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K&F News Brief: New York City’s Ethics Law May Lead To Early Exits At City Agencies

Changes and quirks in New York City’s “revolving door” rules for public officials may make a mess of things in December if City Commissioners and other agency executives leave their posts early to avoid unanticipated effects of a 2019 referendum on the City’s Charter.

In 2019, an overwhelming majority of the voters who came to the polls supported a change in the City’s ethics laws that was put on the ballot by a Charter Revision Commission. That change will finally take effect, right after New Year’s Day. Yet, as 2021 wanes, some voters may discover that their “Yes” votes in 2019 could lead to some unexpected chaos now.

In January, New York City will have a substantially new government. There will be, among others, a new Mayor, Comptroller, and City Council Speaker. The challenges facing these new leaders will be formidable from their first days in office, as they confront complex changes put in motion by the COVID-19 pandemic.

A smooth transition can reduce some of the bumps that new government administrations often experience at the outset. And transitions can be easier if some public servants who work in one administration remain in their jobs, at least for a brief time, until the new administration is sufficiently staffed and gains its footing.

While some public servants in one administration may want to stay through the start of the next administration, most will weigh that against their other personal interests. If the law makes it particularly costly for public servants to stay, few will hold over to the next administration.

For some of the public servants considering whether to offer their help to the new Mayor, there will be a new factor to consider. Under current law, a City Commissioner or other agency head who leaves City employment is subject to a “revolving door” restriction known as the “one-year ban.” This one-year ban provision says that no “former public servant shall, within a period of one year after termination of such person’s service with the city, appear before the city agency served by such public servant,” and prohibits most communications between the former employee and the agency during that first, post-employment year. But under the change in the law adopted by the voters, this one-year ban will become a two-year ban for City Commissioners and certain other high-ranking City employees who leave City government after January 1, 2022.

The Charter Revision Commission that proposed the change in the law was created by the City Council to review the entire City Charter (in essence, the City’s constitution) and suggest revisions for consideration by voters in the November 2019 election. The 671,927 New York City residents who showed up to cast their votes at the ballot box on November 5, 2019 were presented with “Question 3.” That proposition asked whether voters wanted to change the law to “increase the amount of time after leaving service before elected city officials and senior appointed officials can appear before the city agencies in which they served from one year to two years.” Nearly 78% of the voters responded “Yes,” to Question 3.

The change, which only affects those who leave office after January 1, 2022, will impact a wide net of high-ranking and elected public servants, including Deputy Mayors, City Commissioners and other agency heads, the executive director or highest-ranking employee of any City board or commission, and any paid member of a City board or commission.

The effective date selected by the Charter Revision Commission essentially creates a one-time loophole. A public servant subject to the new law who leaves City employment before January 2, 2022 is still only subject to the old, one-year ban. A public servant subject to the law who misses that departure deadline is stuck with the new two-year restriction.

But there’s another wrinkle that could create problems by December. Many City Commissioners, executive directors, and agency heads, who wish to avoid the two-year ban, may need to leave weeks before the new law’s effective date to avoid another ethics rule that says that a public servant’s “date of termination” of City service is not necessarily the last day that the employee performs City duties. For example, if the City employee has unused leave time, the “date of termination,” is the “last day they received benefits conditioned upon current City employment.” So a Commissioner, director, or agency head with unused vacation time may need to leave early, possibly by early or mid-December, to avoid the two-year ban.

A Commissioner’s early departure at a City agency could create a conundrum for the Deputy Commissioner who is asked to run the agency for the last few weeks of 2021. If the Deputy Commissioner becomes the Acting Commissioner, even for a day, the City’s Conflicts of Interest Board (COIB), charged with enforcing the new law, may well tag the Acting Commissioner with the two-year ban when that employee later leaves City service, even though Deputy Commissioners would otherwise only be subject to the one-year ban. This may discourage public servants from accepting Acting positions in 2021, or prompt some deputies to leave City service early.

All of this could present difficulties for Mayor Bill de Blasio in December. If high-ranking officials in the de Blasio Administration perceive that the rule change will burden their private-sector career plans, early resignations and scrambles may ensue, just as the Administration is attempting to complete its work. And early exits may make it harder for programs and projects to be handed-off to the new Administration.

Hiccups are inevitable in the shuffle that comes with any change of administration. The extent to which the change in law, ushered in by “Question 3,” will compound the normal confusion, as the City transitions from one administration to the next, may depend on how many government officials take advantage of the one-time loophole. However, even if just a few agency leaders leave earlier than expected, New Yorkers may feel some extra bumps in the road.

Claude M. Millman is a partner at Kostelanetz & Fink, LLP, who represents New York City and State contractors and subcontractors, including nonprofit organizations, and advises clients on government procurement and contracting and government ethics issues. He was formerly director of the Mayor’s Office of Contracts Services. In 1999, he was Executive Director of a Charter Revision Commission. He was also a 2001 Charter Revision Commissioner. For the past two years, he has been listed in City & State’s Law Power 100. Michelle Dubovitsky is Kostelanetz & Fink, LLP, pre-law paralegal who graduated summa cum laude from the School of Foreign Service at Georgetown University.