Introduction

Recently, newspapers across the state have been filled with stories detailing possible ethical violations that have resulted from individual and corporate entertainment of public officials and employees. Both the public employees and the individuals or corporations that entertained them have been placed in an uncomfortable spotlight. As a result, many corporations that entertain public officials are taking a closer look at their ethics policies.

It’s important to note that Ohio laws have not changed. It is still illegal for a public employee to accept a gift of “substantial value” from any person or company doing business with or seeking to do business with the public employee’s office. Additionally, it is still illegal for a company that is regulated by or seeking to do business with the public employee’s agency to give a gift of substantial value to the employee. Even relatively simple things like lunch, a golf outing or a holiday fruit basket can be problematic.

Many companies are now reviewing their efforts to ensure that all interactions with public employees comply with Ohio ethics laws. If you have not examined your company’s ethics policies lately, this is an ideal time to do so.

Ohio Ethics Laws

There are a number of Ohio laws that regulate the conduct of state and local officials and employees. As noted, Ohio’s ethics laws governing the conduct of public officials and employees, apply to all state and local officials and employees. Corporate clients should pay close attention to section 102.03(F) of the Ohio Revised Code, which provides:

No person shall promise or give to a public official or employee anything of value that is of such character as to manifest a substantial and improper influence upon the public official or employee with respect to that person’s duties.

In order to determine whether or not this statute has been violated, the Ohio Ethics Commission uses the following test:

1. Is the source of the gift improper?

2. Is the gift of substantial value?

If the answer to both questions is “yes,” then this statute has been violated and criminal sanctions (up to a $1,000 fine and six months in jail) could be imposed upon the violator.

A. Improper Source

If you (or your corporation) is: (1) regulated by; (2) doing business with; (3) seeking to do business with; or (4) interested in matters before the public entity which the recipient of the gift serves, you may be an “improper source.” A corporation that has a public contract or is seeking to do business with a public agency is an improper source to the employees or officials of that public agency. Likewise, a business that is regulated or licensed by the public official’s agency is also an improper source. There is no exception for a long-standing friend or neighbor. So if you are regulated by, doing business with or interested in matters before the agency, you can be an improper source regardless of how long you and the public official have been personal friends.

B. Substantial Value

There is no clear test for determining whether a gift from you is of “substantial value.” What constitutes “substantial value” is an issue that the Ohio Ethics Commission has repeatedly reviewed and tends to be very fact driven. In general, a modest lunch, a coffee mug, or a small gift is probably not “substantial.” But a dinner at an upscale restaurant, tickets to a professional sporting event, lodging, or a golf outing have all been deemed to be “substantial” and are illegal if given by an improper source. Because the value of gifts is aggregated over the course of a calendar year, a series of modest lunches may be deemed to be of “substantial value.” When determining whether a gift is of “substantial value,” it is also important to remember that a ticket to a political fundraiser or a ticket to a non-political fundraiser (such as a charity event sponsored by a nonprofit organization) is a gift. The value of the gift is the face value of the ticket.

Practical Application

Entertaining clients and prospective clients is a valuable and commonplace practice in the private sector. However, because of the laws outlined here, the safest policy is simply to make sure that your public sector clients and friends pay their own entertainment expenses. A “pay your own way” policy may also be best because: (1) there are so many nuances and exceptions to the general rule and (2) a determination by the Ohio Ethics Commission as to whether a violation has occurred is very dependent on the specific facts.

There will be times when you must interact with public employees and buying a modest gift or providing a reasonable amount of food or beverage may be perfectly legal. However, if you are doing business with or are interested in matters before the public agency that employs your guest, be aware that any substantial expenditure could trigger these ethical considerations and could have serious consequences. You must also remember that if you are a registered lobbyist, or your corporation employs a lobbyist, there are additional regulations and reporting requirements that must be considered. (Those regulations and reporting requirements are the subject of a separate article: Are You a Legislative Agent or an Executive Agency Lobbyist?)

Conclusion

Ohio law prohibits any individual or corporation that is doing business with, seeking to do business with, interested in matters before, or regulated by a public agency from giving anything of value to an elected official or employees servicing that public agency. The safest policy is to simply make sure the public official pays his or her own way. While it may be uncomfortable or embarrassing to suggest that your public sector client or prospective client pay his or her own way, most public employees understand and appreciate the reasons for the suggestion. The alternative could be public embarrassment, investigation or criminal conviction.

If you have any questions about the ethical considerations addressed in this article or would like some assistance in informing your employees about these matters, please contact one of the attorneys in the Bricker & Eckler government relations group. If you have specific questions related to the Ohio Ethics Commission, visit the Ohio Ethics Commission website. In addition, if you believe that some ethical violation has occurred, consult legal counsel immediately.