New York State
Ethics Commission


Advisory Opinion No. 95-34: Applicability of Public Officers Law §§73, 73-a and 74 to certain workers at the Jacob K. Javits Convention Center.

INTRODUCTION

The following advisory opinion is issued in response to a request from Elizabeth Bradford ("Bradford"), General Counsel to the New York Convention Center Operating Corporation ("NYCCOC"), which operates the Jacob K. Javits Convention Center ("Javits Center"). She asks whether certain workers performing services at the Javits Center pursuant to the Center's arrangement with contractors are State employees subject to the provisions of Public Officers Law §73; and, if they are, whether, when not in their State employment, they can work for contractors who do business at the Center.

Pursuant to its authority under Executive Law §94(15), the New York State Ethics Commission ("Commission") hereby renders its opinion that the workers are State employees for purposes of Public Officers Law §73 because NYCCOC exercises sufficient control over the performance of their duties and, on balance, indicia of State employment are predominant. Consequently, subdivisions (4) and (8) of Public Officers Law §73 apply to them; and, pursuant to these subdivisions, they may not work for the contractors inside the Javits Center other than as employees of the Center while on the Center payroll and for a period of two years after they leave the payroll. They may work for the contractors on projects outside of the Center.

BACKGROUND

NYCCOC is a public benefit corporation created by Public Authorities Law §2560 for the purpose of operating and maintaining the Javits Center in New York City. To answer the questions presented, an understanding is necessary of how events at the Javits Center are organized.

NYCCOC's role is to enter into license agreements with entities known as show managers, entitling them to utilize space at the Center for trade shows and other events. In the course of preparing for these events, the show managers typically retain the services of general contractors, sometimes referred to as "decorating contractors," whose services are made available to exhibitors. The general contractors erect and dismantle displays, exhibits, booths and background. They also lay rugs, and unload and move freight, furniture and equipment. Sometimes, the exhibitors themselves may directly retain the services of contractors who specialize in erecting displays for trade shows. These firms, known as "exhibitor appointed contractors," do not move freight; their services, which are performed on the show floor, are limited to carpentry and erection work on the display booths once the materials have been brought to the exhibit site.

NYCCOC plays no role in the selection of either general contractors or exhibitor appointed contractors, nor does it contract for their services or pay for these services. Each show manager, licensed by NYCCOC, selects the general contractor, which submits its bills for services to the show manager and the exhibitors. Exhibitor appointed contractors are both selected and paid by the exhibitors.

Prior to July 3, 1995, the contractors selected their own laborers to perform display erection work and freight handling. The laborers used were a combination of a contractor's own full-time employees and hourly workers obtained through union hiring halls on an as-needed basis. Most of the workers were members of one of three unions, all of whom had collective bargaining agreements with the New York State Trade Show Contractors' Association, which represents most of the contractors working at the Javits Center. A few contractors had their own collective bargaining agreements with one or more of the unions.

Effective July 3, 1995, NYCCOC began screening the laborers to be selected by contractors at the Center to perform the display erection work and freight handling. Under the new arrangement, contractors must order all such labor from NYCCOC at prescribed rates. To fulfill the contractors' anticipated labor needs, NYCCOC selected approximately 700 carpenters, apprentices, hi-lo operators and helper/checkers to serve on an as-needed basis in response to periodic labor calls. Some of these individuals will work full time or close to full time at the Javits Center, while others will work considerably less time.

Under the new arrangement, NYCCOC is responsible for paying all wages and obtaining workers' compensation and state disability law insurance for these workers. The workers are not eligible for New York State health benefits nor do they contribute to the NYS retirement system. However, the Center does make contributions to the Unions' pension funds in the alternative.

All of the new NYCCOC workers are represented by one of two unions with which NYCCOC has entered into collective bargaining agreements. It is the position of NYCCOC that members of the new labor force at the Javits Center are public employees subject to Article 14 of the Civil Service Law, known as the "Taylor Law," and like all public employees, they are prohibited from striking.

Under the new arrangement, NYCCOC requires that all the contractors utilize only its workers, who will perform their functions under the direction and supervision of the contractor which has retained their services, and which must supply the equipment and materials used by them. The contractors are required to reimburse NYCCOC for the salaries paid to the workers whom they select, as well as for the cost of the workers compensation and disability insurance.

Contractors are permitted to use their own employees as supervisors to direct the work. Since August 21, 1995, however, only individuals who have completed a NYCCOC questionnaire and have been approved by NYCCOC have been permitted to work at the Javits Center in such a supervisory capacity.

NYCCOC seeks the Commission's opinion as to whether the members of the labor force it pays are "State employees" for purposes of Public Officers Law §73. If they are, it then asks whether the restrictions of §§73(4) and 73(8) are applicable when these employees are hired by the contractors to work outside of the arrangements between the contractors and the Center.

APPLICABLE LAW

Public Officers Law §73(1)(i)(iii) defines the term "state officer or employee" to mean:

officers and employees of state departments . . . or other state agencies. . .

Public Officers Law §73(4) states, in pertinent part, the following:

(a) No . . . state officer or employee . . . or firm or association of which such person is a member, or corporation, ten per centum or more of the stock of which is owned or controlled directly or indirectly by such person, shall (i) sell any goods or services having a value in excess of twenty-five dollars to any state agency, or (ii) contract for or provide such goods or services with or to any private entity where the power to contract, appoint or retain on behalf of such private entity is exercised, directly or indirectly, by a state agency or officer thereof, unless such goods or services are provided pursuant to an award or contract let after public notice and competitive bidding.

Public Officers Law §73(8)(i) states, in relevant part, that

No person who has served as a state officer or employee shall within a period of two years after the termination of such service or employment appear or practice before such state agency or receive compensation for any services rendered by such former officer or employee on behalf of any person, firm, corporation, or association in relation to any case, proceeding or application or other matter before such agency.

DISCUSSION

A. The status of NYCCOC's workers

The first question presented is whether the NYCCOC workers are State employees subject to Public Officers Law §73. The Commission begins its analysis by examining general indicia of employment, including principles applied in determining employment status for workers' compensation and unemployment insurance purposes.

In workers' compensation cases the existence of an employer-employee relationship is a threshold issue. Factors such as right to control, method of payment, furnishing of equipment, right to fire, and the nature of work are considered, and an employment relationship, under some circumstances, may be established on the basis of any one of those factual elements.(1)

A review of relevant New York case law and Attorney General opinions reflects that, among the various factors comprising indicia of employment, the power to direct and control the daily activities of the worker emerges as the most significant. Indeed, one court stated that "... although the indicia of State employment typically include the power to hire and fire, the payment of salary, and the power to direct the employee in his or her performance of official duties on behalf of the State, only the last element is essential to a finding of employment." Hardy v. Murphy, 29 AD2d 1038 (3rd Dept. - 1968); Liberman v. Gallman, 41 NY2d 774 (1977), 1979 Op. Atty. Gen. 57. In its consideration of the present case, therefore, the Commission looks first at the ability to direct and control the employee in the performance of his or her services at the Javits Center.

The Commission is also guided by its Advisory Opinion No. 93-7, where it determined that the director of a major State health facility was a State employee subject to the provisions of Public Officers Law §§73, 73-a and 74 even though his salary was paid by a private entity that had a contract with the State for the leasing of employees. The Commission's conclusion that the director was an employee was based primarily on the degree of control his State agency exercised over him in the performance of his duties. The Commission reasoned:

(the employee) functions as the executive/clinical director of a State facility with responsibilities no different from those of other similarly situated directors of other (agency) facilities. As stated in the job description for this position, (the employee) is responsible and reports to (the agency's) Regional Director and, ultimately to the Commissioner of (the agency).

Under these circumstances, it is clear that (the agency), and not (the private contractor), has the right to control (the employee) in the performance of his duties at the facility. In the instant matter, the Commission concludes that (the agency) has appointed (the employee) to the position of clinical director, he is doing the work of the State, the power to direct and control his performance at the facility rests with (the agency) and not (the contractor); therefore, he is a covered State employee for purposes of Public Officers Law §§73, 73-a and 74.

While none of these decisions present facts identical to those now facing the Commission, they give guidance to the Commission in examining the status of NYCCOC's employees.

With respect to the issue of control, the contractors clearly designate the daily assignments of the employees. However, NYCCOC determines whether or not an employee is eligible to be hired, thereby exercising the most basic element of control. In addition, it fixes the amount each employee is paid while working. The Commission must, therefore, look to other indicia of employment.

NYCCOC pays the employees pursuant to a salary scale that it negotiates with the unions, and pays for each employee's workers' compensation and disability coverage. It also pays for retirement and health benefits, but not under plans available to other State employees. Critically, NYCCOC has informed the Commission that it takes the position that its collective bargaining arrangements are pursuant to the Taylor Law (Article 14 of the Civil Service Law), and its employees are bound by this law, including its "no strike" provisions. The Commission concludes that, on balance, the indicia of employment lead to the conclusion that NYCCOC's employees are State employees for purposes of Public Officers Law §73, as well as §§73-a and 74.

This conclusion is consistent with the Commission's determination in Advisory Opinion No. 95-3, where it held that individuals serving on labor management committees of the State Civil Service Employees Association were State employees. There, like here, the Commission examined indicia of employment. The facts in that opinion showed that the individuals serving on the committees, like NYCCOC's employees, were paid by the State. There, the labor management employees were found to be under the direction of a State agency. Similarly, in the present case, NYCCOC, as noted above, dominates control. Thus, while the indicia may not be as clear here as they were when the Commission issued Advisory Opinion No. 95-3, the results in the two situations are not inconsistent.

Inasmuch as the Commission has determined that members of the Javits Center work force are State employees, the Commission must address the specific questions raised by NYCCOC concerning Public Officers Law §§73(4) and 73(8).

B. The Applicability of Public Officers Law §73(4)

Bradford advises that since employment as a carpenter or freight handler at the Javits Center is usually not full time, some NYCCOC employees may, from time to time, work directly for one or more of the contractors who do business at the Center. That work may be totally divorced from the contractor's work at the Center, or it may involve working at the Center, such as the employee's working as a supervisor for the contractor for a show.

As noted above, Public Officers Law §73(4)(a)(i) disqualifies a State officer or employee from selling goods or services to a State agency, unless pursuant to a contract let after public notice and competitive bidding. Thus, a NYCCOC employee could not, by contract, work for NYCCOC unless a competitive bidding process were followed.

However, when such an employee works for a contractor on matters unrelated to the Javits Center, he or she is clearly selling services to a private contractor, not to a State agency. The contract or contracts pursuant to which the employee performs such services are unrelated to the Center.(2) Therefore, a NYCCOC employee may work for contractors which do business at the Center on jobs outside of the Center. As such a worker is not a policymaker, he or she need not seek prior approval to be so engaged.(3)

When such an employee is hired as a private supervisor by a general or exhibitor appointed contractor to work on a show within the Javits Center, the situation is less clear. The services rendered by the employee are still performed pursuant to a contractor's agreement with a private show manager or exhibitor, and not with the Center. However, the Center must approve the individual before he or she can be retained, and the Center may exclude or remove him or her upon failure to meet the Center's requirements. Thus, the Center controls the contractor's power to retain the employee.(4) This brings the matter squarely within the prohibitions of §73(4)(a)(ii), which preclude a State employee from selling his or her services to a private entity where the power to retain the employee resides with a State agency. Thus, although the employee is not selling services to a State agency, the services described may not be performed, as they would be in violation of §73(4).

C. The Applicability of Public Officers Law §73(8)

Bradford indicates that contractors may also wish to hire, for similar purposes, former Javits employees after their separation from State service. She argues that they should be permitted to work for a contractor to perform services at the Center. However, the language of §73(8) bars former employees from appearing before their former agency on any matter before the agency. While the Commission recognizes that the contracts between former Center employees and the contractors are not matters before NYCCOC, it also notes that NYCCOC must approve each employee hired by a contractor to serve in a supervisory capacity. The former employee's application for approval creates a matter "before" NYCCOC, as NYCCOC has the ability to establish and control the terms and conditions of the employment with the contractors. The submission of the application to NYCCOC constitutes an appearance by the former employee before his or her former agency. (See Advisory Opinions No. 90-4 and 90-21.) Therefore, former employees are prohibited for two years after leaving NYCCOC from seeking permission to perform services at the Javits Center of behalf of private contractors.

CONCLUSION

The members of the labor force at the Javits Center are State employees for purposes of Public Officers Law §73, as well as §§73-a and 74, because NYCCOC exercises sufficient control over the performance of their duties and, on balance, indicia of State employment are predominant. Such employees may not, when outside of their State employment, work for contractors inside the Javits Center while on the Center payroll and for a period of two years following their leaving the payroll. They may, however, work for the same contractors on projects outside of the Center.

This opinion, until and unless amended or revoked, is binding on the Commission in any subsequent proceeding concerning the person who requested it and who acted in good faith, unless material facts were omitted or misstated by the person in the request for opinion or related supporting documentation.

All concur:

Joseph M. Bress, Chair

Angelo A. Costanza
Robert E. Eggenschiller
Donald A. Odell, Members

Dated: November 20, 1995


Endnotes

1. Grigoli v. Nito, 11 AD2d 581, 200 NYS2d 511 (3rd Dept. - 1960); Pelow v. Sork, 39 AD2d 494, 337 NYS2d 218 (3rd Dept. - 1972); Rastaetter v. Wilson Memorial Hospital, 80 AD2d 608, 436 NYS2d 47 (2nd Dept. - 1981). For coverage under the unemployment insurance law, the Unemployment Insurance Appeal Board is authorized to look behind the terms of a written contract to determine the actual relationship between the parties where the issue is raised as to whether a compensation benefits claimant is an employee or an independent contractor. Lloyd v. Sans Souci Realty Corp., 32 AD2d 602, 209 NYS2d 613 (3rd Dept. - 1969). Gold v. Catherwood, 35 AD2d 887, 315 NYS2d 643 (3rd Dept. - 1970).

2. By its terms, paragraph (ii) of clause (a) of subdivision 4 of §73 does not apply. The contracts in question are not ones over which NYCCOC exercises the power to contract, appoint or retain employees.

3. Commission Regulation 19 NYCRR Part 923 requires that those employees who have been designated as policymakers seek prior approval from their appointing authority to engage in outside activities where they anticipate earning more than $1,000 annually, but less than $4,000, and must seek approval from the Commission when more than $4,000 annual compensation is anticipated.

4. See the NYCCOC's Rules for Conduct of Business at the Javits Center by Exhibitor Appointed Contractors in which contractors are advised that managers or supervisors who seek to perform services at the Javits Center must complete a questionnaire and be "approved" by the Center. Failure to do so "shall result in a revocation not only of the supervising employee's authorization, but also of the company's authorization to conduct business at the Javits Center."



URL: http://www.nysl.nysed.gov/edocs/ethics/95-34.htm