Ethically Speaking: Doing Business with Your Board of Education

Mark Boardman Attorney Boardman, Carr, Petelos, Watkins & Ogle P.C.

The Alabama Ethics Commission has made it obvious that, under limited circumstances, a business you own can do business with your employing board of education.

In the last edition of Ethically Speaking, we discussed you tutoring students (where the parents pay you) and how you can do so under the Alabama Ethics Act. This article has a different focus - - this is your company doing business with the board of education that employs you.

There are many reasons why you might want to do business with your board of education. For example, you might have a lawncare business “on the side.” Or your spouse could own an office supply business. Or maybe you have a small ownership interest in your parents’ restaurant, which either caters the football banquet or wants to sell concessions in the football stadium.

Let us first look at the basics: if you own at least 5% of a business, the Ethics Act requires that business to meet the same requirements as if you were the sole owner of the business.1 Likewise, your family is obligated to follow the Ethics Act, too. As a public employee, your spouse and your dependents are bound by the Ethics Act.2

The Ethics Act imposes conditions before your business can do work for your employing board. If your company does business with the board and that business is not under the competitive bid laws, plus you are paid above your cost, the Ethics Commission said in Ethics Opinion 202101 that you “should seek an opinion from this Commission and contact the Alabama Attorney General’s office” before entering into an agreement with your board. The Ethics Act also requires that you file a copy of the contract between your business and your Board with the Ethics Commission within 10 days of signing the contract.3 If there is no formal contract, the Ethics Commission, in the same opinion, says you should file the invoice or purchase order with the Ethics Commission. Although the Ethics Commission did not say how quickly you need to do so, presumably the Commission means the same 10-day requirement applies to filing an invoice or statement.

The Ethics Commission notes that the Ethics Act imposes further obligations. You cannot use your public position or influence to direct business to your firm. An example of good evidence that you did not direct your board of education to do business with you is if the business relationship between the business (or predecessors of the business) existed before the board hired you. In doing business with the board, you must recuse (and not be involved in any way) from any contact with the decision-makers who desire to do business with your company. In other words, you must have nothing to do with the board’s (or any supervisor’s) decision.4 As a public employee, of course, you cannot use confidential information you learned by virtue of your employment to assist your business.5 As noted above, the Ethics Commission also suggests consulting with the Attorney General’s office to determine whether there are additional applicable restrictions outside of the Ethics Act.6 (Your own attorney is a good source, too.)

Until 2019, the Ethics Commission prohibited a public employee or public agency who is also a vendor of the government from any profit-making business transaction with the government agency unless the transaction was competitively bid, even when the competitive bid law did not require it.7 The Ethics Commission changed its position after the Alabama Supreme Court addressed the issue in the criminal appeal of former Speaker of the House Mike Hubbard.

Do not let the Ethics Commission’s suggestion that you obtain an Ethics Commission opinion discourage you. In the next edition of Ethically Speaking, we will discuss how easy it is to obtain an Ethics Commission opinion. While the Ethics Commission enforces the law, the Commission also educates on the law and works with citizens to ensure that citizens do not violate the Ethics Act.

1 See Alabama Code Section 36-25-5(f)

2 For public officials, the scope of a legal definition for their family is much wider, as was the subject of the Ethically Speaking article in CLAS School Leader, Spring 2020 issue

3 Alabama Code Section 36-25-11

4 Alabama Ethics Opinion 2021-01. See also Alabama Ethics Opinion 2013-06, where a county commission could still buy concrete from the only local concrete company even when one of the county commissioners owned that concrete company.

5 Alabama Code Section 36-25-8

6 Ethics Opinion 2021-01, pg. 7

7 See Ethics Opinion 2019-10