an instructor for a private driving school. (Opinion No. 82-1.1)
Considering these principles and the circumstances presented here, we do not believe an exception can be granted to allow beauty school teachers or owners to be employed as Board examiners. We understand that such individuals would disqualify themselves from examining their own students, and from other Board matters directly impacting upon their own schools or licenses. In implementing §3-103(a), however, in conjunction with the nonparticipation provisions of §3-101 of the Law, we have viewed them as separate provisions expressing different concerns as to the conduct and activities of officials of the State. We have thus not accepted disqualification as a "cure" of a violation of the prohibitions in §3-103(a), and we do not interpret our exception regulations as adopting that approach.
The exception provision in the Law was intended to allow flexibility to avoid technical application of a prohibition where there is no conflict of interest or appearance of conflict. The regulations were not drafted to be a series of purely technical criteria that could be avoided, but as indicators by which to measure actual or potential conflicts of interest. This is especially so in view of the purposes of the Law, set forth in §1-102, to assure the public of the impartiality of public officials, recognizing that the public may not be in a position to know or understand how reorganization of duties or nonparticipation actually serves to avoid a conflict or appearance thereof. We therefore conclude that the significant relationship between official duties and private interests and activities set forth in this request result in both an actual and apparent conflict of interest and that granting an exception here would not be appropriate.2
Herbert J. Belgrad, Chairman,
Jervis E. Finney,
Betty B. Nelson,
Barbara M. Steckel
Date: October 25, 1983
1 Except where expressly cited to the Maryland Register, citations are to Commission opinions published in COMAR Title 19A.
2 Given the nature and significance of the relationship between the beauty school activities and the duties of an examiner, it is possible that the impairment provisions of §3-103(a)(ii) could also have relevance here. As we believe that the broader prohibition of §3-103(a)(1)(i) fully disposes of the question presented in this request, however, we do not further elaborate on the impairment provision.