Summary and Action Requested
This memo provides an overview of legislation (File #230484) that would prohibit City officers and employees from receiving compensation from departmental contractors, which has been referred from the Board of Supervisors. Staff recommends the Commission discuss this legislation with Staff and representatives from Supervisor Safai’s office to identify relevant questions, concerns, and priorities for the Commission’s consideration of the legislation.
Background & Role of Ethics Commission
This legislation regarding employment with departmental contractors was first introduced by Supervisor Safai in April and referred to the Ethics Commission in May. Staff worked with Supervisor Safai’s office on revisions to the legislation, which strengthened the legislation and aligned it more with policy changes the Commission had previously expressed support for through its draft ballot measure. Specifically, Staff suggested the rule apply to all officers, not just elected officers, and that a provision that would have allowed waivers for this rule be removed. A revised version of the legislation was substituted on June 27 and is the version presented as Attachment 1. The associated legislative digest is included as Attachment 2.
This legislation would amend Section 3.218 of the Campaign and Governmental Conduct Code to specify that employment with departmental contractors is prohibited. Per Section 3.204, the Board of Supervisors may only amend Article III, Chapter 2 if the legislation is first approved by a four-fifths vote of the Ethics Commission.
Overview of Legislation
This legislation would prohibit City officers and employees from being employed by or otherwise receiving compensation for work from an individual or entity that has a contract with the department of that officer or employee. This legislation is intended to address both real, and perceived, conflicts that arise when City officials are employed by entities that contract with their departments.
Last year, it was widely reported that the City’s director of jail health services was working for a nonprofit organization that contracted with her department. In this role, the City official was earning $123,000 annually from an organization contracting with her department, in addition to her more than $425,000 in City compensation from the Department of Public Health. The City official has since resigned from her position with the nonprofit organization. However, following this reporting, at least 300 other officials within DPH filed requests to have their secondary employment approved, indicating the existence of a larger issue with unapproved additional employment in the City. It is unclear how many of these additional employment requests are for employment with entities that are also contracting with the official’s department or how many other officials throughout the City may be employed by departmental contractors.
By prohibiting City officials from being employed by entities that contract with their department, this legislation seeks to preserve the impartiality of City decision-making processes and avoid the appearance that City officials’ decision-making abilities may be compromised by conflicting interests.
In early discussions with Supervisor Safai’s Office, Ethics Staff suggested the rule apply to all officers, in addition to employees and elected officers, since appointed officers can play important roles in contract approvals and as public officers are frequently the face of many departmental decisions, which makes it all the more important to avoid any appearance of corruption in their actions. Staff also suggested an initial waiver process also be removed, as waiver processes can be easily abused, be applied inconsistently, be cumbersome to administer, and often serve to weaken overall rules. Both of these suggestions were made and are currently reflected in the legislation in Attachment 1.
All departmental Statements of Incompatible Activities (SIAs) already prohibit City officials from engaging in outside activities that are subject to the control, inspection, review, audit, or enforcement of their department. This means that, among other things, City officials are already prohibited from working directly on projects that are funded by, or otherwise controlled by their department. The legislation before the Commission today would explicitly prohibit all employment with an entity that contracts with the City official’s department, regardless of if the City official’s work for the entity is related to the entity’s contract with the official’s department.
Additionally, some departmental SIAs already have explicit rules prohibiting employment with departmental contractors. For example, the SIA for DPH does not have this explicit rule, whereas the SIA for MTA does. The legislation proposed by the Board of Supervisors would create a standardized rule that could be applied consistently across all City departments.
Status of Similar Rule in Ethics Commission Ballot Measure
The Ethics Commission’s 2024 ballot measure, which was approved by the Commission in August of 2023, had contained a similar rule to the one proposed by this legislation from the Board of Supervisors. However, during its August 2023 meeting, the Commission amended the ballot measure to remove this rule, prior to sending the measure to voters.
The language in the Commission’s ballot measure was broader than what is in Board’s legislation. The ballot measure language would have prohibited City officials from “having a financial interest in” entities that contract with their department, with “financial interest” being broader, capturing gifts and investments, whereas the legislation from the Board of Supervisors is specific to employment and compensation received for work.
Current Status of Legislation and Potential Next Steps
A meet and confer over the departmental contractor employment legislation has been initiated and there has been one meeting with City bargaining units over the legislation. Prior to the Commission voting on its 2024 ballot measure during the August meeting, Supervisor Safai’s office requested DHR pause the meet and confer over this legislation, as the Chair had indicated she would not be placing the item on the Commission’s agenda while the Commission was still considering a comparable rule through its ballot measure.
Now that the Commission has submitted its ballot measure to voters, with the rule regarding financial interests removed, Staff anticipates Supervisor Safai’s office will resume the meet and confer with City bargaining units regarding the proposed legislation.
Staff has confirmed that a representative from Supervisor Safai’s office will be able to attend Commission’s meeting in September to discuss the proposed legislation with the Commission. This will be an opportunity for the Commission and the public to ask questions, raise concerns, and identify priorities for this legislation, should the Commission wish to consider its adoption.
Staff would like to highlight that it may be necessary to amend the proposed location of this rule in the Code, so as not to conflict with the Ethics Commission ballot measure that will be before voters in March of 2024. The proposed legislation from the Board of Supervisors would currently amend the C&GCC to insert the proposed employment rule into Section 3.218. However, Section 3.218 of the C&GCC is potentially going to be amended by voters through the Commission’s ballot measure. This could complicate the potential amendment process and implementation of both the measure and employment legislation.
To address this concern, Staff would recommend the rule proposed by Supervisor Safai be moved from Section 3.218 and instead be placed in Section 3.206. Section 3.206 is not potentially going to be amended through the Commission’s ballot measure, so this rule being added to Section 3.206 would not give rise to complications with the ballot measure and the change could occur at any time, independent of the ballot measure. Additionally, Section 3.206 focuses on financial conflicts of interest and already contains the City’s rule regarding future employment, therefore Section 3.206 would also be a reasonable place for this employment rule to be located.
Recommended Next Steps
Staff recommends the Commission discuss the proposed legislation with Staff and the representative from Supervisor Safai’s office and communicate any questions, concerns, or priorities the commissioners may have regarding this legislation. If the Commission is interested in continuing to consider this legislation, Staff can continue working with Supervisor Safai’s office on the legislation and work with DHR to resume and conclude the meet and confer over the proposed legislation.
Attachment 1: Legislation Version 2 – File No. 230484
Attachment 2: Legislative Digest Version 2 – File No. 230484