or earned income shall be determined by subtracting the actual and necessary expenses incurred by the employee from any payment received for the activity; (7) An honorarium paid to a charitable organization pursuant to § 2636.204 of this part; or (8) Compensation for: (i) Services rendered prior to January 1, 1991, or prior to becoming a covered noncareer employee; (ii) Services rendered in satisfaction of a covered noncareer employee's obligation under a contract entered into prior to January 1, 1991; or (iii) Services which the covered noncareer employee first undertook to provide prior to January 1, 1991, where the standards of the applicable profession require the employee to complete the case or other undertaking. Example 1. A covered noncareer employee is a limited partner in a partnership that invests in commercial real estate. Because he does not take an active role in the management of the partnership, his share of the partnership income is neither "outside earned income" nor "compensation." Example 2. A covered noncareer employee of the Civil Rights Commission serves without compensation as a member of the Board of Visitors for a university. The roundtrip airfare and hotel expenses paid by the university to permit him to attend quarterly meetings of the Board are neither "outside earned income" or "compensation." Example 3. Where a covered noncareer employee pays for transcripts of a hearing in which he is providing pro bono legal representation, reimbursements for those expenses by a legal aid organization are neither "outside earned income" nor "compensation." Example 4. During the term of his appointment, a Deputy Assistant Secretary of Labor enters into a contract to write a book of fictional short stories. Royalties based on actual sales of the book after publication are investment income attributable to the property interest he retains in the book and, as such, are neither "outside earned income" nor "compensation." (c) Receive means that the employee has the right to exercise dominion and control over the compensation or outside earned income and direct its subsequent use. Compensation or outside earned income is received by an employee if it is for his conduct and: (1) If it is paid to any other person on the basis of designation, recommenda tion or other specification by the employee; or (2) If, with the employee's knowledge and acquiescence, it is paid to his parent, sibling, spouse, child or dependent relative. Compensation that is prohibited by §2636.305 through §2636.307 of this subpart is received while an individual is an employee if it is for conduct by him that occurs while an employee, even though actual payment may be deferred until after Federal employment has terminated. Payments made to charitable organizations in lieu of honoraria under §2636.204 of this part are not compensation or outside earned income and thus are not received in violation of any of the limitations contained in his subpart. However, other compensation or outside earned income donated to a charitable organization is received by the employee. § 2636.304 The 15 percent limitation on outside earned income. (a) Limitation applicable to individuals who are covered noncareer employees on January 1 of any calendar year. A covered noncareer employee may not, in any calendar year, receive outside earned income attributable to that calendar year which exceeds 15 percent of the annual rate of basic pay for level II of the Executive Schedule under 5 U.S.C. 5313, as in effect on January 1 of such calendar year. The effective date of a change in the rate for level II of the Executive Schedule shall be the date on which a new rate of basic pay for level II first becomes applicable to any level II position. NOTE: Notwithstanding the 15 percent limitation described in this section, a covered noncareer employee who is a Presidential appointee to a full-time noncareer position is prohibited by section 102 of Executive Order 12674, as amended, from receiving any outside earned income for outside employment or any other activity performed during that Presidential appointment. Example 1. Notwithstanding that the compensation he will receive would not exceed 15 percent of the rate for level II of the Executive Schedule, a covered noncareer employee of the Department of Energy may not receive any compensation for teaching a university course unless he first receives the authorization required by § 2636.307 of this subpart. (b) Limitation applicable to individuals who become covered noncareer employees after January 1 of any calendar year. The outside earned income limitation that applies to an individual who becomes a covered noncareer employee during a calendar year shall be determined on a pro rata basis. His outside earned income while so employed in that calendar year shall not exceed 15 percent of the annual rate of basic pay for level II of the Executive Schedule in effect on January 1 of the calendar year divided by 365 and multiplied by the number of days during that calendar year that he holds the covered noncareer position. Example 1. A former college professor received an appointment to a noncareer Senior Executive Service position on November 1, 1991. The rate of basic pay in effect for Executive Level II on January 1, 1991 was $125,100. For the 61 day period from November 1, 1991 through December 31, 1991, the amount of outside income he may earn is limited to $3,129. That amount is determined as follows: Step 1. The rate of basic pay for Executive Level II as in effect on January 1 of that year ($125,100) is divided by 365. That quotient is $342; Step 2. The dollar amount determined by Step 1 ($342) is then multiplied by the 61 days the employee held the covered noncareer position. That product is $20,862; Step 3. The dollar amount determined by Step 2 ($20,862) is multiplied by .15 or 15 percent. The product ($3,129) is the maximum outside earned income the employee may have in the particular year attributable to the period of his service in a covered noncareer position. (c) Computation principle. For purposes of any computation required by this section, any amount of $.50 or more shall be rounded up to the next full dollar and any amount less than $.50 shall be rounded down to the next full dollar. (d) Year to which outside earned income is attributable. Regardless of when it is paid, outside earned income is attributable to the calendar year in which the services for which it is paid were provided. § 2636.305 Compensation and other restrictions relating to professions involving a fiduciary relationship. (a) Applicable restrictions. A covered noncareer employee shall not: (1) Receive compensation for: (i) Practicing a profession which involves a fiduciary relationship; or (ii) Affiliating with or being employed to perform professional duties by a firm, partnership, association, corporation, or other entity which provides professional services involving a fiduciary relationship; or (2) Permit his name to be used by any firm, partnership, association, corporation, or other entity which provides professional services involving a fiduciary relationship. Example 1. A covered noncareer employee of the White House Office who is an attorney may not receive compensation for drafting a will for her friend. She may, however, participate in her bar association's pro bono program by providing free legal services for the elderly, provided her participation in the program is otherwise proper. For example, 18 U.S.C. 205 would prohibit her from representing her pro bono client in a hearing before the Social Security Administration. Example 2. An accountant named C.B. Debit who is offered a covered noncareer appointment must terminate his partnership in the accounting firm of Delight, Waterhose and Debit upon appointment. Because his deceased father, J.R. Debit, was the founding partner for whom the firm is named, the name Debit need not be deleted from the firm's name. However, the name C.B. Debit may not appear on the firm's letterhead after the individual enters on duty as a covered noncareer employee. (b) Definitions. For purposes of this section: (1) Profession means a calling requiring specalized knowledge and often long and intensive preparation including instruction in skills and methods as well as in the scientific, historical or scholarly principles underlying such skills and methods. It is characteristic of a profession that those in the profession, through force of organization or concerted opinion, establish and maintain high standards of achievement and conduct, and commit its practitioners to continued study of the field. Consulting and advising with respect to subject matter that is generally regarded as the province of practitioners of a profession shall be considered a profession. (2) Profession which involves a fiduciary relationship means a profession in which the nature of the services provided causes the recipient of those services to place a substantial degree of trust and confidence in the integrity, fidelity and specialized knowledge of the practitioner. Such professions are not limited to those whose practitioners are legally defined as fiduciaries and include practitioners in such areas as law, insurance, medicine, architecture, financial services and accounting. A covered noncareer employee who is uncertain whether a particular field of endeavor is a profession which involves a fiduciary relationship may request an advisory opinion under § 2636.103. Example 1. In view of the standards of the profession which require a licensed real estate broker to act in the best interests of his clients, the selling of real estate by a licensed broker involves the practice of a profession involving a fiduciary relationship. Example 2. A covered noncareer employee may receive the customary fee for serving as the executor of his mother's estate, provided he does not violate the applicable limitation on the amount of outside earned income he may receive. Although the executor of an estate has fiduciary obligations, serving as an executor in these circumstances does not involve the practice of a profession and, therefore, is not prohibited. He could not, however, serve for compensation as attorney for the estate. [56 FR 1723, Jan. 17, 1991, as amended at 58 FR 69176, Dec. 30, 1993] 2636.306 Compensation restriction applicable to service as an officer or member of a board. (a) Applicable restriction. A covered noncareer employee shall not receive compensation for serving as an officer or member of the board of any association, corporation or other entity. Nothing in this section prohibits uncompensated service with any entity. (b) Definition. For purposes of this section, the phrase "association, corporation or other entity" is not limited to for-profit entities, but includes nonprofit entities, such as charitable organizations and professional associations, as well as any unit of state or local government. Example 1. A covered noncareer employee of the Environmental Protection Agency may not serve with compensation on the board of directors of his sister's closely-held computer software corporation. Example 2. A covered noncareer employee of the Department of the Navy may serve without compensation as an officer of a charitable organization that operates a hospice. Example 3. A covered noncareer employee of the Coast Guard appointed to serve as a member of the board of education of the county in which she is a resident may not receive compensation for that service. § 2636.307 Requirement for advance authorization to engage in teaching for compensation. (a) Authorization requirement. A covered noncareer employee may receive compensation for teaching only when specifically authorized in advance by the designated agency ethics official. (b) Definition. For purposes of this section "teaching" means any activity that involves oral presentation or personal interaction, the primary function of which is to instruct or otherwise impart knowledge or skill. It is not limited to teaching that occurs in a formal setting, such as a classroom, but extends to instruction on an individual basis or in an informal setting. (c) Request for authorization. An employee may request authorization to engage in compensated teaching activities by forwarding a written request to the designated agency ethics official. The request shall describe the employee's official duties, the subject matter of the teaching activity, the entity sponsoring the course, and the student, class or audience to be taught. In addition, it shall set forth the terms of the compensation arrangement and identify the source of the payment. The request shall be accompanied by any contract or employment agreement and any literature describing, publicizing or otherwise promoting the class, classes or course. (d) Standard for authorization. Compensated teaching may be approved by the designated agency ethics official only when: (1) The teaching will not interfere with the performance of the employee's official duties or give rise to an appearance that the teaching opportunity was extended to the employee principally because of his official position; (2) The employee's receipt of compensation does not violate any of the limitations and prohibitions on honoraria, compensation or outside earned income contained in this part; and (3) Neither the teaching activity nor the employee's receipt of compensation therefor will violate applicable standards of conduct or any statute or regulation related to conflicts of interests. (e) Determination and authorization. The determination by the designated agency ethics official to grant or deny authorization to engage in teaching for compensation shall be in writing and shall be final. The authority of the designated agency ethics official to authorize compensated teaching may not be delegated to any person other than the alternate designated agency ethics official described in § 2638.202(b). Subpart B-Substantive Provisions 2637.201 Restrictions on any former Government employee's acting as representative as to a particular matter in which the employee personally and substantially participated. 2637.202 Two-year restriction on any former Government employee's acting as representative as to a particular matter for which the employee had official responsibility. 2637.203 Two-year restriction on a former senior employee's assisting in representing as to a matter in which the employee participated personally and substantially. 2637.204 One-year restriction on a former senior employee's transactions with former agency on a particular matter, regardless of prior involvement. 2637.205 Limitation of restrictions of 18 U.S.C. 207(c) to less than that whole of a department or agency. 2637.206 Exemption for scientific and technological information. 2637.207 Exemption for persons with special qualification in a technical discipline. 2637.208 Testimony and statements under oath or subject to penalty of perjury. 2637.209 Partners of present or former Government employees. 2637.210 Officials of a State; officials of corporations created by an Act of Congress and public international organizations. 2637.211 Standards and procedures for designating senior employee positions pursuant to 18 U.S.C. 207(d). 2637.212 Administrative enforcement pro ceedings. 2637.213 Effective date of restrictions. 2637.214 Separate statutory agencies: Des ignations. 2637.215 Separate components of agencies or bureaus: Designations. 2637.216 "Senior Employee" designations. AUTHORITY: 5 U.S.C. App. (Ethics in Government Act of 1978); 18 U.S.C. 207 (1988). SOURCE: 45 FR 7406, Feb. 1, 1980; 45 FR 9253, Feb. 12, 1980, unless otherwise noted. Redesignated at 54 FR 50231, Dec. 5, 1989. NOTE: The post-employment conflict of interest restrictions of 18 U.S.C. 207 were substantially revised effective January 1, 1991, by the Ethics Reform Act of 1989, Pub. L. 101-194, 103 Stat. 1716, with technical amendments enacted by Pub. L. 101-280, 104 Stat. 149 (1990). The Office of Government Ethics has published substantive guidance for the executive branch concerning the amended version of 18 U.S.C. 207 in part 2641 of this subchapter. This part 2637 will continue to provide guidance concerning the previous version of section 207, which will continue to apply to individuals terminating Government service prior to January 1, 1991. EDITORIAL NOTE: The following index of paragraphs is provided for the convenience of the reader: Sec. Subpart A-General Provisions 2637.101 Purpose and policy. (a) Authority. (b) Consultation with the Attorney General. (c) Policy and limitations. 2637.102 Definitions. (a) Statutory definitions. Subpart B-Substantive Provisions 2637.201 Restrictions on any former government employee's acting as representative as to a particular matter in which the employee personally and substantially participated. (a) 18 U.S.C. 207(a). (b) Representation. (1) Attorneys and agents. (2) Others. (3) Appearances; communications made with intent to influence. (4) Government visits to other premises. (5) Elements of "influence" and potential controversy required. (6) Assistance. (7) Project responses not included. (c) "Particular matter involving a specific party or parties". (1) Specific matters vs. policy matters. (2) Technical matters. (3) Relationship of personal participation to specificity. (4) The same particular matter must be involved. (5) United States must be a party or have an interest. (d) "Participate personally and substantially". (1) Basic requirements. (2) Participation on ancillary matters. (3) Role of official responsibility in determining substantial participation. (e) Agency responsibility in complex cases. 2637.202 Two-year restriction on any former government employee's acting as representative as to a particular matter for which the employee had official responsibility. (a) 18 U.S.C. 207(b)(1). (b) Official responsibility. (1) Definition. (a) Applicability. (b) When appropriate. (c) Certification authority. (d) Agency registry. 2637.208 Testimony and statements under oath or subject to penalty of perjury. (a) Statutory basis. (b) Applicability. (c) Statements under penalty of perjury. 2637.209 Partners of present or former govern ment employees. (a) Scope. (b) Imputation. 2637.210 Officials of a state; officials of corporations created by an act of Congress and public international organizations. 2637.211 Senior employee designations. (a) Definitions. (b) Designation procedures. (1) Positions at GS-17 and 18 level, SES and pay grades 0-7 and 0-8. (2) Standards for designation and exemption. (3) Senior Executive Service. (4) "Rate of pay". (c) Differential designation. (d) Fair notice of designation. (e) "Acting" or temporary positions. (h) Computation of time. (i) Position Shifting. (j) Revocation of designations. 2637.212 Administrative enforcement proceed 174-006 0-97--18 |