The author thanks the assistance of Matthew Hoke in writing this post. Matt was a law clerk with McNees in 2020, and is expected to graduate from the University of Virginia law school in May of 2021.
The Pennsylvania Public Official and Employee Ethics Act (Act) has been in effect since 1979 and must be carefully followed by state and local officials and employees. The Act is enforced by the State Ethics Commission (Commission), which is comprised of seven appointed commissioners assisted by a staff of investigators and prosecutors.
Among other things, the Act prohibits public officials and employees from engaging in conduct that constitutes a conflict of interest. Section 1102 of the Act defines “conflict of interest” as:
Use by a public official or public employee of the authority of his office or employment or any confidential information received through his holding public office or employment for the private pecuniary benefit of himself, a member of his immediate family or a business with which he or a member of his immediate family is associated.
Public officials and employees who violate the Act may face administrative penalties, fines, and criminal prosecution. Under Section 1107(13) of the Act, the Commission is authorized to order violators to pay restitution plus interest. However, in its recent opinion in Sivick v. State Ethics Commission, the Pennsylvania Supreme Court significantly curtailed the Commission’s ability to impose restitution.
From 2004 to 2017, John Sivick was Chairman of the Board of Supervisors for Lehman Township, Pike County. During this time, Sivick also served as Roadmaster and Public Works Director and was responsible for hiring the Township’s employees. In 2009, a fellow supervisor decided to update the Township’s employee handbook to include a nepotism policy. Sivick voted for this policy change. But in 2012, he told his fellow supervisors that he wanted the Township to hire his son. After Sivick’s lobbying, the other two supervisors agreed to remove the nepotism policy. Sivick’s son was then hired by the Township in the position of Public Works Maintenance.
Sivick’s conduct was reported to the Commission. The Commission determined that Sivick had engaged in a conflict of interest by “using the authority of his public positions for the private pecuniary benefit of his son.” Specifically, the Commission found that Sivick illegally used his authority:
 when he participated in discussions and actions of the Board to eliminate the Township’s Nepotism Policy with the intent and for the purpose of having Son hired as a Township road crew employee;  when he discussed, recommended, lobbied, influenced, or sought the support of the Board to effectuate the hiring of Son as a Township employee; and  when he verified Township records enabling and/or otherwise directing the payment of salary/wage to Son from public monies.
The Commission ordered Sivick to pay $30,000 in restitution. Sivick appealed to the Commonwealth Court, which affirmed the Commission’s adjudication. Sivick then appealed to the Pennsylvania Supreme Court, which granted allowance of appeal on two issues:
- First, did the Commission err in finding that Sivick committed a conflict of interest by approving and verifying his son’s payroll records?
- Second, did the Commission have the authority to impose restitution on Sivick?
On the first issue, the Court held that the Commission had improperly found a conflict of interest. A public officer or employee performing an administrative or ministerial act that entails little or no discretion but “that benefits a subclass that includes an immediate family member does not, without more, constitute a conflict of interest violation.” Sivick verified the hours and approved the compensation for all Public Works employees, not just for his son. Under the subclass exception, the Supreme Court found there was no conflict of interest.
On the second issue, the Court found that the Commission did not have the authority under the Act to require Sivick to pay restitution. Specifically, the Court concluded that the plain language of the Act does not allow the Commission to impose restitution on a violator for an alleged monetary benefit that flows to an immediate family member. The Commission can only impose restitution on a public official or public employee who personally benefitted from violating the statute.
The Supreme Court admitted that this interpretation creates a risk of inconsistent application: a public employee or official can be required to pay restitution for illegally obtained personal financial gain but not for financial gain illegally obtained for his immediate relatives. The Court maintained that it was not its job to re-write the words of the Act. The General Assembly decided to not apply the restitution provision to close relatives. And, importantly for the Court, the General Assembly may have rationally concluded that restitution was not warranted when a family member reaps the financial benefit of the conflict of interest. In any case, the Court observed that “the Commission has other arrows in its quiver for sanctioning and deterring Conflicts of Interest.”
Finally, while the Court found that Sivick did not violate the Act when he verified the hours and approved the compensation for his son, it did not address the other actions that the Commission found to be a conflict of interest. The Supreme Court remanded the case to the Commission to determine the appropriate sanction and whether a new adjudication was warranted.
For public employees and officials, Sivick confirms that completing an administrative act for a subclass that includes a close relative who benefits from that act does not constitute a conflict of interest. More importantly, however, the Commission cannot require a public official or employee to pay restitution where the alleged financial benefit accrues to a close relative and not the public official himself. Of course, as the Court remarked, the Commission still has several other “arrows in its quiver” to sanction and deter conflicts of interest, so compliance remains top of mind.