Posted by: Jack McCall & Jill McCook on May 1, 2021

Journal Issue Date: May-June 2021

Journal Name: Vol. 57 No. 3

In Part One of “Getting to Know the Federal Executive Branch Ethics Laws: A Primer” (March/April 2021 Tennessee Bar Journal), we reviewed the origins and essence of the federal executive branch ethics laws and regulations. We also provided a summary of specific ethics provisions as to conflicts of interest and financial disclosure reports made by federal executive branch employees; gifts from “prohibited sources”; and gifts between federal employees. In this second part, we will turn to the nuances of post-employment rules binding federal employees and issues arising when federal employees seek a new job; the ethics of the appropriate use of government resources; and the essence of political speech and political activities for federal employees, centering on the Hatch Act.

Seeking Employment and Post-Employment Restrictions

1. The Nuances of “Seeking Employment”

Issues can arise when federal employees seek employment outside the federal government while still working at a federal agency. The basic rule here is that a federal employee may not simultaneously work on a matter affecting a potential employer while seeking a job with that possible employer.

Generally, one may not work in his or her federal job on a matter that would affect the financial interests of someone with whom possible employment is being negotiated.1 To do so would be a conflict of interest subject to criminal penalties; thus, the employee must disqualify himself or herself from working on such a matter during an ongoing job search. “Negotiating” means discussions or communications that are mutually conducted regarding possible employment.

Apart from the 18 U.S.C. § 208 criminal restrictions on “negotiating or [having] any arrangement” concerning prospective employment, OGE’s regulations provide that one may not work on an agency matter that would affect the financial interests of someone with whom the employee is “seeking employment.” The rules define “seeking employment” broadly. “Seeking employment” status begins when contact about possible employment is initiated by the employee, a prospective employer, or an intermediary (job search firm or “headhunter”). It includes (a) unsolicited communications made by the employee, (b) unsolicited communications by a prospective employer that have not been rejected by the employee, and (c) negotiations (i.e. bilateral communications, not necessarily limited to discussion of specific terms and conditions, such as salary and benefits).2

Therefore, in many cases, a federal employee is considered to be seeking employment before engaging in actual job negotiations. For example, sending a resume or having preliminary contacts about possible employment, whether initiated by an employee or a prospective employer, may be considered seeking employment. On the other hand, neither simply requesting a job application nor submitting a resume to someone affected as part of an industry or class is deemed to be seeking employment. Seeking employment is considered to terminate when the prospective employer has expressed no interest within two months of the last communication, or when employment is rejected by either party and all discussions have ceased.3 Also, during a job search, a federal employee must be careful not to misuse agency resources such as one’s official time, the services of other employees, equipment, supplies, or non-public information to which the employee seeking employment may have access.

In instances where financial conflict of interest considerations may be at stake, recusal of the employee who is seeking employment may be essential. The basic assessment whether recusal will be appropriate, as is typical for 18 U.S.C. § 208 considerations, focuses on this: will the employee participate personally and substantially in a particular matter that will have a direct and predictable effect on the prospective employer’s financial interest? If the answer to the section 208 inquiry is affirmative, then recusal of the employee should be undertaken as soon as the employee begins seeking employment (i.e., when the employee initiates a job search or initiates contact about a job) and when the employee’s official duties will affect the financial interest of the prospective employer.4

Certain senior-level officials also must notify their agencies’ ethics programs within three business days of commencing negotiations or reaching an agreement for future private employment, and must submit a formal notification, as well.5

2. Postemployment Laws and Regulations in General

To help better defuse the all-too-common public perception that federal employment can be a lucrative “revolving door” from the non-profit life of public service into the private realm of for-profit enterprise, all former federal government employees are restricted by “postemployment” laws and related OGE regulations from seeking to influence the federal government as to particular matters in which they were involved while employed by the government. In essence, these are intended to prevent employees from switching sides on a matter they have worked on for the government (18 U.S.C. § 207(a)(1) and (a)(2)); unfairly exerting personal influence from government employment (18 U.S.C. § 207 (c) and (d)); and unfairly using information that they have gained from their government jobs (18 U.S.C. § 207(b) and (f)).

It is important to note that, in general and 18 U.S.C. § 207 notwithstanding, the federal government does not prevent a former employee from working for any particular company or private enterprise once he or she leaves federal employment. What the government can do, however, is to focus on and limit those intersections between the employee’s prior federal service and the new employer’s work that the new employer may attempt to leverage directly from that prior federal service.6

The postemployment restrictions apply to applications, contracts, claims, investigations or any other “particular matter involving a specific party or parties” in which a former employee was involved while with the government. The “particular matters” to which these restrictions apply are unique to each former employee and are factually dependent on what his or her precise federal duties were. For example: if an agency has three separate contracts with a certain company, and a former agency employee had worked on only one of the three while employed by the agency, the law restricts the former employee from seeking to influence the agency as to that one contract but not as to the other two.

As to applicable, or “covered,” particular matters, a former employee is prohibited by 18 U.S.C. § 207 from making representations to the government (including any kind of appearance before or communication with the government) with the intent to influence the government on behalf of any other person or organization. So long as the former employee makes no such representation as to a covered particular matter, no violation takes place.1As to any particular matter in which a former employee participated “personally and substantially” at any time on behalf of an agency, 18 U.S.C. § 207(a)(1) imposes a permanent prohibition on making representations back to the federal agency. Sometimes characterized as a “lifetime” ban, this restriction is focused on the lifetime of the underlying matter forming the conflicted nexus. To better illustrate: if a federal employee worked on a contract between his agency and ABC Inc. with a term of 10 years, and she were to leave the agency to join ABC Inc. two years into that contract’s term, the permanent ban only exists for the remaining lifetime of that contract — another eight years — after which the contract will end, and the employee will no longer be restricted as to that matter.

Section 207(a)(2) further imposes a two-year “supervisory” restriction. As to any particular matter on which the former employee did not participate personally and substantially for the agency, but which was pending under his or her official responsibility during his or her last year of service with the agency (e.g., a contract handled by a subordinate of a senior agency official without personal involvement by the senior official), the prohibition lasts for two years from the date of severance from the agency.

3. Additional Postemployment Restrictions on Certain Employees

Former senior officials whose basic pay equals or exceeds 86.5% of Level II of the Executive Schedule — those with base salaries of $172,395 for federal employees leaving in 2021; $170,665.00 or above for those employees who left in 2020; and $166,340.00 or above for those who left in 2019 — face two additional restrictions. The first is a one-year ban prohibiting any communication or appearance on behalf of another party with the intent to influence to any officer or employee of the department or agency where the senior official served within one year before leaving federal service. This first ban is with respect to any matter, regardless of whether the matter in question is related to the senior official’s former duties. The second is a one-year ban on aiding a foreign government or foreign political party in seeking to influence any agency.

A third prohibition outside of 18 U.S.C. § 207 exists as to any federal contracting items involving more than $10 million in appropriated funds. For these procurements, for a period of one year after the last date any former employee was significantly involved for his or her former federal agency in a contract or subcontract award, task order, modification, or payment or settlement of more than $10 million in appropriated funds, he or she may not accept compensation from that contractor.7

Use of Government Resources

Use, or misuse, of government resources can also present ethical problems. Government resources include government property, employees’ time, and information. Generally, federal employees have a duty to protect and conserve government property. This includes real or personal property in which the government has an interest, the services of contractor personnel, office supplies, telecommunications equipment and services, printing and reproduction facilities, government records and government vehicles.8 Employees may nonetheless use government property for purposes authorized by law or regulation or agency rule.9 For example, a federal employee might be able to use an office printer for printing a short personal document if it does not interfere with official business and involves negligible expense, but he would need to check with his respective agency’s rules. Likewise, a federal employee may be able to use her government email for certain personal matters. But federal employees can never use government email for commercial purposes, financial gain, in support of “for-profit” activities, gambling, pornography or criminal activity. Nor can federal employees engage in the solicitation of funds for charitable organizations in the federal workplace.10

Federal employees also have an obligation to “use official time in an honest effort to perform official duties.”11 They may “not encourage, direct, coerce, or request a subordinate to use official time to perform activities other than those required in the performance of official duties or authorized in accordance with law or regulation.”12 While it may seem obvious, a federal employee may not ask his assistant to type personal correspondence while on duty; directing that same subordinate to perform such activity during non-duty hours would constitute improper use of public office for private gain. But the assistant could voluntarily type the correspondence during non-duty hours at home, so long as she is compensated. If she is not, then the arrangement would involve an improper gift.13

As for government information: federal employees may neither engage in financial transactions using non-public information, nor “allow the improper use of non-public information to further his [or her] own private interest or that of another, whether through advice or recommendation, or by knowing unauthorized disclosure.”14 For example, a federal employee cannot use information he learns through the course of his employment to purchase stock in a corporation that he knows will be awarded a government contract, nor can he advise friends or relatives to do so until after the information is made public.15 Importantly, not only would such activity violate the federal ethics rules, but it could violate federal securities laws, too.16 Indeed, disclosure of non-public information could implicate a myriad of federal laws, including criminal ones.17

Endorsements also fall within the category of use of government resources. An employee may not use or permit “the use of his Government position or title or any authority associated with his public office to endorse any product, service or enterprise.”18 Endorsements are permitted only “[i]n furtherance of statutory authority to promote products, services or enterprises,” or under certain rules or programs of an employee’s agency.19 Federal employees, however, may write letters of reference under certain circumstances; to avoid any implied endorsement, such letters should be factual in nature and avoid any characterization of the product, service or enterprise.

While a topic that could warrant its own article, federal employees’ engagement in outside activities also relates to use, or misuse, of government resources. Employees should take care to ensure that they do not use government time, property, or resources in furtherance of their outside activities. This includes service on boards of directors for organizations and teaching, speaking and writing in one’s personal capacity. In these circumstances, federal employees must ensure that they are speaking in their personal capacity, reference their government position only along with other biographical details, and include an appropriate disclaimer.20

Federal Employees, Political Activities and the Hatch Act: Just the Basics

Passed in 1939, the Hatch Act “limits certain political activities of federal employees, as well as some state, D.C., and local government employees who work in connection with federally funded programs.”21 The statute has multiple purposes: “to ensure that federal programs are administered in a nonpartisan fashion, to protect federal employees from political coercion in the workplace, and to ensure that federal employees are advanced based on merit and not based on political affiliation.”22 Different from the other laws and regulations discussed in this article, the federal Office of Special Counsel (OSC) has jurisdiction over the Hatch Act.23

All federal civilian executive branch employees must comply with the Hatch Act, including part-time employees.24 Employees are bound by the Hatch Act even when they are on annual leave, sick leave, leave without pay or furlough.25

The extent to which a federal employee may engage in political activity depends greatly upon his or her status. Federal employees generally fall within the category of being a “less restricted” employee, unless they are a “further restricted” employee. “Further restricted” employees are those working for certain agencies enumerated at 5 U.S.C. 7323(b) and 5 C.F.R. 734.401, and include the Federal Election Commission, the Federal Bureau of Investigation, the Merit Systems Protection Board and the Criminal Division of the Department of Justice. 26

Before illustrating some of the permitted and prohibited activities for each group, it is important to understand the definition of “political activity.” It is activity directed at the success or failure of a political party, candidate for partisan office, or partisan political group.27 As a general rule, federal employees may not engage in political activity while on duty, in a federal building, while wearing a federal uniform or insignia or while using a federal vehicle.28 This precludes federal employees from doing the following while on duty or on or in federal property: distributing campaign materials, displaying campaign materials, wearing partisan political buttons or clothing, and posting to or forwarding a political blog or post or “liking” a political candidate. Federal employees who are less restricted also may not:

  • Use their official authority or influence to interfere with or affect the results of an election;
  • Solicit, accept or receive a contribution for a partisan political party, candidate for partisan political office, or partisan political group (although there are some exceptions to this rule);
  • Be a candidate for partisan political office; or
  • Knowingly solicit or discourage participation in political activity of someone who has business before the employee’s agency.29

But, even with these restrictions, less restricted employees may still participate in many political activities under the Hatch Act. They may:

  • Register and vote for the candidate of their choice;
  • Be candidates for public office in nonpartisan elections;
  • Assist in a voter registration drive;
  • Make financial contributions to political campaigns, political parties or partisan political groups;
  • Attend political fundraisers and rallies;
  • Be a member of a political club and hold office in such clubs;
  • Sign and circulate nominating petitions;
  • Distribute campaign literature in a partisan election;
  • Make campaign speeches in partisan elections; and
  • Express their opinions on candidates and issues.30

In addition to the above restrictions, further restricted employees may not take an active part in partisan political management or partisan political campaigns.31 They may not campaign for or against candidates or otherwise engage in political activity in concerns with a political party, a candidate for partisan political office, or a partisan political group.32 They may, however, register and vote as they choose, join political clubs, attend political fundraisers, sign nominating petitions, and contribute to political campaigns, political parties and partisan political groups.33

Violators of the Hatch Act can face serious consequences. Penalties include removal from federal service, reduction in grade, debarment from federal employment for up to five years, suspension, reprimand, and a civil penalty up to $1,000, or any combination thereof.34

Conclusion

As noted at the outset, the topics addressed in this article are just a mere scratching of the surface of a much deeper body of laws, regulations, OGE legal advisories and judicial opinions. Outside the sphere of OGE-related ethics, an entire article could be written as to the ethics-related aspects of federal procurement law alone. For example, besides the Procurement Integrity Act briefly discussed above,35 federal contracting officers often must address the nuances of “organizational conflicts of interest,” a body of law developed under the Federal Acquisition Regulations to address and prevent actual or potential conflicts of interest in federal contracting and acquisitions.36

Further, a brief word as to ethics resources is merited. OGE’s website has a plethora of resources, including downloadable guides and tools to aid not just ethics officials and DAEO staffs but also federal outsiders seeking resources and more advanced primers on the meaning and expectations of these rules.37

The practice of federal ethics law, as one can discern, is highly specialized. While quite challenging, it is also very rewarding and mentally stimulating. For those lucky enough to serve on a DAEO staff or as legal advisor to an agency ethics staff, this work provides great, and frequent, opportunities not just for creative and practical lawyering, but also to form exceptionally close and strong client relations across an agency, with its rank-and-file employees as well as senior officials. It affords a rare opportunity for public-spirited lawyers and public policy “wonks” to serve the public in a way that is not just mentally challenging but one that makes a meaningful difference in the course of an agency’s daily work and in the lives of its employees, as well as for the benefit of those members of the public, agency stakeholders, contractors and others who transact business with the federal government.

JACK H. (“NICK”) McCALL JR. was a senior attorney and deputy designated agency ethics official with Tennessee Valley Authority in Knoxville, where he worked from 2006 to 2021. He received his law degree with honors from the University of Tennessee. The author of various articles on legal, foreign policy and historical topics and several books, McCall served on the Board of Governors of the TBA from 2005 to 2011 and he is a member of the TBA Leadership Law Class of 2005. He formerly was with Hunton & Williams, and was general counsel and secretary of CTI Molecular Imaging Inc. He was a law clerk to the Hon. Gilbert S. Merritt of the U.S. Court of Appeals for the Sixth Circuit.

 

JILL E. McCOOK is an attorney and manager of compliance, and deputy designated agency ethics official for the Tennessee Valley Authority in Knoxville. Previously, she was an associate with the law firms Baker, Donelson in Knoxville, and Greenberg Traurig in Albany, New York. She also served as a career law clerk to the Hon. Thomas A. Varlan of the Eastern District of Tennessee, and she is an adjunct professor at the University of Tennessee College of Law where she teaches Legal Process. McCook earned her law degree, cum laude, from Washington & Lee University School of Law. She is a graduate of the TBA Leadership Law program, Class of 2018
 

 


NOTES

1. 18 U.S.C. § 208(a); 5 C.F.R. §§ 2635.601 & 2635.602.
2. 5 C.F.R. § 2635.603(b).
3. Id.
4. See 5 C.F.R. § 2635.604.
5. 5 C.F.R. § 2635.607.1This OGE regulation is promulgated pursuant to the STOCK Act of 2012, Section 17. See also U.S. Office of Government Ethics, Legal Advisory LA-12-01, “Requirements Under Section 17 of the STOCK Act Regarding Negotiations for and Agreements of Post-Governmental, Non-Federal Employment,” April 6, 2012, available at USOGE | LA-12-01: Post-Employment Negotiation and Recusal Requirements under the STOCK Act (last visited January 16, 2021).
6. A graphic example of this occurred when the former chief procurement officer for the Air Force, Darleen Druyun, not only requested that Boeing find jobs for her daughter and son-in-law, but ultimately, after her retirement from the Air Force, for herself as well. At the time this transpired, she was in negotiations with Boeing for a $20 billion contract to lease tanker aircraft to the Air Force. Boeing admitted to corruption charges involving conflicts of interest and settled with the Department of Justice for $615 million; in addition, its aircraft lease to the Air Force was canceled, and Druyun went to prison. See, e.g., U.S. Dept. of Defense Standards of Conduct Office, Encyclopedia of Ethical Failure, Sept. 2018, at 150 (on file with authors).
7. Procurement Integrity Act, codified at 41 U.S.C. § 2104. See also Federal Acquisition Regulations § 3.104-3(d), found at 48 C.F.R. § 3.104-3(d).
8. 5 C.F.R. 2635.704.
9. Id.
10. The Combined Federal Campaign (CFC) is the only authorized solicitation of employees in the Federal workplace on behalf of charitable organizations. 5 C.F.R. 950.102(a). Federal employees, however, can engage in collection of gifts-in-kind so long as their agency permits such activity. 5 C.F.R. § 950.102(b).
11. 5 C.F.R. § 2635.705(a).
12. 5 C.F.R. § 2635.705(b).
13. 5 C.F.R. § 2635.705(b), example 1.
14. 5 C.F.R. § 2635.703(a).
15. 5 C.F.R. § 2635.703, example 1.
16. Id. See also SEC Rule 10b5-1, codified at 17 C.F.R. §240.10b5-1 (sanctioning securities trading on the basis of material non-public information in insider trading cases).
17. Another example is 18 U.S.C. § 1905, which generally prohibits unauthorized disclosures of confidential information by federal employees.
18. 5 C.F.R. § 2635.702(c).
19. Id.
20. See 5 C.F.R. § 2635.807(b). The disclaimer provided at the end of this article is an example.
21. Hatch Act Overview, Office of Special Counsel, available at https://osc.gov/Services/Pages/HatchAct.aspx (last visited Jan. 16, 2021).
22. Id. See also 5 U.S.C. § 7321.
23. 5 C.F.R. § 734.102.
24. 5 U.S.C. §§ 7322, 7323.
25. Federal Employee Hatch Act Information, Office of Special Counsel, available at https://osc.gov/Services/Pages/HatchAct-Federal.aspx (last visited January 16, 2021).
26. Federal Employee Hatch Act Information, Office of Special Counsel, available at https://osc.gov/Services/Pages/HatchAct-Federal.aspx (last visited January 16, 2021). See also 5 C.F.R. Part 734.
27. 5 C.F.R. § 734.101.
28. 5 U.S.C. § 7324; 5 C.F.R. Part 734.
29. 5 U.S.C. § 7323; 5 C.F.R. Part 734, Subpart C.
30.15 U.S.C. § 7323(c); 5 C.F.R. Part 734, Subpart B.
31. 5 U.S.C. § 7323(b); 5 C.F.R. Part 734, Subpart D.
32. Id.
33. Id.
34. 5 U.S.C. § 7326.
35. See supra note 35 and accompanying text.
36. Federal Acquisition Regulations, Subpart 9.5, codified at 48 C.F.R. § 9.500 et seq.
37. U.S. Office of Government Ethics website, available at https://www.oge.gov (last visited Jan. 16, 2021).