RECENT CALIFORNIA SUPREME COURT DECISION CHANGES THE STANDARD FOR WHEN A CONSULTANT OR INDEPENDENT CONTRACTOR CAN BE CONSIDERED AN "EMPLOYEE" SUBJECT TO GOVERNMENT CODE 1090

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IC11k BEST BEST & KRIEGER ATTORNEYS AT LAW supra, 140 Cal.App.2d at p. 291 ['[The special attorney] was an officer and agent of the city.']; see also Thomson, supra, 38 Cal.3d at pp. 647-648 ["'The law ... will not permit one who acts in a fiduciary capacity to deal with himself in his individual capacity."'].) So, for example, a stationery supplier that sells paper to a public entity would ordinarily not be liable under section 1090 if it advised the entity to buy pens from its subsidiary because there is no sense in which the supplier, in advising on the purchase of pens, was transacting on behalf of the government." "In the ordinary case, a contractor who has been retained or appointed by a public entity and whose actual duties include engaging in or advising on public contracting is charged with acting on the government's behalf. Such a person would therefore be expected to subordinate his or her personal financial interests to those of the public in the same manner as a permanent officer or common law employee tasked with the same duties. (See 46 Ops.Cal.Atty.Gen., supra, at p. 79 ['[Section 1090] require[s] of those who serve the public temporarily the same fealty expected from permanent officers and employees.'].) Thus, for instance, a person who was initially hired as an officer or employee with responsibilities for contracting and then rehired as an independent contractor to perform the same duties and functions would be expected to continue to serve the public faithfully. Such a contractor would be subject to section 1090." By establishing these new standards the Court steers the analysis from an assessment of the influence wielded by the consultant, which is essentially a subjective judgement, and introduces a far more objective and rational test which looks to the actual function of the consultant and that consultant's actual participation in the contract making process. Applying this new standard should make it more straightforward for government agency officials and officers and outside consultants to measure and determine whether the consultant is covered by section 1090 and "involved in the making of a contract in their official capacity," as construed in that law. Should you have any questions or concerns regarding the information contained in this memo or need guidance concerning consultants as public officials or employees for disclosure or disqualification purposes, please do not hesitate to contact one of the attorneys in our Public Policy & Ethics Group or your Best Best & Krieger attorney. GARY W.SCHONS MICHAEL J. MAURER -3 - 93939,00000\29964650.1