What Is Nepotism?
Nepotism is a term used to define the practice whereby an employer favors or shows preference to family members in hiring and other personnel decisions. This term naturally has some negative connotation associated with it, including favoritism, because of the unequal preferences that such a practice creates in the workplace. Nepotism comes from the Italian word ‘nepoté’ , which means ‘nephew’. This word was used about Pope Sixtus IV in the 15th century because of his frequent placement of nephews within high ranking positions within the church. Nepotism now continues in the modern workplace and can cause all sorts of issues which will be addressed in this blog.
Texas Nepotism Laws Explained
In Texas, state law prohibits nepotism both by public-sector employers and private-sector companies wishing to conduct business with the state. In the case of public-sector employers, including most local government agencies and school districts, the statute applicable to these employers is Title 9, Chapter 171, of the Texas Local Government Code, specifically §171.001 through §171.009. As for private-sector employers, the applicable statute is the Texas Government Code, Title 10, Subtitle G, Chapter 2261, §2261.253 through §2261.258.
In the public-sector, nepotism entails either an explicit or implicit agreement to employ or promote a person to a position within the government entity who ("1") is related by affinity or consanguinity to a person who holds the government entity that is responsible for appointing, confirming, or voting on the promotion of such person, or ("2") is related by affinity or consanguinity to a person who is related to another person in either of the foregoing capacities.
As described more fully below, the primary ways that the law prevents nepotism abuses in the public sector are first by making it illegal for an employer to hire and/or maintain an employee who is related to other individuals in the above-descriptions positions, and second by making it void any contract (or pending contract) the government entity enters into with a company that employs or retains an officer or employee who is related to another officer or employee of the company, and that contract is signed by a government official.
Beyond these public-sector prohibitions on practices that create the appearance of favoritism by the government employer, private-sector companies that wish to enter into a contract with state government are also barred by the state from hiring certain people in certain positions if the hire would result in a prohibited nepotistic relationship. Specifically, under §2261.254(a) of the Texas Government Code, a "state agency [is] prohibited from finally approving a [contract] awarded to a bidder or offeror if a person related to the bidder or offeror by consanguinity within the third degree or affinity within the second degree would be involved in the contract as a vendor, contractor, or subcontractor."
History and Evolution of Nepotism Laws in Texas
Nowhere is that relationship more evident than in the realm of public employment. Indeed, for hundreds of years, public servants in this nation have been subject to a selection of employment guidelines to ensure integrity in public office and to eliminate discrimination.
Statutory prohibitions on nepotism are no exception. Texas joins all but twelve states across the country with nepotism laws applicable to public employees. The original statute governing nepotism, then-Article 16, Section 40 of the Texas Constitution, was enacted in 1876 as part of Texas’ first Constitution. Article 16, Section 40 provided that:
No person related to any member of the Legislature by consanguinity or affinity, including brothers, brothers-in-law, sisters, sisters-in-law, step-brothers and step-sisters, shall be eligible for office or employment from salaries paid out of the Public Treasury of the State, or shall through any means be granted any right or privilege of way or other special pecuniary emolument or advantages whatever from the Public Treasury of the State, during the term for which a member of the Legislature may have been elected.
This constitutional provision grew out of very specific historical concerns. During the decades after the Civil War, many former Confederates sought employment in the post-war government. In many cases, the Texas constitution prohibited the hiring of ex-Confederates, so many politicians "evaded the letter of the law" by securing jobs through their family members at the expense of the public treasury. The nepotism provision thus sought to shield the public treasury from perceived corruption stemming from such hiring practices.
As time went on, it became apparent that the constitutional provision was lacking in several respects, and amendment became necessary. In particular, Article 16, Section 40 failed to account for the expansive familial relationships common in modern America. The nephew of a State Senator, for example, could be excluded from consideration for a job in a particular state agency, but the Senator’s niece would not. Consequently, Article 16, Section 40 became susceptible to political corruption.
In 1975, the Texas Legislature adopted an amendment to Article 16, Section 40 in an effort to clarify the prohibition against nepotism. The 1975 amendment updated the nepotism provision to read as follows: Sec. 40. Nepotism. No person related within the third degree of affinity or within the third degree of consanguinity, as determined by the common law, to a statewide elected official or to a member of the governing body or chief executive officer of a governmental entity, including boards, commissions, districts, authorities, or other entities of the state or of an institution of higher education supported in whole or in part by state funds or any political subdivision of the state, may be employed in the governmental entity that the statewide elected official, governing body, or chief executive officer serves, unless the position held or sought to be held is subject to confirmation by the Senate.
Who All Is Covered by Nepotism Laws
Nepotism laws in Texas are expansive in order to provide for a broad application to various business entities and relationships. Public entities subject to nepotism prohibitions include counties, cities, school districts, college districts, or other governing body of an institution of purely public or private charity. Tex. Local Gov’t Code § 161.001. Private entities such as nonprofits, churches and religious institutions are subject Nepotism Law to the same prohibitions as municipalities. It would be wise for such organizations to examine their governance structures to ascertain the need to reexamine any nepotism prohibitions they may have in place. In addition to prohibiting nepotism in public and common-law governmental entities, the Texas Nepotism Statute prohibits public officers from hiring or offering to hire any person related, by blood within the third degree of consanguinity or by marriage within the second degree of affinity, to the public officer. Examples include cousins, nephews, and aunts qualified for employment as a district judge, city attorney, general counsel, or assistant city attorney. Tex. Gov. Code § 573.002; Tex. Local Gov’t Code § 161.008.
Legal Implications of Nepotism Violations
The use of nepotism is not uncommon among state employees, who are frequently not even aware that they or their family members are playing in a potentially grey area of the law that could have serious legal repercussions.
Potential Legal Penalties
It is a third degree felony to violate nepotism laws relating to the civil service of the State or a county or municipal government in Texas. The penalty for a third degree felony in the State of Texas is between 2 to 10 years in prison, as well as a fine of up to $10,000.00. According to Section 151.903 of the Texas Local Government Code, the following are violations of nepotism laws by governmental officials: A violation can also occur if a person, knowing that he is related to and has the opportunity to influence employment decisions relating to his family member, fails to recuse himself from making such employment decisions . For example, if the Chief Financial Officer of a large non-profit with budgetary oversight authority failed to recuse herself from making an employment decision regarding her sister on a finance-related position, such conduct would be prohibited under nepotism laws just as it would if the CFO were a county or municipal employee.
Enforcement Actions
The enforcement of nepotism laws related to state civil service and counties and municipalities are vested in the proper authorities and offices under the law. The Hiring and Oversight Commission of the State performs oversight and enforcement authority over nepotism matters of state employees. The County Auditor and Commissioners have authority over nepotism matters relating to county employees. In the case of municipal employees, enforcement falls to the mayor, city controller and city council. There do not appear to have been any notable enforcement actions taken by the State, counties or municipalities to date, given their relative obscurity and lack of awareness in the majority of cases.
How to Prevent Nepotism in the Workplace
One effective way to ensure compliance with nepotism laws is to establish a policy that clearly outlines the organization’s hiring and promotion standards. A well-drafted nepotism policy should designate specific steps for handling conflicts of interest and disclose any familial relationships that may pose a risk of favoritism or the appearance of favoritism.
If a job vacancy opens up and a relative of a higher-up in the organization applies, what should the decision-maker do? Even if the listed nepotism policy seems clear, it is best practice to consult with legal counsel before making a hiring decision or proceeding with discipline, as circumstances can vary widely from case-to-case.
A clear anti-nepotism policy demonstrates ethical leadership that clearly discourages public officials’ (or other higher-ups’) potential conflicts of interest or partial treatment as well as assures the people of Texas and local constituents that their rights are protected.
Recent Case Studies and Examples
Although the interpretation of the Nepotism Statute as applied to persons in comparable positions as elected officials is still in its infancy, there are still a few notable examples of the Nepotism Statute being applied in real-world situations. These cases and examples are instructive in helping to demonstrate how courts might interpret both the Nepotism Statute and the Nepotism Provision.
At a minimum, understanding these cases will put you ahead of many public servant employers.
In a case decided in 1977, the Texas Court of Appeals for the Fifth District at Dallas held that a Nepotism Provision in a Public Utility Agency’s charter (which had the same substantive effect as a Nepotism Statute) created a mandate for termination because it was absolute and unqualified. See City of Dallas v. Thompson, 556 S.W.2d 812 (Tex. Civ. App. – Dallas 1977, writ ref’d n.r.e.). In fact, the court in Thompson noted that under Texas law, there are three types of municipal action: ministerial act, legislative act, and administrative act. The court determined the power of hiring and terminating employees was an administrative act and not a ministerial act requiring strict compliance because the agency was not required to follow specific procedures for discipline and discharge.
The City of Roanoke’s City Manager ("Roanoke CM") also faced scrutiny for violating the Nepotism Statute in City of Roanoke v. Smith, 820 S.W.2d 122 (Tex. App. – Fort Worth 1991, writ denied). In Smith, the City Manager hired his brother-in-law as a clerk in the city secretary’s office. Although the City Manager later reviewed the Nepotism Statute and determined his actions violated the Statute, he refused to place the brother-in-law on leave pending appeal to the city council. Ultimately, the city council reinstated the brother-in-law, keeping him in the same position.
The city council’s decision evidently left something to be desired because the city’s citizens soon called for a recall election of all the council members. The recall election became a reason for the council members to reconsider their decision. The prior decision was overturned and the brother-in-law was reterminated. The City of Roanoke filed suit against the city council members claiming they acted beyond their authority when they ordered the brother-in-law retained.
Applying the Nepotism Statute broadly, the court in Roanoke determined the City Manager was required to suspend the brother-in-law with pay until the Statute was complied with – that is, the City Manager was required to place the brother-in-law on leave until the city council had time to determine whether to keep him or terminate him. However, the court did not penalize the city council members because it determined the council acted in the good faith belief that its actions were justified. This case serves only as a reminder that the Nepotism Statute must be strictly followed or, at the very least, suspended pending investigation by the governing body of the nepotist’s continued employment’s necessity.
Conclusion: The Effects of Nepotism Laws In Texas
Understanding nepotism laws in Texas is crucial for employers who wish to remain in compliance with state legislation governing the hiring of relatives. While nepotism laws can be seen as a positive measure for promoting fairness and reducing conflicts of interest, they can also serve as a hurdle for employers and employees alike. By ensuring that employees are hired based on their merits and not their personal relationships, these laws create a level playing field for job applicants. For employers, this results in a more qualified and competent workforce.
However, the restrictions that nepotism laws place on the hiring process can also have negative effects. For instance, many Texas nepotism laws apply primarily to government employees, leaving private-sector employers with more flexibility in hiring and promotional practices. This can lead to an uneven playing field for government employees compared to those in the private sector who may have been hired because of their connection to a decision maker . It can also cause resentment among other employees who may feel that those who were hired through nepotism may not be as qualified as those who were hired on their merit.
Nepotism laws can be confusing and may vary significantly across different industries, sectors, and company sizes. Therefore, it is advisable for employers to seek expert guidance to help them navigate the complexities of these laws and ensure they are well within the law while maintaining their privacy requirements.
In conclusion, the impact of nepotism laws in Texas can be seen as both beneficial and limiting. From an ethical standpoint, these laws are beneficial because they place greater emphasis on allowing qualified individuals to obtain jobs and move up the ranks, regardless of their background. But from practical and business perspectives, nepotism laws can limit the options of employers in their hiring practices and confine them to a narrow selection pool, at least when it comes to government employees. Nevertheless, understanding and adhering to nepotism laws remain crucial to maintaining a fair and equitable workplace, free of potential favoritism.