This Advisory Opinion concerns the following issue as formulated from facts and/or circumstances furnished by a requestor. The Commission approved this opinion on September 6, 2002, basing its approval solely on the facts and circumstances stated herein.
 

 May state agency employees, responsible for performing certain types of inspections, also perform the same type of inspections for a private entity during the times they are not working for the state?

State law restricts the Mississippi Ethics Commission to interpreting and issuing opinions on Sections 25-4-101 through 25-4-119, 1972 Mississippi Code Annotated and Article IV, Section 109, Mississippi Constitution of 1890.  Therefore, this opinion does not address the Mississippi laws outside the Commission’s jurisdiction nor the governmental entity’s internal rules and regulations.

The pertinent conflict of interest laws to be considered here are:

Code Section 25-4-103(b), (c), (d), (e), (f)(i)(ii), (g)(v), (h), (k)(i)(ii), (l) and (p)(i)(ii)(iii) states:
 

“(b) “Benefit” means any gain or advantage to the beneficiary, including any gain or advantage to a third person pursuant to the desire or consent of the beneficiary.

(c) “Business” means any corporation, partnership, sole proprietorship, firm, enterprise, franchise, association, organization, holding company,  self-employed individual, joint stock company, receivership, trust or other legal entity or undertaking organized for economic gain, a  nonprofit corporation or other such entity, association or organization receiving public funds.

 
(d) “Business with which he is associated” means any business of which a public servant or his relative is an officer, director, owner, partner, employee or is a holder of more than ten percent (10%) of the fair market value or from which he or his relative derives more than One Thousand Dollars ($1,000.00) in annual income or over which such public servant or his relative exercises control.

(e) “Compensation” mean money or thing of value received, or to be received, from any person for services rendered.

(f) “Contract” means:
 

(i) Any agreement to which the government is a party; or

(ii) Any agreement on behalf of the government which involves the payment of public funds.

(g) “Governmental” means the state and all political entities thereof, both collectively and separately, including but not limited to:
 

(v) Any department, agency, board, commission, institution, instrumentality, or legislative or administrative body of the state, counties or municipalities created by statute, ordinance or executive order including all units that expend public funds.

(h) “Governmental entity” means the state, a county, a municipality or any other separate political subdivision authorized by law to exercise a part of the sovereign power of the state.

(k) “Material financial interest” means a personal and pecuniary interest, direct or indirect, accruing to a public servant or spouse, either individually or in combination with each other.  Notwithstanding the foregoing, the following shall not be deemed to be a material financial interest with respect to a business with which a public servant may be associated:
 

(i)  Ownership of any interest of less than ten percent (10%) in a business where the aggregate annual net income to the public servant therefrom is less than One Thousand Dollars ($1,000.00);

(ii) Ownership of any interest of less than two percent (2%) in a business where the aggregate annual net income to the public servant therefrom is less than Five Thousand Dollars ($5,000.00).

 
(l) “Pecuniary benefit” means benefit in the form of money, property, commercial interests or anything else the primary significance of which is economic gain.  Expenses associated with social occasions afforded public servants shall not be deemed a pecuniary benefit.

(p) “Public servant” means:
 

(i) Any elected or appointed official of the government;

(ii) Any officer, director, commissioner, supervisor, chief,  head, agent or employee of the government or any agency thereof, or of any public entity created by or under the laws of the State of Mississippi or created by an agency or governmental entity thereof, any of which is funded by public funds or which expends, authorizes or recommends the use of public funds; or

(iii) Any individual who receives a salary, per diem or expenses paid in whole or in part out of funds authorized to be expended by the government.”

Code Section 25-4-105(1), (3)(a), (4)(b)(c)(d) and (5) states:
 

“(1) No public servant shall use his official position to obtain pecuniary benefit for himself other than that compensation provided for by law, or to obtain pecuniary benefit for any relative or any business with which he is associated.

(3) No public servant shall:
 

(a) Be a contractor, subcontractor or vendor with the governmental entity of which he is a member, officer, employee or agent, other than in his contract of employment, or have a material financial interest in any business which is a contractor, subcontractor or vendor with the  governmental entity of which he is a member, officer, employee or agent.

(4) Notwithstanding the provisions of subsection (3) of this section, a public servant or his relative:

 

(b) May be a contractor or vendor with any authority of the governmental entity other than the authority of the governmental entity of which he is a member, officer, employee or agent or have a material financial interest in a business which he is a member, officer, employee or agent where such contract is let to the lowest and best bidder after competitive bidding and three (3) or more legitimate bids are received or where the goods, services or property involved are reasonably available from two (2) or fewer commercial sources, provided such transactions comply with the public purchases laws.

(c) May be a subcontractor with any authority of the governmental entity other than the authority of the governmental entity of which he is a member, officer, employee or agent or have a material financial interest in a business which is a subcontractor with any authority of the governmental entity of which he is a member, officer, employee or agent where the primary contract is let to the lowest and best bidder after competitive bidding or where such goods or services involved are reasonably available from two (2) or fewer commercial sources, provided such transactions comply with the public purchases laws.

(d) May be a contractor, subcontractor or vendor with any authority of the governmental entity of which he is a member, officer, employee or agent or have a material financial interest in a business which is a contractor, subcontractor or vendor with any  authority of the governmental entity of which he is a member, officer, employee or agent: (i) where such goods or services involved are reasonably available from two (2) or fewer commercial sources, provided such transactions comply with the public purchases laws; or (ii) where the contractual relationship involves the further research, development, testing, promotion or merchandising of an intellectual property created by the public servant.

(5) No person may intentionally use or disclose information gained in the course of or by reason of his official position or employment as a public servant in any way that could result in pecuniary benefit for himself, any relative, or any other person, if the information has not been communicated to the public or is not public information.”

Pertinent facts and circumstances provided by the requestor, absent identifying data, are set forth as follows and considered a part of this opinion.
 

I would like to request an advisory opinion on behalf of employees of a Division of a department of the state.

 
The Department’s Division certifies to producers, shippers and other financially interested parties the grade, quality or condition of certain products in accordance with Mississippi law.  Inspectors must take samples at facilities around the State and bring them to the lab for grading.  During the season (September-October), a number of companies operate 24 hours, seven days a week.  Annually, we have provided this service and paid our employees for overtime hours.

As we discussed on Monday of this week, the Department is experiencing some financial problems due to the State’s budget situation.  It affects the employees of the Division, because the Department will be unable to pay overtime wages.  Therefore, the Division’s employees will be working only a 40-hour week for the Department during the  season.  We have reached an agreement with a Private Inspection Service Business for them to perform the above services for Mississippi companies during our off hours.  The Federal Inspection Service also agreed to this arrangement.

The Private Inspection Service Business has expressed an interest in hiring our employees to perform essentially the same job duties they perform for us during hours they are not on Department time.

The Department respectfully requests on behalf of our employees an advisory opinion from the Commission as to any consequences of this employment under Miss. Code Ann. Section 25-4-1, et seq.

The Commission formally adopts Advisory Opinion No. 01-113-E in response to this request and by attachment incorporates it into this opinion.

Based solely on the facts and circumstances presented by the requestor, the Commission’s opinion is as follows.

Code Section 25-4-105(1), cited above, prohibits a public servant, including a state employee, from using his or her official position to obtain a pecuniary benefit for himself or herself, or a business with which he or she is associated.

Code Section 25-4-103(c), cited above, defines a “business” as any corporation, partnership, sole proprietorship, firm, enterprise, franchise, association, organization, holding company,  self-employed individual, joint stock company, receivership, trust or other legal entity or undertaking organized for economic gain, a nonprofit corporation or other such entity, association or organization receiving public funds.

 
Code Section 25-4-103(d), cited above, defines a “business with which he is associated” as  any business of which a public servant or his relative is an officer, director, owner, partner, employee or is a holder of more than ten percent (10%) of the fair market value or from which he or his relative derives more than One Thousand Dollars ($1,000.00) in annual income or over which such public servant or his relative exercises control.

Regardless of how the out-of-state inspection business is set up, it will be a business with which the state employee is associated as defined in the above cited Code Section 25-4-103(d).

Therefore, the state employees may not benefit from payments for performing the  inspections if they use their official positions with the state agency to set up, conduct and/or provide the inspections for the private business, as to do so would violate Code Section 25-4-105(1).

As did the circumstance in the attached advisory opinion, the requestor presents a unique circumstance as the state employees obtained their basic knowledge in this particular area at some cost and at the direction of their state agency employer as they are required to have this knowledge in order to hold [or perform] their public employment positions [or duties].

Clearly, the state employees obtained their training in this type of inspection at the expense of the state agency as it is required of them in their official capacity for the state.

As in the circumstance addressed in the attached advisory opinion, there is, however, no evidence that the state employees used their official positions with the state agency to obtain the basic training to perform their state jobs. The state agency employees’ use of their official positions are a necessary element to violate Code Section 25-4-105(1). There are no mandates in state law requiring the state employees to obtain the inspection training.  In fact, a decision as to whether a state employee will receive training in a particular area at the cost of his state agency employer is solely within the purview and authority of the state agency’s executive director or governing body.

Based solely on the specific facts presented herein, Code Section 25-4-105(1) will not prevent the state employees from performing inspections for a private inspection service similar to their state jobs for compensation.  This is true even though the state employees in question obtained their basic training in such inspections at some cost and at the direction of their state agency employer as there is no evidence that the state employees used their positions to obtain the training for the reasons stated above.

 
The requestor is advised to inform the state employees that they will be in violation of Code Section 25-4-105(1) should they use the state agency’s equipment, facilities or other resources to conduct the inspections for the private business. Specifically, the requestor may not use state agency’s vehicles and resources to conduct the private inspections nor may they use their governmental authority as state agency inspectors to conduct the private inspections.  Also, the state employees will violate Code Section 25-4-105(1) should they conduct the private inspections when they have not completed their required work hours for their state employment positions or taken personal leave.

The requestor is also cautioned to remain keenly aware of the following provisions of the state conflict of interest laws discussed below.

Code Section 25-4-105(3)(a), cited above, prohibits a public servant from being a contractor, subcontractor or vendor with the governmental entity employing him or from having a material financial interest in a business that is a contractor, subcontractor or vendor with the governmental entity employing him.

Therefore, Code Section 25-4-105(3)(a) will prohibit the state employees from performing the inspections under contract to the state and especially their state agency employer.

Also, Code Section 25-4-105(3)(a) will prohibit the state employees from having a material financial interest in the private inspection service business should it be a contractor with the state, including their state agency employer or any other state agency.  The state employees will have a material financial interest in the private inspection service business if they have less than a 2% ownership interest in the business and receive an aggregate annual net income of $5,000.00 or more from the business.  In this circumstance, there are limited exceptions to a violation of Code Section 25-4-105(3), which are cited above in Code Section 25-4-105(4)(b)(c)(d).

Code Section 25-4-105(5), cited above, prohibits a public servant from using or disclosing non-public information gained by reason of the public servant’s official employment that in any way could result in a pecuniary benefit to the public servant or any other person.  The definition of “person” set forth in Code Section 25-4-103(m), cited above, would include the non-state governmental entities contracting with the state employees.

The requestor should advise the state employees that the conflict of interest laws do not overrule specific state agency policies and procedures which might be more restrictive than the conflict of interest laws.  Therefore, the requestor should inquire of the state agency to ensure there are no policies or procedures prohibiting the state employees from contacting with a private entity to perform crop inspections similar to their state jobs.
 
 
 

Scott Rankin
Executive Director