An opinion has been requested from an employee (the Requestor) in the Unemployment Insurance Division of the Department of Economic & Employment Development (DEED) regarding whether he may have a private business doing microcomputer programming, and whether this activity may involve collaboration with the person who is his agency supervisor. We advise that the Requestor may undertake this consulting activity as long as it is consistent with prior guidance on private consulting, but that the activity may not involve collaboration with his agency supervisor.
The Requestor is an Unemployment Insurance Program Specialist working in DEED's Unemployment Insurance (UI) Division. This Division of DEED is responsible for managing the State's unemployment insurance program, under which employers fund a system for providing payments to individuals who are unemployed within the criteria of the federal and State statutes that establish the program. The Division is responsible for collecting contributions from employers, for determining eligibility for unemployment benefits and making payments, for billing employers (primarily not-for-profit and government entities) who are basically self-insurers and participate in the system on a reimbursable basis, and for collecting from employers who do not make required contributions or from claimants who are overpaid.
Much of the information and data relating to the operation of the unemployment insurance program is collected and maintained on a computer database, either a large mainframe computer or on a personal computer (PC) network. The Requestor works as an Unemployment Insurance Program Specialist, in the past as a supervisor in the Recovery Unit, a position that included some computer work. In this position he developed a serious interest in computer programming and software activities. He received some training at agency expense and also pursued training and development of expertise on his own. As a result his duties now relate almost totally to providing computer support services to the Unemployment Insurance Division.
The Requestor was involved, for example, in developing the software for automating the Reimbursable Unit, developing a billing system and programming a record-keeping system. He has also done general office automation programs relating to accounting, inventory control and word processing, and has developed programs for use by UI staff in interfacing between the PC and the mainframe system. The Requestor indicates that he uses commercial software as a basis, but that all of the programs written by him are written specifically for agency use. His work involves support activities in relation to other UI staff, but does not involve working with employers subject to contribution or reimbursement under the program or with claimants. He does not deal directly with specific cases or data.
This request arises because the Requestor wants to have a private business doing PC software development. He indicates that this is a field that he has pursued largely on his own. Though some course work was funded by the agency, his skills in the commercial software that he primarily uses were basically self-taught. He has his own computer hardware and personally owns the commercial software that he uses. He says that he would like to supplement his income providing software development services in the general population, unrelated to the activities of his agency. For example, he could develop a program for use by a physician in billing, or to computerize inventory control for a business. He also indicates that he has been approached by a computer hardware company to consult with it in developing software where a sale is made to a purchaser who wants software services as well. He indicates that he would not in any case use any program or software developed in connection with his State employment.
This request also involves a potential relationship between the Requestor and his immediate supervisor, the Chief of the Tax Enforcement Unit. The Requestor indicates that in discussing his plans with his supervisor they talked about the possibility of setting up a partnership where the Supervisor would handle the marketing and business aspects and the Requestor would do the programming. Apparently, pending Ethics Commission review, nothing has been done to pursue this possibility and there are therefore very few details regarding how this partnership would be undertaken. We are advised, however, that, despite recent personnel changes, the Requestor continues to be directly supervised by this individual.
Two basic Ethics Law questions are presented by this request, one relating to the Requestor's engaging in the outside employment as described, and the other relating to the proposed partnership between him and the Supervisor. The first issue, that of the Requestor's private activity generally, involves 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). Subsection (a)(1)(i) of this provision bars employees from being employed by or having an interest in an entity that is under the authority of or contracts with their agency. Subsection (a)(1)(ii) forbids any other employment relationship that would impair the individual's impartiality or independence of judgment.
Though the Requestor's private business would apparently not itself be an employer subject to the authority of his agency, it is very likely that clients to whom he would provide services would be employers subject to the contribution and other provisions of the Unemployment Insurance program. We have in prior opinions generally advised that the provision of personal services to an entity can be viewed as employment with the entity, even though there may be an intervening consulting or private practice business. Under this approach, it is our view that the Requestor would be viewed as having an employment relationship with a private company to which he would provide programming services. If that company is in the Unemployment Insurance system the employment would come within the strict language of §3-103(a)(1)(i) of the Law, and is prohibited unless an exception is allowed.
Exception is permitted under this provision of the Law where, pursuant to Commission regulations, it is determined that the employment would not present a conflict of interest or appearance of conflict. Our implementing regulations are published at COMAR 19A.02.01, and generally include guidelines for determining whether the relationships of the private activities and official duties and program are sufficiently remote that a conflict or appearance of conflict is viewed as unlikely. The regulations consider, for example, whether the employee has any duties impacting on the private entity, whether he serves in the unit or is supervised by a person that impacts on the entity, and whether his private employment involves the entity's dealings with the agency. In this situation the Requestor's duties appear not to directly impact on employers subject to the UI program, though he does work in the unit that manages the program. He has indicated that his private work would involve programming efforts unconnected with the client's unemployment insurance responsibilities. Moreover, the agency has advised that it does not believe that the Requestor's proposed activity would impair the agency in its functions, as long as the work does not entail collaboration with the Supervisor.
We therefore advise the Requestor that an exception can be granted to allow him to engage in private programming activities even though private employers would as a technical matter be subject to the authority of his agency unit. This private activity, however, must be conducted within the general constraints applicable under the impairment principles developed under subsection (a)(1)(ii) and §3-104 (which prohibits improper use of prestige of office) regarding private consulting and other businesses. These principles are discussed in Commission Opinions No. 91-8,No. 89-8, No. 89-1, No. 86-14, and No. 85-18. The approach has been that private consulting businesses are not necessarily prohibited by the Law, though they could be limited, based on a consideration of whether there are relationships between the private and official duties that would impact on the performance of the individual in his State job, or whether the private work would involve the improper use of official position in connection with either acquiring or carrying out the private activity.
Several of the factors addressing private consulting involve concerns where the person would be doing the same work in the private activity as is done in the State position or would involve service to or marketing of the same population served in the official employment. The Requestor needs to be aware of these constraints as his business develops. He must be certain that the skills being used in his private work continue to be the result of his own initiative and training. None of the products of his State work may be used in any way in connection with his private business, and he needs to take care that he does not use State computer hardware or software in the work or engage in any private work using State time or materials. This would include, for example, taking phone calls or running programs at his job during the workday. Also, the Requestor should not undertake to do any work that would relate to the Unemployment Insurance program or a private client's compliance with it.
As to the possible collaboration with his supervisor in this undertaking, we have on several occasions addressed the question of employees having economic relationships with personnel that they supervise, considering application of the disqualification and prestige provisions of §3-101 and 3-104 of the Law. Some economic relationships have been prohibited, such as the ban in Opinion No. 85-27 against a correctional officer marketing insurance to other employees in his facility. In some situations, joint endeavors have been allowed where it was understood that the supervisor would not be involved in personnel evaluations, leave approval, and similar actions regarding an employee with whom there was a private business relationship. In particular, in Opinion No. 82-49 a private social work practice was allowed. A private consulting business among several Lottery employees was disallowed in Opinion No. 85-18.
In our view, the application of principles developed in prior opinions to the circumstances here requires the conclusion that the relationship is prohibited. The Supervisor has significant supervisory responsibilities regarding the Requestor, and it is not clear that he could remove himself sufficiently from these responsibilities in order to comply with criteria set forth in prior opinions. These responsibilities include the obligation, for example, to monitor computer use in situations such as the Requestor's to ensure that State resources are not improperly used in connection with private business endeavors. Moreover, the Department has indicated that it is not prepared to support a private economic relationship such as this. Under the circumstances, we advise that though the Requestor may engage in private computer consulting consistent with the constraints discussed above, he should not do this in collaboration with his Supervisor as proposed.
William J. Evans, Chairman
Mark C. Medairy, Jr.
Mary M. Thompson
Date: March 3, 1992