Female Speaker: It is my pleasure to introduce Mr. Patrick Shephard. Thank you sir, you may begin.
Patrick Shephard: Okay, thanks very much Holly. Good Afternoon and welcome to the advanced practitioner’s series. My name’s Patrick Shephard. I’m very pleased to be joined today by Rachel Dowell and Seth Jaffe from OGE’s office of general council and legal policy division. Today they’ve joined us to share with us some updates to subpart F of the standards of conduct, which we all know is the regulation dealing with seeking outside employment, so welcome guys. Thanks for joining us.
Rachel Dowell: Thank you.
Patrick Shephard: So we have sort of a lot to get through in an hour. So if it’s okay with you guys I’ll pull up your slides and we can get started. Just a reminder for those folks on the hangout. If you have questions you can type those into the question app in the bottom right hand corner of your screen. And those folks on the phone, we will have a question and answer section at the end of the presentation. So if you give me just a second, I’ll pull up your slides and we can get into the presentation. Alright. I think we’re all set.
Seth Jaffe: Thanks Patrick. My name’s Seth Jaffe. I’m the chief of the ethics law and policy branch at OGE. Welcome to the advanced practitioner’s webinar on OGE’s amendments to the seeking other employment rules. Today Rachel Dowell and I will review the recent amendments to the seeking other employment rules found at 5CFR2635 subpart F, which were published as final on July 26th. This is the first significant rewrite of the seeking employment rules since they became effective in 1993. We’re really happy to have the opportunity to provide you all with this guidance and webinar prior to the rule becoming effective a week from today on August 25th. I’ll start out briefly discussing the path that we took to get to the publication of the final rule, and I’ll move on to discuss the implementation of the notification recusal requirements under section 17 of the Stock Act that were incorporation in the final regulation. Rachel will then discuss some of the other significant change in the final rule, including the application of the seeking other employment rules to employees who seek employment online and through social media.
So at its core, what is subpart F of the standards of conduct? It really should be understood as a recusal requirement. When all is said and done, the bottom line of subpart F comes done to delineating when, and under what circumstances an employee who is seeking employment must recuse from working out a particular matter that will affect their potential employer. In addition, pursuant to the Stock Act for public financial disclosure filers, subpart F now contains a notification requirement. But I believe the thinking about subpart F as primarily a recusal requirement provides a framework from which it becomes easier to understand the details of the rule.
So now we know what subpart F is, why do we have subpart F? One simple answer is that we have subpart F because among other things, the first President Bush issued two executive orders specifying the principles of ethical conduct including principle number ten, stating that “employees shall not engage in outside employment activities, including seeking or negotiating for employment, that conflicts with official government duties and responsibilities. The executive orders then delegate the authority to OGE to promulgate and disseminate the rules implementing this, that all fourteen principles of ethical conduct.
Of course at a more substantive level, we have subpart F because the public’s trust in the integrity of government services would be undermined if government employees could simultaneously seek employment from a potential employer while also working for example on a grant application involving their potential employer.
Now a lot has changed since 1993 when subpart F was first published. The way that employees look for a job has changed dramatically. I know it’s difficult to believe, but 1993 was largely prior to the widespread use of the internet and was certainly before the ubiquitous presence of social media. In addition, in 2012 the Stock Act was passed, which also required OGE to amend, among other things, our seeking employment regulations reflecting new notification requirements for public financial disclosure filers.
Specifically section 17 of the Stock Act requires a public filer who’s negotiating for, or has an arrangement of future employment or compensation to file a statement with an agency ethics official of such activity within three business days. As a result of these developments, when we got to work incorporating the section 17 Stock Act requirements into subpart F, we also decided that the time was right for OGE to significantly rewrite subpart F and to provide guidance to both employees, and ethics officials, for how employees actually look for jobs in the modern world. Since it took a while to get significantly rewritten subpart F through all the regulatory hoops and publish a final regulation, we started providing guidance on the section 17 Stock Act requirements in 2012 and 2013. We did this with legal advisories 12-1 and 13-6, which we will touch upon briefly later in the webinar.
More relevant for today’s presentation, direct your attention to our recently published LA-16-06, which summarizes many of the significant changes of subpart F and our final regulation, much as we are doing today. LA-16-06 also contains an attached red line version of subpart F, detailing all the changes from the previous regulation. The advisory with the attachment is available online as part of the materials for this webinar. I’ll also note that we have included more information on the slides for the presentation today than were strictly necessary. So you can refer back to these slides and use them as additional tools when advising employees on the recusal requirements when seeking employment.
In the run up to beginning the regulatory process, we believe that it was vital to solicit feedback from agency ethics officials. That is feedback from you. In order to benefit from your experience over the past twenty plus years, so we could adequately address the issues most concerning and prevalent in the community. We started this process early and we took it very seriously. In September 2014 at our National Government Ethics Summit, we had three separate sessions that were led by our general council that were attended by over eighty ethics officials. There we solicited comments on purposed changes to the regulation and we incorporated those suggestions into a draft regulation. After that, in February 2015, we convened a meeting at OGE with ethics officials from both small and large agencies. It was attended by ethics officials from thirty-one separate agencies. There we discussed further draft amendments and further incorporated agency comments at the time. The comments we received were extremely helpful and definitely produced a better product as we began the regulatory process.
Now the regulatory process, as many of you know, can be a little bit like a labyrinth. The most important parts to the process however, from a quality control stand point, are the parts of the process where we solicit and receive comments on the regulation. There are many opportunities for stake holder comment. The first opportunity came when we submitted the purposed regulation to OMB for them to circulate the agencies as part of the first ninety day review process. As a result of the circulation, we received over fifty individual comments from ten agencies.
After reconciling the comments from the agencies and coming to an agreement with all agencies, on February 17th, 2016, we published a purposed regulation. This then initiated another sixty day comment period, this time a public comment period. At the close of the sixty day comment period, and I think as a result of your earlier comments in our implementation of many of them, we did not receive any public comments. However this did not mean that we got to publish our final regulation just yet. We then again submitted the potential final regulation to OMB for one more ninety day review process, where the regulation was again circulated to agencies for comment. At this stage we received over twenty individual comments from three agencies. After reconciling all the comments from the agencies, and coming to an agreement with all the agencies, finally on July 26th, 2016, we published the final regulation, and it wasn’t so hard, it only took twenty three years. And the effective date is a week from today, August 25th.
Now I’ll take the next few minutes to review the amendments of subpart F of the standards of conduct that we incorporated into the final regulation, implementing section 17 of the Stock Act.
Now there are two base requirements of section 17 of the Stock Act. A notification of the negotiation requirement, and a notification of recusal requirement. And more specifically, section 17 requires a public filer who’s negotiating for, or has an agreement of future employment of compensation to file a statement notifying the agency ethics official of such negotiation or agreement within three business days after commencement of the negotiation or agreement. Secondly, section17 requires a public filer who files a notification statement regarding the negotiation or agreement to also file a notification regarding recusal whenever there is a conflict of interest or appearance of a conflict of interest with respect of the annuity identified in the notification statement.
Now OGE previously issued interpretive guidance for implementation of section 17 of the Stock Act on April 6th, 2012, and April 25th, 2013. LA-12-01 addressed the application of the notification or recusal requirements for negotiations and agreements of future employment, while LA-13-06 addressed the same requirements for negotiations and agreements of future compensation. New section 607 of subpart F codifies and further develops this guidance.
Now I’ll briefly review some of the primary take a ways from this guidance as well as some of the new ground cover in the regulation. It is important to remember that the requirements of section 17 do not apply to all negotiations and agreements for employment. Its notification requirements only apply to negotiations and agreements for one, future, two, employment or compensation involving three, a private entity. So let’s discuss the applicability of these three elements.
So what does future mean? Future means employment or compensation starting after termination of federal government employment. Therefore, the new section 607 notification requirements of subpart F are not applicable to employment or other compensation activities that occurred during government employment. I’d just like to note though, it’s very unlikely that an employee would try to avoid the stock act notification requirement in 607 by planning to begin outside employment during government service, merely to escape the notification requirement.
This is so because all other existing authorities applicable to such employment are compensate activities remain in force. So for instance, all other recusal provisions of subpart F and criminal liabilities under 18 U.S.C. 208 still apply if the employee is negotiating for employment that will begin prior to the end of government service. In addition, this employee may also be subject to outsider income limitations or outsider income ban, as well as the limitations and restrictions on teaching, speaking, and writing in section 807 of the Standards of Conduct, as well as other conflict of interest statutes and regulations.
Next, the Stock Act notification requirement to only kick in when a government employee engages in negotiations for, or has agreement of future employment or compensation. The point I want to make here is that compensation is broader than employment. So for instance the Stock Act notification provisions apply when negotiations or agreements to compensate an employee occur for personal services that were performed after government service. This is true even when the performance of those personal services do not constitute employment. There for, a public filer who is in negotiations with a publisher to get paid to begin writing a book after he leaves government, will be required to file a Stock Act notification statement with his ethics official within three business days of commencing the negotiations, even though the publisher will not be his employer.
Finally, section 17 notification requirements are only applicable to negotiations for an agreement of future, private employment. An important point to be aware of here is that pursuant to OGE’s authority under the Ethics and Government Act and executive order 12731, inconsistent with our previously published legal advisories, we extend to the notification requirement to negotiations for or agreements of future employment or compensation to all, nonfederal entities. We felt this extension was appropriate because of the potential for conflicts of interest is not limited to private entities. Therefore, a public filer who is in negotiations for employment with a state government after he leaves federal government will be required to comply with the section 17 notification requirements of the Stock Act.
Now before I hand the webinar over to Rachel, I want to review some new ground covered in the final regulation concerning the ability of employees to satisfy the STOCK Act notification and recusal requirements through advanced filing.
This is an area where we receive many comments and a lot of interest. I think it’s the area where we achieve an excellent balance of the requirements of the act with the practical reality of how people actually search for jobs, as well as their concerns about notifying their employer that they are looking for other work. Also remember thus notification requirement’s particularly sensitive because it only applies when the employee involved is looking to leave government service and not when she is seeking concurrent employment with her government job.
The section of the regulation specifically addressing advanced filing is section 607C. Examples one and two of this paragraph also flush out the option of advance filing.
Here are the few basic points to remember when advising an employee on their option of advanced filing. First, advanced filing is an option to file notification and recusal statements prior to starting negotiations, and both statements may be contained on the same document. Second, advanced filing continues to satisfy the filing requirement when negotiations begin, or an agreement is reached without a subsequent filing. And this is so, so long as the name of the nonfederal entity is provided and the filing contains an estimated date of commencement of the negotiation or agreement. Third, advanced filing is not required under subpart F and is not construed as a statement that negotiations have or have not commenced, or that a conflict of interest does or does not exist on the date specified. I’ll talk a little bit about that more in a second. And four, although advanced filing of both the notification and recusal statements are encouraged by OGE, the agency ethics officials are under no obligation to notify the filer’s supervisor once the filing is submitted. Of course, under certain circumstances, an employee may need to notify their supervisor in the case of an actual recusal.
So how would advance filing work in practice? So let’s say that you have an employee who files a public financial disclosure report, and this employee receives an unsolicited call from their former nonfederal employer, asking the employee if he is interested in leaving the government and coming back to work for them. The employee tells his former employer that he is interested and that he will call them back after he gets advice from his ethics official. The employee then comes to you for advice. The employee tells you that he plans on calling his former employer back, and that he plans to express interest in the job and wants to arrange an interview. At this point, although the employee has begun seeking employment, he has not yet begun negotiating for employment. Because it is possible, if not even likely that the employee will cross into negotiating for future employment during the upcoming phone call or subsequent interview, it would be prudent to advise the employee to follow the Stock Act notification and recusal at this point. The filing will satisfy the Stock Act requirement so long as it identifies the entity with whom he is about to begin negotiating for employment, and also lists the date of the upcoming phone call as the estimated date of the start of the negotiations.
Now one final point I want to emphasize here is that even if the employee waited until after the interview to file the notification report, it would still contain an estimated date of when the negotiations actually began. For instance, did the negotiations begin during the phone call that proceeded the interview? Did the negotiations begin during the interview? Maybe the negotiations only began sometime after the interview. It will always be an estimate because it is not always clear exactly when negotiations begin. By providing an advanced filing, the employee will reduce the likelihood that he will begin negotiations, not file a notification, and then begin working on a particular matter in violation of 208. And remember the employee does not need to notify the supervisor at this point as a requirement is to file the notification with you as ethics official.
Now I’ll turn it over to Rachel Dowell, who will review the other substantive, nonstock act related changes in our final subpart F regulation.
Rachel Dowell: Great. Thank you. Now the main reason we focus on amending the seeking employment regs. was really to implement the Stock Act’s notification requirement that Seth just discussed. But this also gave us a great opportunity to take a fresh look at subpart F after twenty plus years and really improve the existing rules, both through substantive updates and through smaller technical changes. I’ll go through some of these technical updates just briefly at the end. But I want to spend most of our time right now discussing the various substantive changes that were made throughout the regulation to clarify, modernize, and extend on existing subpart F concepts. Now the core rules remain the same, but we address new issues in our examples, either by updating them, or adding new examples all together. So I’m going to touch on all five of these topics today, starting with one that has been a hot topic for many years now, and that’s social media.
In the last ten years or so, social media has become prevalent, leaving employees and ethics officials with questions about how the standards of conduct apply to an employee’s use of social media, including when they’re seeking employment online.
So with our updates we had a great opportunity to address how the standards apply to an employee’s use of social media. We address those issues by adding four new examples to clarify that the rules apply in the same matter to all methods employees use when seeking employment. So whether they’re picking up the phone, meeting in person, or going online, we have the same rules, just different technologies.
Three of our new examples address when an employee’s online activities are considered seeking employment. Our fourth example discusses who is a perspective employer when you’re seeking employment online. So we’ll take a closer look at all four of these examples, but I do want to remind you again that I threw up a screenshot of all of the examples text. It’s a long black text. Don’t feel rushed or obligated to read through these right now, I’m going to talk about all the main points here. We just put the text up there for your reference later.
So starting off, we have three new examples that address when an employee’s online activities are considered seeking employment. Now as a reminder, you’re considered to be seeking employment when you make an unsolicited communication with a person regarding possible employment, or when you make a response other than a rejection to an unsolicited communication from any person regarding possible employment.
So our first new example shows a DOE employee, we’ll call him Joe, and he’s posting a profile that summarizes his professional experience. Now with this example we are kind of envisioning a LinkedIn profile where you’re part of a social networking site and your profile’s generally not targeted at any one person. I do want to also mention that this is not an endorsement of LinkedIn or any other site or dimension. It’s just kind of a reflection of what we were thinking of when we came up with these examples, and what the typical employee today uses.
So in this example, Joe is listing his professional experience, his education, etcetera, and his whole network can see it. Joe is not seeking employment because his profile is not an unsolicited communication with any perspective employer. Rather, it’s closer to posting a resume on a bulletin board, and I think that makes a lot of sense. If I put my resume up on a bulletin board, I’m not seeking employment with everyone who could possibly walk by and see it. Same thing with these online e profiles, you’re not seeking employment with the whole world just because every company could, in theory, find your profile.
Our second new example, example five, goes out to explain that Joe would also not be seeking employment if he gets notified that someone view his profile. Again, that’s a feature we see in sites like LinkedIn. So if Joe gets notified that Suzy from Exxon HR office viewed his profile, he’s not seeking employment with Exxon because there’s been no communication regarding perspective employment.
On the same note, new example six goes on to explain that Joe would still not be seeking employment if Suzy from Exxon sends him an unsolicited message on LinkedIn asking him if he’s interested in a new job, because again at that point he’s not made a response to Suzy. However, new examples five and six both make clear that if Joe responds to Suzy, and that response is anything other than a clear rejection, then Joe is seeking employment with Exxon. So again if Joe just ignores the message, he hasn’t made a response and he’s not seeking employment. That’s just the same concept if you ignore a voicemail, or if you’re rude and ignore someone in person, you can’t be seeking if you don’t respond to the unsolicited communication. But if Joe does respond and he says he might be interested in the Exxon job, then he’s not made a clear rejection, and he’s seeking employment with Exxon.
Moving along, the final social media example adds kind of a modern twist to our traditional head hunter scenarios. Like regular employment search perms, there are online services like Monster’s Resume Agent Service that works as kind of an agent of intermediary connecting you with a potential employer. So as you know when you use a head hunter and that head hunter sends out your resume to companies A, B, and C, you’re not seeking employment with companies A, B, and C until the head hunter identifies those companies to you. Same goes for our digital head hunters. So DOE employee Joe uses his Monster’s Agent Resume Service, and that service sends his resume to Bowing and Lockheed, he’s not seeking employment with those companies until Monster actually identifies the companies to Joe. So again the theme with all of these examples is we had these new technologies, but the same rules applied.
Moving along, I want to touch on a couple other smaller updates that we’ve made just to add some clarity to some of our longstanding interpretations. First of all, we added a new example to the definition of employment. Just as a starting point, this does not change our definition of employment, rather this example just clarifies a longstanding interpretation that certain uncompensated volunteer activities, like serving dinners at a homeless shelter, are not considered employment. Again this is nothing new, we actually first said this in the preamble to the 1992 final rule. So it doesn’t change our definition of employment at all. All we wanted to do was add this interpretation as an example to provide some more clarity, and for those employees who don’t read our 92 preamble, they’ll know that we don’t consider that employment.
The next example that’s new deals with informational interviews. We’ve long received several questions over the years about whether you’re seeking employment if you go on informational interviews. And we answered this question by providing a pretty limited example where there’s a true informational interview. Here we have a paralegal meeting with a law firm partner about what it’s like to work at a law firm. There’s clearly now talk of employment anywhere on the table here. In this type of scenario, we clarified that the informational discussions with nothing more, no perceptive job opportunity, would not be considered seeking employment.
Next up, we provided an example that shows when seeking ends, and negotiating employment begins, which also probably one of the areas that agencies most wanted clarified. Now remembered subpart F combines our criminal prohibitions related to negotiating for employment with actions that fall short of negotiating, but still raise impartiality issues. Now we all know how difficult it is to draw this line, and facts specific to that analysis can be. So to help better draw this line, we split what was previous example three into two different examples. Now if you remember, previous example three was kind of a long fact pattern and it didn’t distinguish between the lesser seeking activities and when that employment hit the negotiating employment. So what we did is we split up that example to more clearly draw this line, and we also made a few tweaks to kind of base the example’s facts more closely on a 1991 negotiating employment case, USB Shalton Brown.
Last, but not least, we added one more example to give just some more practical guidance on what employees can say to reject employment. So as you know, we already have an example that provides language that would reject employment, so this is just one more tool for you all to use when you’re advising employees. And I think this example is especially relevant right now because it involves a political employee near the end of an administration. So everyone in this example knows this person’s leaving soon, so it’s going to be a little disingenuous to say you’re not interested in leaving government like our existing example. So we provided another way to reject employment by stating, “I’m not talking to anyone about employment until I leave government.” Again this is just one example, it’s not the only option, but it does provide some helpful guidance to employees.
Before we wrap up, I want to point out that we made several smaller technical updates kind of scattered throughout the regulation. The best place to look for these technical updates is our Red Line that’s attached to legal advisory 1606. It’s a lot easier to spot where we made all of these minor changes. Really what these technical updates do is they really clean up the reg. so there’s a lot of outdated citations that we need to change. And they also make the reg. a lot easier to follow. For example, we reorganized examples to follow the secrets of the regulation. I did want to go into one more detail and just one point just to make clear that one of the technical updates is actually not a substantiate change. And you’re probably all familiar with the exclusion to the definition of seeking employment that was sometimes incorrectly referred to as a mass mailing exception. So this exclusion basically provided that if you send your resume to someone who is affected by your work as part of a class or industry, then you aren’t seeking employment and more importantly, you don’t need to recuse yet. This is just a recusal concept, so we moved it to a more logical spot in the regulation, the recusal section in 604. So even though we moved locations, the result is the same and should not have any effect on your guidance to employees.
So if you submit your resume to a pharmaceutical company, and that company is affected by a regulation you’re working on as part of a class, you don’t need to recuse yet. That’s the same rule as before. So then if you submit your resume to the same pharmaceutical company for which you’re reviewing a drug approval application, then you would need to recuse because that’s a party matter. Again that’s the same rule, it’s just this rule is in a more logical spot in the regulation.
So that’s about all I have for today, and we can check if we have any questions though.
Patrick Shephard: Great. Well thank you Rachel and Seth for that very informative information about the updates to the regulation. We will open the phones up to questions, Holly if we could, and again folks on the phone and if you have questions on the Hangout you can ask those by typing them into the question app.
Female Speaker: Thank you. If you would like to ask a question, please unmute your phone, press star followed by the number one, record your name clearly when prompted so we may introduce your question. To withdraw your question press star two. Again to ask a question press star one. And we’ll take a few moments for questions to come in. Please stand by.
Patrick Shephard: As someone who has taught the seeking and negotiating reg. a few times, I’m very grateful for the moving of that last technical example to the recusal area. I don’t know how many time we had to explain and re-explain and then come back a few months later to explain again, because it was very confusing the old way. So it’s nice to see us learning from those twenty odd years of experience and produce a regulation that’s more usable for our ethics community. I’m not showing any questions on the Hangout.
Seth Jaffe: Well I’m glad that we were so clear that we don’t have any questions.
Patrick Shephard: While we’re waiting for any questions that might come through on the phone, I would like to remind everyone that we do have the ethics community training needs assessment out until the end of the week. The deadline is this Friday, so if you’ve not responded to that, we’ve sent a reminder list on Monday you can find that. It’s a brief three question survey. If there are training opportunities that you’d like us to offer that we’re not currently offering, things we are offering that you’d like to see more of, things you’d like us to keep the same, let us know, because that information is really helpful for our planning and we are in the process of planning our training activities for the next few years, so if you share your information or your preferences with us we can incorporate them, but we can only do that if you’re willing to share your feedback, so please do. Do we have any questions on the phone Holly?
Female Speaker: No questions at this time, but as a reminder if you would like to ask a question, please press star followed by the number one.
Patrick Shephard: Well it looks like we’re not going to have any questions today. If you think of something, as always, you can get in touch with us through your desk officer or give us a call here at OGE. Again, thank you guys very much for joining us, and thanks everyone on the hangout and on the phone for joining, we hope you found this to be helpful and we look forward to joining you next month on the second Thursday of the month for our first broadcast for everyone here at OGE. I’m Patrick Shephard and I’ll see you next time.