May Firms Woo Prospective Employees From the House?

Posted April 18, 2008 at 5:06pm

Q: I am the human resources manager for a lobbying firm and have a question about our efforts to hire a senior House staffer. We recently extended him an offer and are now trying to persuade him to accept it.

[IMGCAP(1)]A longtime tradition of our firm is to hold a Founder’s House Weekend for anyone to whom we offer a job. It is at the beach house of our firm’s founding partner, and typically involves a lavish dinner in honor of the prospective employee, who stays at the house. We would have liked to throw a Founder’s House Weekend for this staffer but are concerned about the House gift rules. I gather there is an exception for personal hospitality but that it doesn’t apply to lobbyists. Therefore, I think we will have to take a pass on this tradition for the House staffer. Is that right?

A: Whoa! Don’t cancel Founder’s House Weekend just yet. Sure, the personal hospitality exception to the House prohibition upon gifts may not apply. But don’t forget that there are more than 20 other exceptions. In fact, there is one that could be right on point.

But before turning to those exceptions, the place to start is always the gift prohibition itself. Under a House rule, a staffer may not accept any “gift,” which the rule defines as a “gratuity, favor, discount, entertainment, hospitality, loan, forbearance, or other item having monetary value.” The rule provides several examples, including services, transportation, lodging and meals. Under these definitions, an invitation to Founder’s House Weekend is almost certainly a gift. This means that the staffer may not accept it unless an exception applies. It also means that if an exception does not apply, proceeding with Founder’s House Weekend could expose your firm and the founding partner to sanctions. So, let’s look at the exceptions.

The exception you mention covers “personal hospitality.” Unfortunately, you are right that the Founder’s House Weekend does not qualify. First, as you point out, the exception does not apply to hospitality provided by a lobbyist. This is not because the House thinks that the quality of hospitality provided by lobbyists is unacceptably meager. Rather, the personal hospitality exception is one of several places in the House rules where the restrictions on lobbyists are heightened out of concern for the appearance of improper influence.

Second, even if your founding partner were not a lobbyist, the applicability of the personal hospitality exception would still be in doubt. Under the rule, personal hospitality means hospitality that is intended for a nonbusiness purpose. Wooing a prospective employee might not qualify. Moreover, while you don’t mention who typically pays for the weekend, note that, according to the ethics manual, the exception does not apply where the host’s expenses are to be reimbursed by the business, or deducted as business expenses.

Nevertheless, there is hope yet for Founder’s House Weekend. Consider the exception for benefits provided in connection with employment discussions. This exception applies to “food, refreshments, lodging, transportation, and other benefits … customarily provided by a prospective employer in connection with bona fide employment discussions.” The idea behind the exception appears to be that the gift rule should not deprive staffers who are seeking employment in the private sector the same benefits enjoyed by other prospective employees.

The key requirement here is that the benefit must be “customarily provided by a prospective employer.” Does this mean that the benefit must be one that a typical employer customarily provides? Or, to qualify for the exception, is it enough that the specific employer in question customarily provides the benefit to prospective employees? These questions are critical because, while Founder’s House Weekend has a long history at your firm, not every firm customarily provides such a benefit to its prospective hires.

Fortunately, the Ethics Manual answers these questions favorably for you. The manual includes an example involving employment discussions between a lobbying firm and a House staffer during which the firm offers the staffer use of a beach condo for a weekend. The manual states that the offer is not acceptable unless the firm has a history of making the same offer to comparable prospects in the private sector. Therefore, given that it is a longtime tradition of your firm to hold a Founder’s House Weekend for any prospective employee, it should qualify.

One final note. Firms less scrupulous than yours might view this exception as an opportunity to conduct bogus employment discussions merely as an excuse to bestow gifts upon House Members and staffers. Don’t. The exception applies to benefits in connection with bona fide employment discussions. Founder’s House Weekend qualifies. Benefits in connection with sham discussions do not.

C. Simon Davidson is a partner with the law firm McGuireWoods LLP. Readers should not treat his column as legal advice.