Sending Holiday Gifts To State and Federal Employees?

During the holiday season, contractors often send gifts to business contacts as a showing of appreciation, goodwill, or as a kind gesture.  While a gift helps facilitate and strengthen business relationships in the private sector, in the public sector, common business courtesies may appear as an attempt to unduly influence a government official and the procurement process.  As such, both state and federal law restrict when government employees may accept gifts from outside sources.  Furthermore, certain instances of gift giving may be construed as an unlawful bribe leading to significant penalties to contractors and the public employee. 

Rules for Federal Employees

As a general rule, federal employees are prohibited from soliciting or accepting gifts that are given because of their official positions or that come from certain prohibited sources.  Federal law defines a “gift” as including “any gratuity, favor, discount, entertainment, hospitality, loan, forbearance, or other item having monetary value.”  Prohibited sources include anyone: (1) seeking official action by the employee’s agency; (2) doing business with or seeking to do business with the employee’s agency; or (3) conducting activities regulated by the employee’s agency. 

There are detailed exceptions to the general rule. See, 5 CFR §2635.201–206.  For instance, federal employees may receive greeting cards and items with little intrinsic value, such as plaques, paperweights or pens with company logos, which are not prohibited gifts.  Modest items of food or refreshment such as soft drinks, coffee, and donuts offered other than as part of a meal are also exceptions to the gift ban.  Alcohol, however, is considered a gift and is a prohibited.  Additionally, employees may accept items with a market value or $20.00 or less, so long as the employee does not accept gifts with a market value in excess of $50.00 from one person or organization in any given year.  

Rules for Minnesota State Employees

Similar to federal law, Minnesota law generally prohibits gift giving, with the rules varying among each of the different branches of government.  For instance, Minnesota executive branch employees (e.g, MN/DOT employees or employees of another contracting agency) are not allowed to accept gifts, except for items of nominal value ($5.00 or less), plaques, and mementos.  Similarly, for the legislative branch, a “lobbyist” or “principal” may not give a give a gift to an official, and an official may not accept a gift from a lobbyist or principal.  Gift is defined very broadly, and includes anything given without the giver receiving equal or greater value in return.  A “lobbyist” includes anyone who spends more than $250.00 annually for the purpose of attempting to influence legislative or administrative action by communicating with public officials.  A “principal” includes an individual or association that employs a lobbyist or spends a total of at least $50,000.00 annually on efforts to influence legislative or administrative action. 

Gifts Can Be Construed As Bribery

Even if state or federal law permits the giving of a gift, contractors should be aware that there is no bright line test for when acts of goodwill cross the line into being considered a criminal bribe. Generally speaking, anti-bribery laws prohibit the giving of any benefit, reward or consideration to which the public official is not legally entitled where the intent is to influence the person's performance of his/her powers or duties as a government official.   If the act of goodwill crosses the line into being a bribe, the consequences can be severe.   For instance, under Minnesota law, individuals who attempt to bribe a government official or employee can be subject to criminal penalties of up to $20,000 and 10 years in prison.  Minn. Stat. §609.42.  Likewise, under federal law, an unlawful bribe can lead to criminal penalties of up to 15 years in prison plus treble the monetary value of the item at issue.   18 U.S.C. § 201.  While sending a holiday card or trinket is unlikely to be considered an unlawful bribe, before sending holiday gifts to public employees, contractors should be familiar with the laws of gift giving to public officials and/or consult with legal counsel for advice.  

If you have questions regarding this article or any other labor and employment law matters, please contact Tom Revnew (trevnew@seatonlaw.com or 952-921-4622) or any other attorney at Seaton, Peters & Revnew, P.A.

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