The information provided is educational in nature and should not be considered legal advice. Persons with questions about a specific situation should contact the Ethics Commission (617) 371-9500 for free confidential advice.
The conflict of interest law, G. L. c. 268A, is intended to prevent, among other things, self-dealing. Section 19 of the conflict law generally prohibits a municipal employee (paid or unpaid, appointed or elected, full-time or part-time) from participating in any particular matter in which the municipal employee, an immediate family member or partner, or a business organization in which he or she has certain affiliations, has a financial interest.
A municipal employee generally may not act on matters affecting the financial interest of the municipal employee him or herself, his or her spouse and/or the parents, siblings and children of both the municipal employee and the spouse. In-laws who marry into the "immediate family" are not considered to be members of the immediate family. For example, a town clerk's sister-in-law, who married the town clerk's brother, is not a member of the clerk's immediate family while the clerk's sister-in-law, who is his spouse's sister, is a member of the immediate family. Similarly, nieces, nephews, cousins and grandchildren are not members of the employee's immediate family. (They are, however, kin and acting on matters involving kin may give rise to the appearance of a conflict of interest. Section 23 of G.L. c. 268A addresses this.)
In determining if a public employee may act in matters involving a family member's employee, it is the family member's financial interest that must be considered. For example, a particular matter before a board of health might affect the financial interest of the business organization that employs a board of health member's mother. That financial interest alone won't disqualify the member from acting, however, unless the particular matter also affect's the mother's financial interests.
A municipal employee who is an officer, partner, director, trustee, or employee of an organization or who is negotiating for prospective employment with an organization, in general, may not participate in matters affecting the financial interest of that organization. It does not matter if the business organization is a private, for-profit business or a non-profit organization.
Participating and Voting
Participation includes not only voting on a matter but also formal and informal lobbying of colleagues, reviewing, discussing, giving advice and/or making recommendations on particular matters. Therefore, a municipal employee will be deemed to have participated in the particular matter if he discusses the matter but abstains from the vote of his or her board. Often, discussing, providing advice or making recommendations about a particular matter may have more of an effect than the employee's single vote. It does not follow, however, that if a municipal employee votes without participating in any discussion or otherwise acting regarding the matter in question, that vote will not amount to participation. Regardless of whether the vote tally is unanimous or split, voting constitutes participation. Finally, many actions, such as signing payroll warrants, which may seem to be routine or ministerial, in fact, constitute participation in the particular matter. Signing payroll warrants, for example, is making a decision to approve the payroll. Such a decision is a particular matter.
The decision to delegate a matter to a co-worker or to a subordinate also constitutes participation in the particular matter.
The law includes three exemptions from the general prohibition. Often, exemptions of the conflict law require the municipal employee to make written disclosures to the municipal clerk and/or to the municipal employee's appointing authority. A municipal employee's appointing authority is not necessarily his or her immediate supervisor; the appointing authority is the official or board responsible for the municipal employee's appointment to his or her position. Making an oral disclosure or making a written disclosure to an immediate supervisor who is not an appointing authority, a co-worker or a subordinate who is also involved in a matter may not be deemed sufficient disclosure.
A municipal employee can always comply with § 19 by simply not participating in the relevant particular matter. The law does not require a municipal official to disclose the reasons why he or she has decided not to participate.
- The exemption most often available for appointed municipal employees is § 19(b)(1). A municipal employee who first advises his or her appointing authority of the nature and circumstances of the particular matter, makes full disclosure of the financial interest, and then receives in advance a written determination made by the appointing authority may act in matters in which he or she would otherwise be prohibited from participating. This exemption is not available to elected municipal employees because they do not have an appointing authority.
The determination made by the appointing authority is that "the interest is not so substantial as to be deemed likely to affect the integrity of the services which the municipality may expect" from the employee. Whether the municipal official receives the written determination rests solely with the appointing authority. The Ethics Commission has no role in making the determination.
- Section 19(b)(2) allows an elected municipal official to make "demand bank deposits of municipal funds" if he or she first files with the municipal clerk a statement making full disclosure of the financial interest. Thus, the elected town treasurer may use this exemption if she intends to make a demand bank deposit of municipal funds in a bank in which she serves, for example, as an officer, director, trustee or employee.
- Finally, § 19(b)(3) allows any municipal employee to participate in a particular matter involving "a determination of general policy" and in which "the interest of the municipal employee or members of his immediate family is shared with a substantial segment of the population of the municipality." Generally, this exemption applies to particular matters such as real estate tax rates or municipal utility rates.
What is a financial interest?
Although the conflict of interest law does not define the term financial interest, the Commission has a long-standing practice of interpreting the phrase. The restrictions of the conflict law apply in any instance when the private financial interests are directly and immediately affected or when it is reasonably foreseeable that the financial interests would be affected.
Example: A selectman who owns a restaurant in town may have a financial interest in awarding a liquor license to a business competitor if it would be reasonably foreseeable that the granting of the liquor license to a competitor's restaurant would affect the selectman's restaurant sales.
Example: A planning board member who is a trustee of a private non-profit organization which opposes a project before the board will be prohibited from voting on that project if she knows that the private organization will spend financial resources to oppose the project if it is approved by the board. In contrast, if the organization has no intent to spend resources based on the decision, then the organization does not have a financial interest and the board member's participation would not violate this section of the conflict law.
The conflict law generally prohibits any type of official action regardless of whether the financial interest is large or small and regardless of whether the proposed action would positively or negatively affect the private financial interest.
Example: A public official responsible for hiring summer employees generally may not participate in the hiring process if an immediate family member is an applicant, even if it is clear that the immediate family member will not be hired and thus has a negative financial interest.
What is the rule of necessity?
If a member of a town or city board has a conflict of interest, that member will be disqualified from acting on that board matter. In some cases, especially when more than one member is disqualified, a board cannot act because it does not have a quorum or some other number of members required to take a valid affirmative vote. (If the number for a quorum is not set by law, a quorum is generally a majority of the board members.) In these instances, the board can use what is called the rule of necessity to permit the participation of the disqualified members in order to allow the board to act.
The rule of necessity is not a law written and passed by the Legislature. Rather, the rule of necessity was developed because judges applied it in their court decisions.
How does the rule of necessity work?
The rule of necessity works in the following way:
It can only be used if a board is unable to act on a matter because it lacks the number of members required to take a valid official vote, solely because members are disqualified by the conflict law from acting.
Example: A five member board has a meeting and all members are present. Three of the five members have conflicts. Three members are the quorum necessary for a decision. The two members without conflicts do not make a quorum. The board cannot act. The rule of necessity will permit all members to participate.
Example: A five member board has a meeting and four members are present (one member is sick at home). Two of the four present members have conflicts. A quorum is three. The one member who is sick at home does not have a conflict. The Rule of Necessity may not be used because there is a quorum of the board which is able to act. Because one member of the board is absent does not permit use of the Rule of Necessity.
Example: A five member board has a meeting and all members are present. One member has a conflict and is disqualified. The vote is a two to two tie. The rule of necessity may not be used to break the tie. In general, a tie vote defeats the issue being voted on. Stated differently, a tie vote will maintain the status quo.
Example: All five members of a five member board are present. A quorum is three. However, one agenda item requires four votes, rather than the usual simple majority, for an affirmative decision. Two of the board members have conflicts. Although a quorum is available, the required four votes needed for this particular matter cannot be obtained without the participation of one or both of the members who have conflicts. The rule of necessity may be invoked and all five members may participate.
The rule of necessity should be invoked by one or more of the otherwise disqualified members, upon advice from town or city counsel or the State Ethics Commission.
- If it is proper for the rule of necessity to be used, it should be clearly indicated in the minutes of the meeting that the board was unable to obtain a quorum due to disqualification of members and, as a last resort, that all those disqualified may now participate under the authority of the rule of necessity. Each disqualified member who wishes to participate under the rule of necessity must first disclose publicly the facts that created the conflict.
Note: Invoking the rule of necessity does not require previously disqualified members to participate; it merely permits their participation.
- The rule of necessity may only be used as a last resort. Every effort must be made to find another board capable under the law of acting in place of the board that could not obtain a quorum.