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NYS Comptroller

THOMAS P. DiNAPOLI

The Academy for New York State's Local Officials

Protecting the Public’s Interest: A Tutorial on Local Government Ethics and Transparency in New York State

Module 1 - Conflict of Interest of Municipal Officers and Employees

Exceptions - Interest Arising From Private Employment

As discussed earlier, a municipal officer or employee is deemed to have an interest in the contracts of a firm, partnership, association or corporation of which he or she is an officer or employee. Similarly, a municipal officer or employee is deemed to have an interest in the contracts of a corporation of which he or she is an officer or employee. These interests are allowed if two criteria are met:

  1. The individual's remuneration (compensation) from the private business is not directly affected by the contract with the municipality, and
  2. The individual's duties as an officer or employee of the private business do not directly involve the procurement, preparation, or performance of the municipal contract.

It should be noted that the exception applies only to interests arising by virtue of a municipal officer or employee being an officer or employee of a private business, firm, corporation, or association. The exception does not apply to interests arising from other circumstances such as a municipal officer or employee's status as a partner, corporate director, or stockholder.

In the video, Mark gave one example as to how this exception might apply. Here's another. Suppose a village contracts with an engineering firm and the village mayor is employed by the firm. As discussed earlier, because the mayor is an employee of the firm, he or she is deemed to have an interest in the firm's contract with the village. That interest would not be prohibited if the mayor's duties with the firm do not directly involve the procurement, preparation, or performance of the village contract and if the mayor's compensation from the firm is not directly affected by the village contract.

There is a statutory exception that applies to contracts with a membership corporation or other voluntary not-for-profit corporation or association, such as contracts with a volunteer fire company.

  Next: Exceptions - Sales of Bonds and Notes