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Ethics and Conflicts of Interest

This page provides a basic overview of Washington State’s ethics and conflict of interest laws that apply to municipal officers, contained in chapter 42.23 RCW, which includes prohibited uses of public office, special privileges and exemptions, contract interests, remote interests, and exceptions.

Overview

Chapter 42.23 RCW prohibits municipal officers from using their positions to secure special privileges or special exemptions for themselves or others, and from entering into certain contracts or having other personal financial interests with their jurisdictions.

These rules apply to officers in all types of municipal and quasi-municipal corporations, including cities, towns, counties, and special purpose districts. A separate chapter of state law, chapter 42.52 RCW, addresses financial conflicts and ethical issues for state officers and employees, but it does not apply to local governments.

RCW 42.23.020(2) defines “municipal officer” rather broadly to include all elected and appointed officials, all deputies and assistants of such officials, and anyone exercising or undertaking to exercise the powers of those officials (such as city managers, city or county administrators, or special purpose district superintendents).

Violating these rules can bring serious penalties, including monetary fines, nullification of contracts, and possible forfeiture of office.

Common sense can be a good guide in this area of the law, but sometimes gray areas can create confusion and uncertainty. If you are concerned about a specific situation, consult your legal counsel.

Prohibited Uses of Public Office

State law, codified at RCW 42.23.070, governs the ethical conduct of county, city, and special purpose district officers and prohibits them from taking four types of action while in office. Specifically, municipal officers may not:

  1. Use their position to secure special privileges or exemptions for themselves or others;
  2. Give, receive, or agree to receive, directly or indirectly, any compensation, gift, reward, or gratuity from a source except the employing municipality, for a matter connected with or related to the officer's services as such an officer;
  3. Accept employment or engage in business or professional activity that they might reasonably expect would require or induce them by reason of their official position to disclose confidential information acquired by reason of their official position; or
  4. Disclose confidential information gained by reason of their position, nor may they otherwise use such information for their personal gain or benefit.

Only the first provision, RCW 42.23.070(1), addressing special privileges and exemptions, has been interpreted by the courts and attorney general. (See Conflicts of Interest Court Decisions and AG Opinions.)

Prohibited Contract Interests

RCW 42.23.030 specifically prohibits a municipal officer, or their office, from directly or indirectly receiving a financial benefit from a contract if the contract is made by, through, or under the supervision of the municipal officer, in whole or in part. Any contract entered into by a municipality in violation of this prohibition is void.

Under RCW 42.23.020(3) “contract” is defined as any contract, sale, lease, or purchase, including a contract (written or unwritten) of employment. To see what courts and the attorney general have found to constitute a contract, see Conflicts of Interest Court Decisions and AG Opinions.

A contract is made “by, through or under the supervision of the municipal officer” only when that municipal officer has the actual authority to enter into the contract on behalf of the municipality. The prohibition applies broadly to members of the governing body, who are generally responsible for approving contracts, regardless of whether they voted on the contract or not. To see how courts and the attorney general have discussed when a contract is made “by, through or under the supervision” of a municipal officer, see Conflicts of Interest Court Decisions and AG Opinions.

Although there are some exceptions for specific situations (see below), certain contract interests are prohibited in any situation. Specifically, a municipal officer who has authority over the making of the contract may never:

  • Purchase or lease property from the same municipality;
  • Contract for legal services with the same municipality, except for reimbursement of expenses; or
  • Enter into any contract with the same municipality if the municipality is a county of 125,000 or more, a city of 10,000 or more, or an irrigation district encompassing more than 50,000 acres.

Exceptions

Contract interests are allowed if the officer entered into the contract before assuming office. However, any future contract renewals or revisions would be subject to the restrictions of chapter 42.23 RCW, since the contract would effectively be remade at that time.

RCW 42.23.030 contains a number of very specific exceptions, allowing municipal officers to have contract interests with their municipalities in certain situations. Some of these exceptions apply to certain types of contracts, while others depend on the monetary value or the type and size of the municipality.

If an exception applies, the municipal officer must fully disclose the contract interest to the governing body, which must note the interest in its official minutes or similar records before approving the contract, and the municipal officer may not vote on the contract under any circumstances.

Remote Interests

Certain “interests” that municipal officers have in contracts made by, through, or under their supervision are not considered to fall under the prohibition in RCW 42.23.030, but rather are considered “remote” interests under RCW 42.23.040. A municipality may enter into contracts in which an officer who has authority over the making of the contract has a remote interest, provided certain conditions are met.

There are four types of remote interests, which exist only where the municipal officer is:

  1. A non-salaried officer of a nonprofit corporation that is a contracting party;
  2. An employee or agent of the contracting party, where the salary consists entirely of fixed wages or salary;
  3. The landlord or tenant of the contracting party; or
  4. Someone who holds less than 1% of the shares of a corporation or cooperative that is a contracting party.

“Contracting party” is defined in RCW 42.23.020(4).

A remote interest will only apply if all of the following conditions are met:

  • The municipal officer discloses the remote interest to the governing body of the municipality prior to the formation of the contract;
  • The remote interest is noted in the official minutes, or similar records, prior to the formation of the contract;
  • The governing body, in good faith, approves the contract without counting the vote of the officer with the remote interest; and
  • The officer with the remote interest did not influence or attempt to influence the decision of other municipal officers, who serve the same jurisdiction, related to the contract.

Relatives and Spouses

The prohibition in RCW 42.23.030 does not apply to contracts with relatives of municipal officers unless that relative, such as a spouse or a minor child, has a legal interest in the earnings of the municipal officer. However, hiring or contracting with spouses may be allowed if the municipal officer and their spouse have entered into a separate property agreement.

Some municipalities have additional, more restrictive policies regarding nepotism, or the hiring of or contracting with spouses and relatives.

Penalties

The consequences of violating chapter 42.23 RCW are severe. Any municipal officer who violates chapter 42.23 RCW is subject to a $500 civil penalty, on top of other possible civil and criminal penalties, and may have to forfeit their office. In addition, any contract made in violation of chapter 42.23 RCW is void, and acting in good faith is not a defense.

Local Ethics Codes

A municipality may adopt an ethics policy that includes additional restrictions not covered by state law. Such policies cannot conflict with state law, but they can supplement it. Many municipalities throughout Washington have adopted their own ethics codes, and there are several good reasons for doing so. 

  • It allows the municipality to further explain what is covered by state law.
  • It can cover employees as well as officers.
  • It can address ethical issues not covered by chapter 42.23 RCW.

Other Potential Conflicts of Interest and Ethical Issues

In addition to chapter 42.23 RCW, state law and some local laws address other potential conflicts of interest and ethical situations, including:

  • Conflicts of interest outlined in a local ethics code;
  • Local nepotism rules, which regulate the hiring of and contracting with relatives;
  • The doctrine of incompatible offices, which prohibits an individual from simultaneously holding two public offices that are “incompatible” with one another;
  • The appearance of fairness doctrine, which requires government decision-makers to conduct quasi-judicial hearings and proceedings in a way that is fair and unbiased in both appearance and fact;
  • The common law conflict of interest doctrine as recognized in Smith v. Centralia, 55 Wash. 573 (1909), a case in which the Washington Supreme Court found that the common law principle preventing municipal officers from adjudicating their own cause is a “a maxim as old as the law itself”; and
  • Article 11, section 8 and article 30, section 1 of the Washington State Constitution, which prohibit mid-term or post-election pay increases for municipal officers who fix their own compensation.

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Last Modified: February 10, 2017