The Administrator of the Motor Vehicle Administration (MVA) has requested Ethics Commission guidance concerning whether and how the Public Ethics Law (Article 40A, Annotated Code of Maryland, the Ethics Law) would apply to a proposed employee incentive program that would involve awards financed by private sector entities. We believe that the types of awards contemplated in this program would be allowable as part of an established agency program, provided that the agency program comes within the constraints we have outlined in other decisions and as set forth below.
The Administrator indicates that this request and situation grew out of a meeting of a group of private business persons in Baltimore City that led to formation of a private committee called the Marvelous Maryland Committee (the Committee). The group, which was informally set up by the Governor, reflects an extension of an approach relied upon by him in the past. It meets regularly and provides reports to the Governor. The Committee was established to develop public/private sector joint efforts oriented toward improving State employee productivity and responsiveness. One of the proposed ways of doing this is to establish an employee incentive or award program that would be funded by the Committee through private donations.
The Committee's first effort is a pilot project of employee incentive awards in the Baltimore City Office of the Motor Vehicle Administration. The Administrator indicates that there has not been a great deal of detailed planning or outlining of the program, as it is hoped to define some parameters under the Ethics Law before resources are committed to defining an incentives or award program. A customer survey of the Baltimore MVA Office has been conducted, however, as a benchmark to evaluate the program.
The Administrator indicates, as a preliminary consideration, that he does not anticipate the award would be an in-kind gift directly from a business to an employee. He would hope to establish a fund or pool which would be the source of a particular award or gift. Nor would he agree to an incentive or bonus payment as a cash award. He says, though, that the general thought is that some "real" thing, rather than a certificate or letter (though apparently these types of things will also be included in the general program), is intended as a supplement to the more traditional kinds of personnel rewards for good performance.
Also, the preference would be to make a lot of smaller awards rather than a few larger ones, and as an example the Administrator asks whether there would be a problem with using funding to purchase dinners at a local restaurant and as an award providing a "chit" to an employee for dinner for two at the restaurant. He says he would anticipate developing constraints that would require avoidance of any relationships with private entities that have regulatory or other visible interactions with the agency. He would not, for example, include awards involving car dealers, rental agencies, or automobile repair or supply activities.
The outlines of the program would be written out and defined in a clear administrative framework. The tentative plan would be to establish a review committee that would include mostly management along with a few employees. This agency committee would have written guidelines and criteria for identifying employees who would receive awards. These might include, for example, the receipt of an unsolicited letter from the public noting special or outstanding service, or the participation in developing and implementing innovations designed to improve service to the public. The private sector would not participate in this committee, in either identifying the employee or determining what the particular award to a particular employee would be. Its involvement would be to fund the awards, probably by soliciting funds from businesses or groups.
The general question under the Ethics Law is whether the involvement of the private sector in this program, either as the solicitor or source of the award, would result in a prohibited gift to a selected employee pursuant to §3-106 of the Law. Gift is defined in §1-201(p) to mean the transfer of any thing of economic value regardless of the form without adequate and lawful consideration. Section 3-106 prohibits the solicitation of gifts by officials and employees, and bars the acceptance of gifts from entities or persons that do or seek to do business with their agency, engage in activities regulated by the agency, have financial interests that could be affected in some particular way by the individual, or are registrants pursuant to Title 5 of the Law.
Despite the fact that some situations have presented appearance concerns, we have generally not read this provision to apply to activities by agencies as part of official agency functions. We have looked at the Law as addressing private economic relationships of employees with prohibited donors. For example, in our Opinion No. 81-31 State Aviation Administration (SAA) employees were permitted to accept air travel from airlines that were subject to SAA regulation and contractual arrangements. The individuals were traveling to conduct briefings at airline reservation centers as part of the agency's marketing of BWI Airport. Invitations were not issued by the airlines to the employees, whose briefing schedules were established by their supervisors. Tight control over travel arrangements was retained by the SAA, and all expenses other than the air travel were to be paid by the agency.
We have also provided informal advice as to issues similar to or related to the one presented here by the Administrator. Agencies, for example, have been advised that solicitation of funds in connection with an agency program is allowable under certain constraints designed to ensure that the funds are properly accounted for in accordance with State fiscal procedures. We also informally advised a DHMH residential facility that it could develop an employee morale award (a dinner gift of certificate or $50) funded by the hospital auxiliary.
Considering the provisions of the Law and our prior interpretations of it, we believe that the types of awards contemplated in this program would come within the concept of gift as it is defined in §1-201(p) of the Law. They would be allowable, however, as part of an established agency program, provided that the agency program comes within the constraints we have outlined in other decisions and as discussed here. These relate particularly to the assurance of agency control and the development of a program design that protects against direct relationships between the honored employees and the private entities involved in soliciting or donating awards or award resources.
Though it is difficult to provide specific advice without a plan presented by the Administrator and without purporting to design the program ourselves, we believe that some specific parameters can be set forth. For example:
1) Agency officials should not be involved in soliciting donations to fund the award program, particularly if the proposed donor has some special relationship with the agency or the Department.
2) Awards should be in-kind items rather than cash, with items purchased by the State from funds made available by the private committee. Generally, the items should not be solicited directly from the private entity.
3) Items or entities that are impacted by the agency's program should not be included as awards.
4) Determinations regarding which employee would receive an award and what the particular award would be should be made solely by the State within its discretion, but consistent with established criteria.
5) All funds provided by the private business community in furtherance of this program should be processed and accounted for through the appropriate control agencies and mechanisms in accordance with State law.
In our view these principles reflect several basic constraints that would attach to such a program in order to ensure that direct conflicting relationships cannot be established between private donor entities and employees receiving awards. As the plans develop and become more definite, agency managers designing the program should keep in mind this basic principle of maintaining the program as an agency program completely within agency control, and the goal of maintaining a separation between the employee and any private donor or contributing organization. If specific ethics issues are presented in the future in connection with more detailed program design, additional advice may be requested from the Commission or its staff.
William J. Evans, Acting Chairman
Rev. C. Anthony Muse
Barbara M. Steckel
Date: June 28, 1988