Finding a new job just got more complicated for federal employees

Finding a new job just got more complicated for federal employees
© Greg Nash

The Obama administration has quietly imposed stricter ethics rules on federal employees seeking jobs in the private sector, with the changes made just months before President Obama leaves office.

The Office of Government Ethics (OGE) recently updated standards on the conflicts of interest that can arise when government officials are job hunting.

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While regulations already required top officials to recuse themselves from government activities that might affect a future employer, the new rules go further, triggering recusals much earlier in the process.

Experts say the rule gives the government’s roughly 3 million employees less wiggle room.

“The upshot is, executive branch employees should assume that they’re going to have to recuse themselves very early in the process of being considered by a particular company,” said Rob Kelner, the chair of Covington & Burling’s election and political law practice. “That’s just going to become the norm.”

Obama has 113 days left in the White House, and agencies are still working to finish rules that will be part of his legacy in office. Some say the changes to the recusal rules could be an attempt to prevent a rush to the exits.

“The effect is two-pronged: to hold on to folks, and make sure there is continuity of government, and an overall extension of the attempt to gum up the revolving door even further,” said Julian Ha, the practice leader of executive search firm Heidrick & Struggles’s government affairs and trade association teams.

“Once you’re negotiating with a specific employer for a future job, you start behaving differently toward that employer,” said Craig Holman, a government affairs lobbyist at Public Citizen. “This sort of conflict of interest rule nips that in the bud right away.”

The rule is the most significant update to the OGE standards since 1993. The standards primarily cover top officials who are at the highest levels of decision-making within agencies or offices, designated on the government pay scale at GS-15 or higher. Many federal agencies also have their own ethics rules that go beyond the ones issued by the OGE.

Previously, federal employees could have informational meetings with corporations, firms or other prospective employers as long as they were not considered to be in serious negotiations over specifics like salary. 

Under the new rules, however, responding to a job inquiry with anything other than something like “no” or “I’m not interested at this time” means that the person is officially considered to be “seeking employment” — which triggers more requirements, including compelling the person to recuse themselves from working on matters that could have a “direct and predictable effect” on their potential future employer.

“My advice to folks who are looking to hire these people is, just be cognizant of the fact that they still have work to do in a lot of cases and would like not to recuse,” said Ivan Adler, a principal at the McCormick Group. “Don’t be offended if they say they aren’t interested.”

“In this particular administration, there seems to be more rulemaking going on later than in past administrations,” Adler said. “Therefore, it’s likely there are more people postponing their discussions that would force recusals with possible employers.”

Headhunters like Adler and Ha are also under stricter rules with the new OGE regulations.

A government official simply knowing that a private-sector entity is interested in them can activate restrictions.

If a government official hires an executive search firm or a resume distribution service, for example, and then learns that a company is interested, that will trigger a recusal. The official has to recuse even if he or she has not personally spoken with the interested entity.

Similarly, having a LinkedIn account alone does not designate someone in government as “seeking employment,” but responding to offers to meet or knowing that a company is interested in a person is enough to set off the rule’s requirements.

The rules were first proposed in February and finalized in July, after receiving no comment letters from outside the agency. They went into effect Aug. 25.

“It’s not unusual with campaign finance, government ethics or lobbying regulations for there not to be any comments,” Kelner, the political lawyer that specializes in lobbying regulation and government ethics. “It’s a problem. People are afraid to raise their hand and comment on government ethics regulations, so the agency has no input from the regulated community.”

He said that he counsels companies every year who only realize there are restrictions in place after they have already hired a former government official. 

“You’d be amazed at the number of companies that hire people from the Hill or the administration who don’t even think about the revolving door requirements,” Kelner said. “Most of the burden is placed on the employee, but the consequences are shared equally between the company and the employee.”

Even people who are familiar with ethics regulations can get tripped up, he added.

“Post-employment rules are very complex,” he said. “There are gray areas.”

The head of one Washington lobby shop had received a notification about the updated rules and said they could chill overtures from the private sector and stifle people from getting hired.

The rule is “guiding our concern about how we interact with people,” the person said, who requested anonymity in order to speak freely.

“We had people in an agency that we heard through the buzz that, ‘Oh, these people would be really good,’ ” he said. “We don’t want to contact them because we didn’t want to inadvertently trigger a recusal of issues we didn’t even know they were involved in.”

“It creates a different atmosphere,” he said. “It creates a little bit of a chilling atmosphere overall.”