Vendors Bearing Gifts: Disclosure Requirements For Public Officials And Employees
July 2010
Number 26
CLIENT NEWS BRIEF
VENDORS BEARING GIFTS:
DISCLOSURE REQUIREMENTS FOR
PUBLIC OFFICIALS AND EMPLOYEES
Especially in these troubled economic times, vendors, consultants and others seeking business from
public agencies are often going to ever greater lengths to land new clients and drum up new
business. These efforts may be coupled with promises of gifts and other free offerings, including
meals, wine, tickets to concerts or sporting events, and more. As an important reminder, when such
gifts are received by public officials or employees, they are subject to dollar limits and public
disclosure under the Political Reform Act of 1974 ("PRA"; Gov. Code, §§ 81000-91014). This is a brief
review of some relevant disclosure issues.
One of the primary goals of the PRA is to ensure that public officials and employees perform their
duties in an impartial manner, free from bias caused by their own financial interest or the financial
interests of persons who have supported them. (Gov. Code, § 81001(b).) To this end, the Fair Political
Practices Commission ("FPPC") maintains regulations that impose limits on gifts received by public
officials and employees, as well as requiring disclosure of such gifts in many instances. Additionally,
Government Code section 87300 requires state and local government agencies, including school
districts, to adopt a conflict of interest code which, at a minimum, includes the terms set forth in
section 87300 and the corresponding regulations.
The PRA requires those public officials and employees who are designated in the agency's conflict
of interest code to disclose annually in a Statement of Economic Interests, or "Form 700," certain gifts
that were received in the previous 12-month period which exceed designated dollar amounts.
Once filed, the Form 700 becomes a public record. If a public official or employee receives a gift or
gifts totaling $50 or more from a single source, the gift or gifts must be disclosed on Form 700. (Gov.
Code, § 87210.) Further, officials and employees designated in the conflict of interest code may not
receive gifts totaling more than $420 in any calendar year from a single source if they would report
income or gifts from that source on Form 700. (Gov. Code, § 89503; Cal. Code Regs., tit. 2, § 18940.2.)
Violations of the PRA are punishable by a variety of administrative, civil, and criminal penalties,
depending on the severity of the violation. In addition, persons violating an agency's conflict of
interest code are subject to disciplinary action. (Gov. Code, § 91003.5.)
The PRA defines the term "gift" very broadly, with only limited exceptions. Generally, a "gift" includes
anything of value that is received by a public official or employee for free or at a discount and
which is not otherwise made available to members of the general public. This may include meals or
food, entertainment (e.g., concert or sporting event tickets), some forms of travel and even parking
passes. Limited exceptions to the disclosure rules include gifts received from relatives; gifts
approximately equal in value that are exchanged between a public official or employee and
another individual on holidays, birthdays or similar occasions; and informational materials which
serve primarily to convey information and which are provided for the purpose of assisting the
recipient in the performance of his or her official duties. (Cal. Code Regs., tit. 2, §§ 18942, 18942.1.)
Page 50
Thomas E. Gauthier
Shareholder & Local Government Practice Group Co-Chair
Sacramento Office
tgauthier@lozanosmith.com
As the information contained herein is necessarily general, its application to a particular set of facts
and circumstances may vary. For this reason, this News Brief does not constitute legal advice. We
recommend that you consult with your counsel prior to acting on the information contained herein.
Written by:
July 2010
Number 26
CLIENT NEWS BRIEF
It is not always obvious to a public official or employee whether what they are receiving may fall
under the reporting requirement. For example, what if a public official was solicited by a vendor to
participate in an ongoing "book club" that offered free meals and free books? In such a scenario, a
public official or employee would need to know the actual monetary value of the items received to
ensure compliance with the PRA, including its disclosure requirements. If the cost of a gift exceeds
$50, and none of the limited exceptions under Government Code section 82028 apply, the public
official or employee would have to disclose his or her receipt of such gifts on Form 700. Additionally,
multiple gifts from a single source totaling $50 or more during a one year reporting period must also
be disclosed. Finally, the public official or employee would need to determine whether the value of
multiple gifts received over the 12 month period total more than the gift limit of $420. On top of these
considerations, the public official or employee must also consider compliance with their own
agency's adopted conflict of interest code.
In addition to the PRA and local conflict of interest policy requirements, it is worthwhile to consider
the appearance of accepting gifts. The press, county grand juries and the public in general often
express concerns about hiring any vendors or purchasing any equipment or services if the decision
makers or other agency employees have received gifts of any size.
Public agencies should take time to review their adopted conflict of interest codes and the PRA
regulations to ensure compliance. Should you have any questions regarding the PRA's gift rules,
when reporting is required, or updating your agency's conflict of interest code, please do not
hesitate to contact one of our seven offices located statewide or consult our website.
Gregory A. Wedner
Shareholder
Santa Rosa and Sacramento Offices
gwedner@lozanosmith.com
Harold M. Freiman
Shareholder
Walnut Creek Office
hfreiman@lozanosmith.com
© 2010 Lozano Smith Page 51
Number 26
CLIENT NEWS BRIEF
VENDORS BEARING GIFTS:
DISCLOSURE REQUIREMENTS FOR
PUBLIC OFFICIALS AND EMPLOYEES
Especially in these troubled economic times, vendors, consultants and others seeking business from
public agencies are often going to ever greater lengths to land new clients and drum up new
business. These efforts may be coupled with promises of gifts and other free offerings, including
meals, wine, tickets to concerts or sporting events, and more. As an important reminder, when such
gifts are received by public officials or employees, they are subject to dollar limits and public
disclosure under the Political Reform Act of 1974 ("PRA"; Gov. Code, §§ 81000-91014). This is a brief
review of some relevant disclosure issues.
One of the primary goals of the PRA is to ensure that public officials and employees perform their
duties in an impartial manner, free from bias caused by their own financial interest or the financial
interests of persons who have supported them. (Gov. Code, § 81001(b).) To this end, the Fair Political
Practices Commission ("FPPC") maintains regulations that impose limits on gifts received by public
officials and employees, as well as requiring disclosure of such gifts in many instances. Additionally,
Government Code section 87300 requires state and local government agencies, including school
districts, to adopt a conflict of interest code which, at a minimum, includes the terms set forth in
section 87300 and the corresponding regulations.
The PRA requires those public officials and employees who are designated in the agency's conflict
of interest code to disclose annually in a Statement of Economic Interests, or "Form 700," certain gifts
that were received in the previous 12-month period which exceed designated dollar amounts.
Once filed, the Form 700 becomes a public record. If a public official or employee receives a gift or
gifts totaling $50 or more from a single source, the gift or gifts must be disclosed on Form 700. (Gov.
Code, § 87210.) Further, officials and employees designated in the conflict of interest code may not
receive gifts totaling more than $420 in any calendar year from a single source if they would report
income or gifts from that source on Form 700. (Gov. Code, § 89503; Cal. Code Regs., tit. 2, § 18940.2.)
Violations of the PRA are punishable by a variety of administrative, civil, and criminal penalties,
depending on the severity of the violation. In addition, persons violating an agency's conflict of
interest code are subject to disciplinary action. (Gov. Code, § 91003.5.)
The PRA defines the term "gift" very broadly, with only limited exceptions. Generally, a "gift" includes
anything of value that is received by a public official or employee for free or at a discount and
which is not otherwise made available to members of the general public. This may include meals or
food, entertainment (e.g., concert or sporting event tickets), some forms of travel and even parking
passes. Limited exceptions to the disclosure rules include gifts received from relatives; gifts
approximately equal in value that are exchanged between a public official or employee and
another individual on holidays, birthdays or similar occasions; and informational materials which
serve primarily to convey information and which are provided for the purpose of assisting the
recipient in the performance of his or her official duties. (Cal. Code Regs., tit. 2, §§ 18942, 18942.1.)
Page 50
Thomas E. Gauthier
Shareholder & Local Government Practice Group Co-Chair
Sacramento Office
tgauthier@lozanosmith.com
As the information contained herein is necessarily general, its application to a particular set of facts
and circumstances may vary. For this reason, this News Brief does not constitute legal advice. We
recommend that you consult with your counsel prior to acting on the information contained herein.
Written by:
July 2010
Number 26
CLIENT NEWS BRIEF
It is not always obvious to a public official or employee whether what they are receiving may fall
under the reporting requirement. For example, what if a public official was solicited by a vendor to
participate in an ongoing "book club" that offered free meals and free books? In such a scenario, a
public official or employee would need to know the actual monetary value of the items received to
ensure compliance with the PRA, including its disclosure requirements. If the cost of a gift exceeds
$50, and none of the limited exceptions under Government Code section 82028 apply, the public
official or employee would have to disclose his or her receipt of such gifts on Form 700. Additionally,
multiple gifts from a single source totaling $50 or more during a one year reporting period must also
be disclosed. Finally, the public official or employee would need to determine whether the value of
multiple gifts received over the 12 month period total more than the gift limit of $420. On top of these
considerations, the public official or employee must also consider compliance with their own
agency's adopted conflict of interest code.
In addition to the PRA and local conflict of interest policy requirements, it is worthwhile to consider
the appearance of accepting gifts. The press, county grand juries and the public in general often
express concerns about hiring any vendors or purchasing any equipment or services if the decision
makers or other agency employees have received gifts of any size.
Public agencies should take time to review their adopted conflict of interest codes and the PRA
regulations to ensure compliance. Should you have any questions regarding the PRA's gift rules,
when reporting is required, or updating your agency's conflict of interest code, please do not
hesitate to contact one of our seven offices located statewide or consult our website.
Gregory A. Wedner
Shareholder
Santa Rosa and Sacramento Offices
gwedner@lozanosmith.com
Harold M. Freiman
Shareholder
Walnut Creek Office
hfreiman@lozanosmith.com
© 2010 Lozano Smith Page 51
As the information contained herein is necessarily general, its application to a particular set of facts and circumstances may vary. For this reason, this News Brief does not constitute legal advice. We recommend that you consult with your counsel prior to acting on the information contained herein.
