CEO 78-93 -- December 21, 1978
CONFLICT OF INTEREST
CITY POLICE OFFICERS OWNERS OF PAWN OUTLET LOCATED IN CITY
To: John C. Nelson, Undersheriff, Jacksonville
Prepared by: Phil Claypool
Section 112.313(7)(a), F. S. 1977, prohibits a public officer or employee from holding any employment or contractual relationship with a business entity subject to the regulation of his public agency. In CEO 78-10 it was advised that when a business is in the form of a proprietorship, the proprietor of the business is not considered to be "employed" by that proprietorship. Accordingly, no prohibited conflict was deemed to exist where city police officers owned a pawn outlet subject to the regulation of their law enforcement agency. However, upon further examination of the term "employment" and of the provisions of the Code of Ethics, it is concluded that the word should be construed in its broader sense as the business in which one is engaged, which would encompass the relationship of a proprietor to his proprietorship. Therefore, CEO 78-10 is revoked, and a prohibited conflict of interest is found to exist where police officers own a pawn outlet subject to the regulation of their agency. To the extent that it is inconsistent with this opinion, Question 1 of CEO 77-68 also is amended hereby.
Does a prohibited conflict of interest exist where a police officer owns and operates a pawn shop that is regulated by his law enforcement agency?
Your question is answered in the affirmative.
In a previous advisory opinion concerning the same situation which you reference in your letter of inquiry, CEO 78-10, we advised that the ownership, in the form of a proprietorship, of a pawn outlet by a police officer did not constitute a violation of s. 112.313(7)(a), F. S. 1977, despite the fact that pawn outlets are regulated by the officer's agency. Section 112.313(7)(a) provides in relevant part:
CONFLICTING EMPLOYMENT OR CONTRACTUAL RELATIONSHIP. -- No public officer or employee of an agency shall have or hold any employment or contractual relationship with any business entity or any agency which is subject to the regulation of, or is doing business with, an agency of which he is an officer or employee . . . nor shall an officer or employee of an agency have or hold any employment or contractual relationship that will create a continuing or frequently recurring conflict between his private interests and the performance of his public duties or that would impede the full and faithful discharge of his public duties.
One of the elements of a violation of this provision is an employment or contractual relationship. We advised that when a business is in the form of a proprietorship, the proprietor of the business is not considered to be "employed" by the proprietorship. The basis of our opinion was that the "employment" relationship, or "master and servant" relationship, as it formerly was described, is a
relationship that exists when one person who employs another to do certain work exercises control over the performance of the work to the extent of prescribing the manner in which it is to be executed. (Emphasis supplied.) [21 Fla. Jur. Master and Servant s. 2.]
Therefore, we felt that regardless of how much work a proprietor might put into his business, and regardless of how he might pay himself, legally he cannot be considered to have employed himself. Under the law, a proprietorship, unlike a corporation, generally is not an independent legal entity separate from the proprietor with the power to enter into contracts. See 8 Fla. Jur.2d Business Relationships ss. 10, 424 and 450.
However, upon further examination of the term "employment" and of the provisions of the Code of Ethics for Public Officers and Employees, we conclude that the term should be construed in its broader sense as the business in which one is engaged, which would encompass the relationship of a proprietor to his proprietorship.
The term "employment" is not defined within the Code of Ethics. Dictionary definitions recognize a broader meaning of the word in addition to the narrower sense to which we referred in CEO 78-10. For example, Webster's Seventh New Collegiate Dictionary (1971) defines "employment" as "activity in which one engages or is employed." The Random House College Dictionary (1975) defines the term as "an occupation by which a person earns a living; work; business" and as "an activity that occupies a person's time." Legal definitions also have included this broader sense of the word:
It does not necessarily import an engagement or rendering services for another. A person may as well be "employed" about his own business as in the transaction of the same for a principal. [State v. Canton, 43 Mo.51.]
Act of employing or state of being employed; that which engages or occupies; that which consumes time or attention; also an occupation, profession, trade, post or business. Hinton v. Columbia River Packers' Association, C.C.A. Or., 117 F.2d 310; Davis v. Lincoln County, 117 Neb. 148, 219 N.W. 899, 900. Black's Law Dictionary (4th Rev. Ed. 1968).
The expressed legislative intent behind the Code of Ethics indicates that a broader reading of "employment" is proper. Section 112.311(5), F. S. 1977, provides:
It is hereby declared to be the policy of the state that no officer or employee of a state agency or of a county, city, or other political subdivision of the state, and no member of the Legislature or legislative employee, shall have any interest, financial or otherwise, direct or indirect; engage in any business transaction or professional activity; or incur any obligation of any nature which is in substantial conflict with the proper discharge of his duties in the public interest. To implement this policy and strengthen the faith and confidence of the people of the state in their government, there is enacted a code of ethics setting forth standards of conduct required of state, county, and city officers and employees, and of officers and employees of other political subdivisions of the state, in the performance of their official duties. It is the intent of the Legislature that this code shall serve not only as a guide for the official conduct of public servants in this state, but also as a basis for discipline of those who violate the provisions of this part. (Emphasis supplied.)
From this, it can be seen that the Legislature intended to prohibit certain conflicting financial interests, business transactions, and professional activities rather than precluding merely those situations in which a public officer or employee is hired by another to do certain work which conflicts with the performance of his public responsibilities. See also s. 112.316, which speaks in terms of "accepting employment" and "following any pursuit."
As to the argument that a proprietorship is not a legal entity independent of its proprietor, it appears that the Code of Ethics does make such a distinction for its limited purposes. A "business entity" is defined to include "any corporation, partnership . . . proprietorship, firm, enterprise . . . [or] self-employed individual . . . doing business in this state." Section 112.312(3), F. S. 1977. The distinction which the Code of Ethics makes between a proprietor and his proprietorship is clear in s. 112.313(3), which prohibits a public officer who is acting in his official capacity from purchasing goods for his agency from a business entity in which he has a material interest (ownership of more than 5 percent of the total assets or capital stock of the business entity).
Reading "employment" in its broader sense, then, s. 112.313(7)(a) would prohibit a proprietor's employment with a business entity (his proprietorship) which is subject to the regulation of his public agency. To interpret "employment" in its narrowest sense would lead to the conclusion that a prohibited conflict of interest would exist under certain circumstances where one is an employee of a particular business but not where he is the owner/proprietor. Such a conclusion is unreasonable and is not warranted by the legislative intent of the Code of Ethics.
Accordingly, we find that a prohibited conflict of interest does exist where a police officer owns and operates a pawn shop that is regulated by his law enforcement agency, and CEO 78-10 is hereby revoked. Section 112.322(3)(b), F. S. 1977. Also, to the extent that it is inconsistent with this opinion, question 1 of CEO 77-68 is hereby amended.