G.L. c. 268A, sections 7 (state employees), 14 (county employees) and 20 (municipal employees) prohibit public employees from having a direct or indirect financial interest in a contract made by their employing government in which the government employer is an interested party, unless an exemption applies.


The purpose of these sections is to prevent public employees from acting in their own self-interest in relation to contracts with the government by which they are employed and from having an unfair advantage over members of the public in obtaining jobs and other opportunities funded by their employing government.


For example, issues would arise under section 7 if a state employee performed work for multiple state agencies. By way of further example, an issue would also arise under section 7 if an individual, in addition to his state position, were to receive compensation from a private entity or individual and that compensation was derived from a contract in which the Commonwealth is a party.


In other words, sections 7, 14 and 20 apply if a public employee has a contract directly with the government by which they are employed, or if the public employee derives any financial benefit from a contract which their employing government has with another person or entity.

 

Exemptions Under Sections 7, 14 and 20


There are a number of exemptions available under sections 7, 14 and 20. Public employees who qualify for an exemption under these may have a direct or indirect financial interest in a contract made by the state/county/municipality. If you believe you may qualify for an exemption under section 7, 14 or 20, please contact the Legal Division for further advice.


The following is an overview of some of the exemptions that are currently available under sections 7, 14 and 20.

 

Exemptions Available for STATE Employees Under Section 7


G.L. c. 268A, section 7 prohibits a state employee from having a direct or indirect financial interest in a contract made by a state agency in which the Commonwealth, or a state agency is an interested party, unless an exemption applies.


Section 7(b) Exemption


Section 7(b) allows state employees (other than members of the general court) to have a financial interest in a contract with a different state agency, provided that the following conditions are met:

 

  1. The contract must be with a completely independent agency or department. The state employee may not in his existing state position participate in or have official responsibility for any of the activities of the second agency, and the first agency must not regulate activities of the second agency;

  2. the contract must have been publicly advertised or, where applicable, awarded through public bidding; and

  3. the individual files a statement with the State Ethics Commission disclosing the contract;


    And, if the contract is for personal services the following requirements must also be met for a state employee to qualify for an exemption under 7(b):


  4. the contract will be performed outside of the normal working hours of the first position;

  5. the services performed pursuant to the contract are not part of the employee's duties in the first job;

  6. the employee is not compensated pursuant to the contract for more than 500 hours per year; and

  7. the head of the second agency or department certifies in writing (to the State Ethics Commission) that no employee of that agency is available to do this work as part of their regular duties.

Members of the General Court - Section 7(c)


Pursuant to section 7(c), members of the general court (the state Legislature) may have a financial interest in a contract provided:


 

  1. the contract is made by an agency other than the general court or either branch thereof, and

  2. his direct and indirect interests and those of his immediate family in the corporation or other commercial entity with which the contract is made do not in the aggregate amount to ten percent of the total proprietary interests therein, and

  3. the contract is made through competitive bidding, and

  4. he files with the state ethics commission a statement making full disclosure of his interest and the interests of his immediate family.

Sections 7(d) and 7(e) Exemptions for Special State Employees


Section 7 also contains two exemptions which are applicable to special state employees.


Special state employees may, under section 7(d) , have a financial interest in a contract with a state agency by which they are not employed and in whose activities they do not participate or have official responsibility provided that they file a full disclosure with the State Ethics Commission.


Under section 7(e) special state employees may have a financial interest in a contract with their own agency or an agency in whose activities they participate and for which they have official responsibility provided they make a full written disclosure of his financial interest with the State Ethics Commission and with the Governor and receive a written exemption from the Governor.


For more information about the definition of "special state employee" see G.L. c. 268A, section 1(o).

 


"Public Assistance Exemption"

A state employee may provide services or furnish supplies, goods and materials to a recipient of public assistance, provided that:

 

  1. such services or such supplies, goods and materials are provided in accordance with a schedule of charges promulgated by the department of transitional assistance or the division of health care policy and finance; and

  2. that such recipient has the right under law to choose and in fact does choose the person or firm that will provide such services or furnish such supplies, goods and materials.

"Teaching Exemption"


A state employee may teach or perform " other related duties in an educational institution of the Commonwealth; provided, that such employee does not participate in, or have official responsibility for, the financial management of such educational institution; and provided, further, that such employee is so employed on a part-time basis." (Emphasis added).


The Commission, in its interpretation of the language "other related duties," has stated


the permissible services are not unlimited and must be directly related to the content of instruction and how that content is taught. Thus, services related to the development of curriculum, the selection and evaluation of teachers, course scheduling, and the advising of students in connection with courses would fall within the statutory exemption. On the other hand, purely administrative or custodial functions, such as record-keeping, facility management, financial and budgetary services and personnel administration, while indirectly supporting the ultimate educational objectives of the institution, do not have a sufficiently direct relationship to instruction and therefore do not qualify under the amended exemption (emphasis added).


EC-COI-91-7.


"Critical Need Exemption"


The "critical need exemption" of section 7 allows for certain part-time employment. To qualify for the "critical need exemption" all of the following requirements must be met:

 

  1. the state employee must be employed on a part-time basis by a facility operated or designed for the care of the mentally ill or mentally retarded persons, public health, correctional facility, or any other facility principally funded by the state which provides similar services and which operates on an uninterrupted and continuous (24 hour) basis;

 

  1. in the state employee's full-time position, he must not participate in, or have official responsibility for the financial management of such facility;

 

  1. the state employee may not be compensated for more than four hours in any day in which he is otherwise compensated by the state;

 

  1. the state employee must be compensated by the facility at a rate which does not exceed that of a state employee classified in step one of job group XX of the general salary schedule contained in G.L. c. 30, § 46 (as of October 1, 1993, $582.42 per week); and

 

  1. the head of the facility must file with the Ethics Commission a written certification that there is a critical need for your services.

 

Receipt of Payments from the Department of Social Services - 930 CMR 6.05


It is not a violation of M.G.L. c. 268A, section 7 for a state employee to have a financial interest in a contract or agreement with the Department of Children and Families to serve as a foster parent, guardian, pre-adoptive or adoptive parent, including but not limited to the receipt of payments directly or indirectly from the Commonwealth of Massachusetts according to prevailing schedules, provided that:

 

  1. the state employee has been approved by the Department of Children and Families to be a foster parent, guardian, pre-adoptive, or adoptive parent; and

  2. the state employee files with the Commission a disclosure doc format of Disclosure of State Employee Interest in a DCF Contract of the financial interest.

"Massachusetts Port Authority Exemption"


Pursuant to this exemption, officers and employees of the Massachusetts Port Authority remain eligible for a residential sound insulation program administered by the Massachusetts Port Authority notwithstanding section 7, provided the officer or employee does not have responsibility for the administration of the program.

 

Exemptions Available for MUNICIPAL Employees Under Section 20


G.L. c. 268A, § 20 prohibits a municipal employee from having a direct or indirect financial interest in a contract made by a municipal agency of the same municipality in which the municipality is an interested party, unless an exemption applies.



Section 20(b) Exemption


Section 20(b) allows municipal employees to have a financial interest in a contract with a different municipal agency, provided that the following conditions are met:

 

  1. The contract must be with a completely independent agency or department. The municipal employee may not in his existing municipal position participate in or have official responsibility for any of the activities of the second agency, and the first agency must not regulate activities of the second agency;

  2. the contract must have been publicly advertised, or where applicable, awarded through public bidding;

  3. the individual files a statement with the clerk of the city or town a statement making full disclosure of his interest and the interest of his immediate family


    And, if the contract is for personal services the following requirements must also be met for a state employee to qualify for an exemption under 20(b):

  4. the contract will be performed outside of the normal working hours of the first position;

  5. the services performed pursuant to the contract are not part of the employee's duties in the first job;

  6. the employee is not compensated pursuant to the contract for more than 500 hours per year; and

  7. the city council, board of selectmen or board of aldermen approve the exemption of his interest from this section.

Sections 20(c) and 20(d) Exemptions for Special Municipal Employees


Special municipal employees may, under section 20(c), have a financial interest in a contract with a municipal agency by which they are not employed and in whose activities they do not participate or have official responsibility for provided that they file with the city or town clerk a full disclosure of their interest in the contract.


Under section 20(d) special municipal employees may have a financial interest in a contract with their own agency or an agency in whose activities they participate and for which they have official responsibility provided they file with the clerk of the city, town or district a statement making full disclosure of their interest and the interests of their immediate family in the contract; and the city council or board of aldermen, if there is no city council, board of selectmen or the district prudential committee, approve the exemption.


For more information about special municipal employee status see G.L. c. 268A, section 1(n) and Summary of the Law: Special Municipal Employees.


"Residential Improvement Exemption" - Section 20(e)


Section 20(e) provides that municipal employees may receive benefits from programs funded by the United States or any other source in connection with the rental, improvement, or rehabilitation of his residence to the extent permitted by the funding agency.


"Part-Time Police, Fire, Rescue or Ambulance Worker Exemption" - Section 20(f)


Section 20(f) provides that municipal employees may receive compensation for personal services they provide in a part-time, call or volunteer capacity with the police, fire, rescue or ambulance department of a fire district, provided that:

 

  1. the municipality has a population of less than 35,000 inhabitants;

  2. the head of the contracting agency makes and files with the clerk of the city, district or town a written certification that no employee of said agency is available to perform such services as part of his regular duties; and

  3. the city council, board of selectmen, board of aldermen or district prudential committee approve the exemption of his interest from this section.

"Housing Subsidy Exemption" - Section 20(g)


Section 20(g) provides that municipal employees are eligible for housing subsidy
programs administered by their local housing authority provided:

 

  1. the employee applied for the housing subsidy in the usual course;

  2. the employee is otherwise eligible for the housing subsidy program; and

  3. the employee is not employed by the local housing authority in a capacity in which he has responsibility for the administration of such subsidy programs.

"Owner of Residential Rental Property Exemption" - Section 20(h)


Section 20(h) provides that a municipal employee may rent residential property to a tenant who receives a rental subsidy administered by the local housing authority, unless the employee is employed by the local housing authority in a capacity in which he has responsibility for the administration of such subsidy programs.

 


"Selectmen's Exemption"


A municipal employee, or an individual who has a financial interest in a municipal contract, may also serve as a member of the Board of Selectmen ("BOS"), provided he complies with the restrictions set forth in the "selectmen's exemption." Under this exemption, a municipal employee who is serving as a member of the BOS and has a second municipal position or a financial interest in a municipal contract may only receive compensation for one office or position in town. The employee may choose the position for which he shall receive compensation. In addition, while serving as a member of the BOS, he may not vote or act on any matter which is within the purview of the agency by which he is employed or over which he has official responsibility. Finally, the BOS member is not eligible for appointment to any additional position while he is still a member of the BOS or for six months thereafter.

 

Multiple Elected Positions - No Exemption Needed


Section 20 does not prohibit elected municipal employees from holding one or more additional elected positions in town, whether those positions are compensated or uncompensated.

 

"City Councilor Exemption"


A municipal employee, or an individual who has a financial interest in a municipal contract, may also serve as an elected City Councilor provided he complies with the restrictions set forth in the "City Councilor exemption." Under this exemption, a municipal employee who is serving as a City Councilor and has a second municipal position or a financial interest in a municipal contract may only receive compensation for one office or position in town. The employee may choose the position for which he shall receive compensation. In addition, while serving as a City Councilor, he may not vote or act on any matter which is within the purview of the agency by which he is employed or over which he has official responsibility. Finally, the City Councilor is not eligible for appointment to any additional position while he is still a City Councilor or for six months thereafter.
 

"Housing Authority Employee Exemption"

An employee of a housing authority in a municipality may hold any elective office, other than the office of Mayor provided he complies with the restrictions set forth in the "Housing Authority Employee Exemption." Under this exemption, a municipal housing authority employee who also holds an elective office (other than Mayor) may only receive compensation for one office or position in town. The employee may choose the position for which he shall receive compensation. In addition, while serving as an elected municipal employee, he may not vote or act on any matter which is within the purview of the housing authority by which he is employed or over which he has official responsibility. Finally, the housing authority employee is not eligible for appointment to any additional position while he is still serving in such elective office or for six months thereafter.


"Small Town Exemption"


Section 20 does not prohibit an employee in a town that has a population of less than 3,500 persons from holding more than one appointed position in the same town, provided that the board of selectmen approves the exemption of his interest from this section.

 

Exemptions Available for COUNTY Employees Under Section 14


G.L. c. 268A, section 14 prohibits a county employee from having a direct or indirect financial interest in a contract made by a state agency in which the county is an interested party, unless an exemption applies.

 

Section 14(b) Exemption


Section 14(b) allows county employees to have a financial interest in a contract with a different county agency, provided that none of the following conditions are met:

 

  1. The contract is with a completely independent agency or department. The county employee may not in his existing county position participate in or have official responsibility for any of the activities of the second agency, and the first agency must not regulate activities of the second agency;

  2. The contract is must have been obtained through competitive bidding; and

  3. The employee's direct and indirect financial interests and those of his immediate family in the corporation or other commercial entity with which the contract is made may not in the aggregate amount to 10% of the total proprietary interests therein.

 

Section 14(c) Exemption for Special County Employees

 

Under this exemption, section 14, does not prohibit a special county employee from having a financial interest in an additional county contract provided:

 

  1. the special county employee does not participate in or have official responsibilities for any of the activities of the contracting agency; and

  2. the special county employee files with the state ethics commission a statement making full disclosure of his interest and the interests of his immediate family in the contract; and

  3. the county commissioners approve the exemption of the special county employee's interest from this section.


See G.L. c. 268A, section 1(m) for further information about the definition of "special county employee."