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Almost 5% of U.S. workers held more than one job in 2017, according to the U.S. Bureau of Labor Statistics.  It is not unusual for school employees to have a second job, particularly during the summer. For instance, the recently retired superintendent of the Ticonderoga Central School District, John McDonald Jr., has spent every summer working as a tour boat captain for the Lake George Steamship Company.

“That’s my 30th year there,” he recently told the Press-Republican newspaper. “It’s a fun job.”

But some outside employment by school employees can result in allegations of a conflict of interest or other improprieties. For instance, amid attendance record discrepancies involving a school employee who allegedly had an employment relationship with a school vendor, a school district recently asked a county district attorney and the state comptroller to investigate.

This article examines relevant laws that affect school employees who “moonlight.”

Conflict of interest laws
Frequently, school attorneys are asked about a situation in which an employee has secondary employment and whether any conflict of interest exists which would prohibit such employment. By statute, New York only finds a prohibited conflict of interest when a municipal officer or employee has a contract with the municipality. Even in some of these cases, the contract between the employee and the district may not be prohibited if any of the exceptions of General Municipal Law section 802 apply.

Although an employee’s moonlighting may not be prohibited by a conflict of interest statute, New York also has a “common law” prohibition on conflicts. That is, there are legal restrictions that arise primarily from judicial precedent rather than statutes. Generally, a public officer is prohibited from holding two public offices at the same time if the offices are incompatible.

What does incompatibility mean? The Court of Appeals has held that two public positions are incompatible with one another when one is subordinate to the other or if there is an inherent inconsistency in the duties of the two positions.

One might think that one form of incompatibility would be physical incompatibility – meaning the inability of an individual to work in two different places at the same time. But physically incompatibility has specifically been addressed by the courts and determined to not be a conflict of interest as defined by common law.

However, attempting to work in two places at the same time could be “time theft.”

Time theft
Employees could be subject to discipline if an employee, while on the clock for the district, engages in work for either a second employer or self-employment.

Pursuant to section 75 of the Civil Service Law or Education Law section 3020-a, such “time theft” during the mandatory hours of employment at a school district would almost certainly meet any definition of employee misconduct. Criminal laws may apply to the conduct if the action meets the requisite elements of a penal law statute.

Most misconduct crimes related to time theft require either knowing or intentional culpability for an employee to be convicted. Larceny, falsifying business records, or offering a false instrument for filing may all be applicable to an employee engaging in conduct or work for another employer while working on the clock for a school district. Any employer aware of such conduct should make a report to the appropriate authorities.

Penal Laws and other protections
Suppose an employee working a second job does something in the course of that employment that the school administration believes violates a school rule or harms the school district’s reputation. Can the employee be disciplined or subject to an adverse employment
action?

Yes. For instance a Potsdam teacher was terminated through a 3020-a proceeding after it was established that she had been found guilty of systematic theft of almost $1,500 worth of merchandise from her secondary employment as a Walmart cashier. In that case, the hearing officer found that the employee’s dishonesty and attempts to minimize the misconduct were sufficiently connected to the classroom in that they undermined her ability to perform teaching duties.

It should be noted that New York created some limited protections for employees engaging in lawful off-duty conduct in Labor Law section 201-D. However, those protections are limited to the prohibition of discrimination against employees for engaging in political activities, use of consumable products, recreational activities, and union activities while the employee is off-duty. Recreational activity under this law is specifically defined to cover a lawful, leisure time activity, for which the employee receives no
compensation.

The fact that conduct occurred during non-school hours does not shield an employee from discipline or negative employment consequences.

Faithless servant
One additional avenue available to employers, including public employers, in cases in which an employee has acted in bad faith or acted outside of the trust of the employer is the faithless servant doctrine. This doctrine permits the employer to reach back and potentially recover compensation from the employee engaging in the activity.

In 2016, the Appellate Division of state Supreme Court, Third Department, applied this doctrine in a case involving the city of Binghamton, in which an employee had admitted to embezzling more than $50,000 over a six-year period from his position with the Department of Parks and Recreation. The court awarded the city damages in the amount of $316,535.54 (all compensation paid to the employee) and declared that the city was relieved of its obligation to provide defendant with health insurance benefits.

Notably, the Court of Appeals has held that forfeiture of compensation is required even when some or all of the services were beneficial to the principal or [when] the principal suffered no provable damage as a result of the breach of fidelity by the agent.

Therefore, in faithless servant cases, arguments by employees that some or most of their duties were performed adequately and thus damages should be mitigated will be difficult if not impossible to sustain. Furthermore, the doctrine permits employers to reach back to the time period in which the employee first engaged in the actions which were disloyal to the employer. In a moonlighting situation, if the school district can prove that the employee engaged in other employment while he or she was expected to be performing duties of the district, the faithless servant doctrine may allow the district to take action against that employee.

What, if any, action can school districts take to prevent or discourage these activities to prevent issues from arising involving employees’ outside employment?

Unfortunately, school districts are limited in this regard. While some districts have a policy prohibiting theft of services or property from the school, as a practical matter these policies offer little deterrence and effect when compared to penal laws which address the same conduct.

Placing a prohibition on outside employment would be subject to collective bargaining, and would be impractical. In situations in which an employee is moonlighting or providing work for another employer with the school district’s knowledge and blessing, transparency is key. The more clarity a district can provide in these situations, the better off it will be in addressing problems down the road.

Members of the New York State Association of School Attorneys represent school boards and school districts. This article was written by Cameron B. Daniels of Hogan, Sarzynski, Lynch, DeWind and Gregory, LLP.

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