An opinion has been requested as to whether Ethics Law issues are presented for a Maryland Occupational Safety and Health (MOSH) Inspector (Department of Licensing and Regulation, DLR) who retains a small interest in a real estate business with which his spouse and adult son are actively involved. Given the individual's duties, the agency's views regarding his work assignments, and the limited scope of the real estate business, we do not believe that this would be prohibited under the Law, but the Law does impact on these activities.
This request was presented by an individual (the Requestor) who was recently employed as a MOSH inspector in the Division of Labor and Industry in DLR. The MOSH Program administers and enforces the federal Occupational Safety and Health Law. This law requires employers to provide a safe and healthful workplace by complying with regulations aimed at preventing injuries and illnesses. MOSH inspects workplaces where there are one or more employees, including governmental units, and entities engaged in manufacturing, farming, construction, or any activity of commerce, industry, trade or other business in the State. When violations are found, citations may be issued and penalties assessed as set forth in the statute and the regulations. The Program also provides consultation surveys and offers free educational and training programs.
The Requestor is currently in the MOSH training program, assigned to the Eastern Shore Region, and his current duties thus entail participation as an observer with other inspectors, but no actual inspection responsibilities. When his training is completed, he will be assigned to the Upper Shore area of the Region, where he will, in accordance with the Inspector I position description, perform routine safety and health inspections, and assist in the inspection of larger more complex manufacturing or industrial plants. Though these inspections are conducted within established guidelines and procedures, the inspectors are expected to exercise independent judgment in organizing the inspection and in applying the applicable standards. The inspections cover the full range of workplace activities, including seasonal workplaces in this particular Region (such as migrant labor and seafood/canning operations), but primarily year-round activities relating to manufacturing and construction. Apparently construction inspections deal with industrial and commercial projects as well as residential construction, but on a smaller scale than is likely in more metropolitan areas.
This request involves the Requestor's inquiry about application of the Ethics Law to his continued affiliation with a real estate firm that is a family business incorporated by the Requestor, his spouse and his adult son. He says it has been in existence about three years, and that all three of the individuals are licensed as real estate sales agents. As none of the three are brokers, the firm is affiliated with another real estate firm that operates primarily in Anne Arundel County (though it does have one office on the Eastern Shore). According to the Requestor, all of the participants in the firm have been considered to be part-time, and the business has actually operated at a loss since its establishment. He advises that the firm's business has been almost entirely directed at resale of existing residences, and is limited to the Anne Arundel County area. He says that the firm has never listed or pursued listings for new construction or site development, though apparently firm participants have occasionally dealt with a developer by sitting an open house on a weekend.
The Requestor indicates that since coming to the State, he has significantly curtailed his involvement with the firm. He has turned his real estate sales license in to the Real Estate Commission and therefore is not himself personally engaged in any real estate sales or other activity. He has also reduced his interest in the business to 3 percent, or three of the 100 issued shares. He says that he has in the past assisted in doing the books for the firm and preparing reports, but that he would be able to discontinue this, too, reducing his affiliation to the firm solely to his interest as a 3 percent stockholder. He advises that he is not an officer of the corporation.
This request raises issues under the employment and interest prohibitions of the Public Ethics Law (Article 40A, Annotated Code of Maryland, the Ethics Law), as well as under the Law's participation and prestige provisions. §3-103(a) of the Law prohibits an employee from being employed by or having an interest in an entity that is under the authority of his agency, or from having any other employment that would impair his impartiality or independence of judgment. §3-101 bars participation by an employee in matters in which he or certain relatives have an interest or which involve as parties entities with which he or the relatives have certain economic relationships. Section 3-104 prohibits an employee from using the prestige of his official position for his own economic gain or that of another. Generally, the issues here relate to the fact that the DLR includes the unit in State government that regulates real estate sales persons and brokers (the Real Estate Commission), and to the potential for interaction between real estate companies and builders regulated by MOSH.
Reflecting application of these provisions, MOSH's Chief of Safety Compliance (and the Requestor's second line supervisor), has identified some issues relating to this situation, if the firm were to engage in real estate work on the Eastern Shore, or otherwise affiliate with construction businesses operating on the Eastern Shore and subject to the Requestor's inspection authority. Apparently with so few inspectors in the Eastern Shore Region, the Requestor's need to disqualify himself from inspections as a result of the real estate business would present significant workload and practical issues for the agency's proper conduct of its business. The agency is also concerned about appearance issues that could arise if the Requestor's spouse or the firm were affiliated with businesses that he inspects. There could be a perception, for example, that discretionary inspection decisions would be impacted by the actual or potential business relationships of the real estate firm with entities subject to inspection by the Requestor.
We agree that these are the kinds of issues that could be presented by this type of situation, and that present the kind of potential for conflict intended to be avoided by application of the provisions of the Public Ethics Law. We recognize, however, that the Requestor is no longer personally involved in real estate activities, and has significantly reduced his own direct interest in the firm. He has indicated that he will discontinue the provision of other services to the firm. Further, the firm's activities appear to be limited both in geographical coverage and scope of work. In our view, to the extent that the firm does not do business directly on the Eastern Shore, and to the extent that it has no activities with developers, contractors or other businesses that operate on the Eastern Shore, there would appear to be little potential for situations to arise where there would be a conflict of interest or appearance of conflict. Also, as long as the real estate firm avoids dealings with developers or contractors operating within the Requestor's inspection area, it would appear that prestige issues could also be avoided.
We believe also, however, that additional care must be taken to avoid issues arising from any relationship that the firm (or another realty firm with which it affiliates) may have with developers within the Requestor's inspection jurisdiction. The firm thus needs to discontinue any open house activity that involves work for a developer with a presence within the MOSH Eastern Shore Region, as this could raise potential issues where the Requestor would have to disqualify himself, and present the kinds of appearance issues raised by the agency. Disqualification would also generally be required from any inspections involving a project with which the firm's affiliate has the listings. To the extent that its affiliate firm has any significant listing involvement with Eastern Shore developers, the firm may need to reconsider its affiliation to avoid disqualification issues for the Requestor that would present concerns for the agency.
Based on this discussion and the facts and guidelines presented here, we advise the Requestor that the Ethics Law does not on its face prohibit his holding this position while his family continues its real estate business. The Requestor should, however, continue to be aware of the potential for conflict, and be careful not to use his State position in any way to benefit his family's real estate firm.
William J. Evans, Chairman
Shirley P. Hill
Mark C. Medairy, Jr.
Robert C. Rice, Ph.D.
Mary M. Thompson
Date: January 12, 1993