97.03

OPINION NO. 97-03

An opinion has been requested as to application of the Ethics Law to an Income Maintenance Specialist in a local Department of Social Services whose spouse operates a day care facility in their home. Based on the information provided regarding the nature of the duties of this individual and the history of this day care operation, we advise that continuation of this type of activity in the individual's home would be inconsistent with the requirements of the Ethics Law, and that, as to this situation, an exception would not be allowable.

The Purchase of Care (POC) Program offered by the Department of Human Resources (DHR) provides a subsidy for low income working parents or individuals receiving public assistance to pay for child care. The purpose of the subsidy is to provide child support assistance to an individual who is engaged in some activity designed to move the individual in the direction of being self-sufficient. An individual who receives Aid for Dependent Children (AFDC), food stamps, or other public assistance applies for purchase of care support and produces evidence of eligibility. Once a parent is determined to be eligible, a day care voucher identifying the amount of the subsidy is provided to the parent and can be taken by the parent to any licensed day care provider. There are no additional licensing requirements placed on providers to receive income maintenance subsidies. Based on receipted vouchers, the provider submits invoices directly to the agency and checks are made payable directly to the provider. According to agency staff, provider selection is ultimately the parent's choice, though various assistance can be given to a parent in selection of a provider.

The Employee's local department recently restructured its purchase of care program, decentralizing this service to allow staff in community units of the local office to address this issue with families receiving services through the agency's Family Investment Program. Under this restructuring one individual from each community center would be assigned to the central office to train in Purchase of Care. This individual would then return to their regular income maintenance duties in the community center and provide advice, make eligibility determinations, and issue POC vouchers for public assistance clients in the Family Investment Program, but the payment process to the provider would remain centralized. The Employee here is an income maintenance worker who has been trained to do purchase of care work providing services to DSS public assistance clients regarding child care services available through the agency. His spouse is a licensed day care provider in their home, and until his Department raised the issue recently he also was on the license.

The Employee was the individual in his local unit assigned to receive POC training, and did participate in this activity though he did not advise the agency of his and his spouse's involvement in the day care industry. He also volunteered to participate in training for providers about changes in the program procedures, and was paid overtime, again without advising the agency of his involvement in the day care industry. When his and his spouse's participation in the purchase of care program was discovered by an invoice processing supervisor, the Employee was removed from the POC program, and he was reassigned to his community center office as a regular food stamp and AFDC worker.

The Employee's position involves working with income maintenance applicants, conducting interviews, determining eligibility and maintenance levels, and making referrals for services, including gathering verification information for determining eligibility for Income Maintenance and Purchase of Care Programs. He may in a client interview discuss and assess the client's need for child care, advising them of the type of child care available, providing the client with an overview of Purchase of Care, screening for potential eligibility, and if eligible, determining the priority code. His position description also suggests that the worker would refer a customer to the appropriate child care resources. We are advised that parents may select providers from any place in the State and could very easily want to find a provider near a place of work or school rather than in the location where they would be applying for benefits.

The Employee maintains that his wife is the provider and has been for about 3 years, and further advises that he is no longer on the license.1 He says that though the business is in his home, it is his spouse's business. He says he may substitute for her, but that he does not have time to be involved in the business. He provides no financial support, he indicates, except that it is his house, and he may assist with supplies and with general maintenance. The Employee also states that his home is located in an area distant from the local center where he works, and that it is unlikely that he would encounter any potential private clients in his official duties. The business does operate at his home address, however, and it is clear from the licensing regulations that there are a variety of requirements relating to maintenance and other aspects of the home facility, and review of the home includes certain information regarding other adults in the home.

The issue here is application of the employment and interest prohibitions of §15-502(b) of the Public Ethics Law (State Government Article, §15-502(b), Annotated Code of Maryland, the Ethics Law), and application of the regulatory exception provisions developed pursuant to this section (COMAR 19A.02.01 and .02). This section prohibits an employee from being employed by or having an interest in an entity that contracts with or is subject to the authority of his agency. We have in the past considered a variety of situations involving spouse's businesses, without necessarily attributing a spouse's business or employment interests to an employee. Where the business is in the family home, however, there has been some concern that separation of the interest is difficult if not impossible. In Opinion No. 92-9, a spouse's consulting business was viewed as a separate business, but only after very careful scrutiny, and in that situation there were no private clients actually in the home since the consulting actions involved travel to the spouse's clients' businesses. In Opinion No. 82-12, on the other hand, the Commission concluded that a business at the home was not allowed for a State police officer whose duties conflicted with the family used car business.

In the situation here, there appears to be a close involvement between the business and the family home, with substantial and sensitive regulated activity actually taking place at the home. Also, as the homeowner and individual involved in home maintenance, the Employee would appear to be involved in activities that are directly subject to requirements of his agency. Thus, though we recognize that the Employee is no longer on this day care license, we must conclude based on the facts of this situation that the day care program operated at his home is an entity with which he has an employment and interest relationship. Under the circumstances, since the business is a licensed Child Care Administration entity subject to the authority of the Employee's agency, the affiliation is barred by §15-502(b) unless an exception is applied, even if no POC clients are accepted. Exception is permitted pursuant to statutory language that the prohibition applies unless it is determined by the Commission pursuant to regulation that there is no conflict of interest or appearance of conflict. The Commission's regulations (at COMAR 19A.02.01 and .02) generally look to relationships between an individual's official duties and the private activity, as well as to the nature of the private activity, to determine whether the relationships are sufficiently remote that a conflict or appearance of conflict is unlikely.

In our view the situation here presents concerns suggesting that exception would not be possible to allow the operation of a day care business in the Employee's home while he is a Department of Human Resources employee. The Commission has long held that where there is a strict conflict under the Law, exception will be permitted only where the relationships are clearly remote, and in our view this finding cannot be made as long as the Employee is involved in the POC program or in aspects of the Family Investment Program that entail his working with clients on issues relating to purchase of care. This is a particular concern given that he would appear to have responsibilities in the home that are necessarily related to his spouse's continuing compliance with agency regulations. Also, this particular situation presents some past conduct questions and the agency seems to be especially concerned about his lack of disclosure of this activity when he was assigned to train in the purchase of care and day care areas.

We therefore advise the Department that in this specific situation exception would not be possible to permit the Employee's dual relationships with his agency's program and his spouse's licensed day care operation, and also that this approach would apply as a general matter to DHR employees. We recognize that the Department believes that there are some agency units and positions where the functions are so clearly distinct from the child care program that any conflict or appearance of conflict is clearly remote. While we believe that our approach here applies as a general rule, we therefore recognize that there may be circumstances that the Department would want to have considered as a possible exception. These situations would be reviewed by the Commission, if presented, on an individual basis.

Michael L. May, Chairman,
    Mark C. Medairy, Jr.,
    Charles O. Monk, II,
    April E. Sepulveda

Date: April 24, 1997

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1 Note that though there are apparently no current vouchers outstanding for POC clients in this home there is some uncertainty as to the past situation. The Employee says that his spouse does not accept clients who have purchase of care subsidies, but according to the agency the last payments were made to this home in September for care provided to 3 children in one family in August.