88.05

OPINION NO. 88-5

An opinion has been requested as to whether the recently appointed Commissioner of Labor and Industry may accept a vehicle from his former employer, a major labor organization. We advise the Commissioner that acceptance of the vehicle is allowable, given the indication by the organization that this type of severance benefit is a practice followed with retiring labor executives.

This request is presented by the individual who since March 1987 has been serving as the Commissioner of Labor and Industry, in the Department of Licensing and Regulation. Prior to accepting this gubernatorial appointment, the Commissioner was employed as the President of the Metropolitan Baltimore Council, AFL-CIO. He has been active in labor organizations for 35 years, serving in his Bakery, Confectionery and Tobacco Workers local for many years, and also as First Vice-President of the Maryland State and D.C. AFL-CIO. He was requested to accept his current position in Labor and Industry in January 1987. To do this, he advanced the date of his retirement, but was still not able to leave his union position until March, given the need to hold an election to fill his union position and to generally organize other matters prior to leaving the position. He advises that when he did leave the AFL-CIO, he took on his current position the very next day.

According to information presented to this Commission, it is the practice within the labor movement for a retiring executive to be recognized at a farewell gathering. A severance or retirement benefit is provided in connection with this effort, usually in the form of a car or other item (rather than cash), the value of which is considered taxable as income. The Commissioner's successor as President of the Union organization has also indicated: The AFL-CIO, as a matter of policy, traditionally honors its retiring presidents with a retirement testimonial dinner. The goal of this effort has been to present to the retiring president a severance benefit of a new car. The AFL-CIO has, as per their constitution and by-laws, a provided lease car to all presidents during their term of office. This practice has left the retiring presidents without a personal car upon their retirement.

Given the accelerated time frame of his retirement, in order for him to accept the State position, there was not time for this affair to be held prior to his taking office as Commissioner. The testimonial dinner for him was held in November 1987. (The Commissioner requested this Opinion prior to the event, but the request could not be heard until January 1988.) Tickets, which cost $50 per person, included a cash bar, hors d'oeuvres, and a full sit down dinner. Individuals were also invited to purchase program ads, at a price of $100 per half page and $150 for a full page.

According to DLR officials who attended the dinner, those present generally included labor officials from the many AFL-CIO union locals in the area, representatives of charitable organizations with which the Commissioner has been active over the years, and a few State or local government officials. Given the ticket cost of the dinner, and the nature and location of the dinner, the proceeds from which the vehicle will be purchased will probably come from the program that was available at the dinner. It is in total 52 pages long, and includes ads purchased primarily by union entities, with a few public officials and several public interest groups. About a half dozen businesses are in the program (mostly bakeries or food related entities) and there is one law firm advertiser and one accounting firm.

Section 1-102(p) of the Ethics Law defines a gift as "the transfer of anything of economic value regardless of the form without adequate and lawful consideration." In the absence of a long prior employment relationship, and an existing practice of providing this type of severance benefit, we would be inclined to view this as a gift under this definition, acceptance of which would be prohibited by §3-106 of the Ethics Law. We are advised here, however, that this proffered vehicle is consistent with an existing and continuing policy that treats it as a severance benefit. It also makes up for the absence of a vehicle resulting from availability of an official car during the individual's term as president. The Commissioner indicates that in fact he did have a union vehicle while he was president, which he turned over to his successor. Moreover, most of the participants in the testimonial and funding of the vehicle were union organizations with which the Commissioner had been involved in an employment capacity for over 35 years.

We are also advised by the Department of Licensing and Regulation that it does not oppose the Commissioner's acceptance of the vehicle. The Commission also recognizes that the situation arises here from the fact that the Commissioner began his State service immediately upon leaving his prior employment, thus limiting the employer's ability to make this presentation until after he became a State official. Under all of these circumstances, and particularly in view of the representations made by union officials, it is our conclusion the proffered vehicle does not come within the Ethics Law definition of prohibited gift, but rather is more appropriately viewed as compensation for past services rendered. We therefore advise the Commissioner that he is not barred from accepting it by the limitations on the acceptance of gifts contained in §3-106 of the Ethics Law.

M. Peter Moser, Chairman
   William J. Evans
   Betty B. Nelson
   Barbara M. Steckel

Date: February 22, 1988