What salary threshold triggers executive and legislative approval for an Arkansas state agency hiring a constitutional officer's spouse after the state pay plan was overhauled in 2009?

Plain-English summary

Legislative Auditor Roger Norman asked the AG to interpret an oddity in Arkansas's anti-nepotism rules. Ark. Code Ann. § 21-1-402(b) generally requires both the Governor and a legislative body (Joint Budget Committee or Legislative Council) to approve a state agency's hiring of a sitting constitutional officer's spouse. The exception, in § 21-1-407, is when the "entry salary does not exceed the amount prescribed by Level 4 of Grade 13 of the state compensation plan found in § 21-5-209."

The problem: that pay plan was overhauled in 2009 (Act 688). The new plan, still codified at § 21-5-209, no longer has a "Level 4" or "Grade 13." There is no direct mapping between old grades and new grades.

The Department of Finance and Administration, which has rulemaking authority in this area, has used $37,649 (the figure that corresponded to old Level 4, Grade 13 just before the 2009 transition) on its Employee Disclosure/Certification and Employment of Family Members Form ever since.

The AG endorsed that interpretation:

• Courts defer to long-standing agency interpretations of ambiguous statutes (Matter of Sugarloaf Mining Co.; Greene Acres Nursing Homes; Pledger v. Boyd; Leathers v. W.S. Compton Co.).
• The only alternatives were (1) the static $37,649; (2) the same figure adjusted for inflation (no statutory basis); or (3) nothing at all because there is no Level 4, Grade 13 in current law (which would mean either no exception at all or universal exception, neither of which the legislature could plausibly have intended).
• So $37,649 is the correct threshold.

The harder question was what "entry salary" means for part-time work. The Auditor described a real-world scenario: a constitutional officer's spouse accepted part-time state employment at an annual pay less than $37,649, but at an hourly rate that would have produced more than $37,649 if she had worked full time. No approvals were obtained. Was that compliant?

The AG concluded it more likely than not was not. The reasoning: "entry salary" refers to the amount a state employee initially earns working full time. For a part-time employee, that means the amount she would earn in a year were she to work full time at the rate she is paid. If the hourly rate, multiplied by the standard 2,080 work hours, exceeds $37,649 (which works out to $18.10/hour), approval is required regardless of actual annualized part-time pay.

Two policy points supported this reading. First, hiring a spouse at a high hourly rate for limited hours creates the same appearance-of-impropriety concern that the approval requirement was meant to address. Second, an "egregious low-salary case" (e.g., spouse paid just under $37,649 annually for only a few duty hours) would clearly call for oversight. The fact that work is part-time does not itself reduce the propriety concern.

The AG was careful to note this conclusion was not the only reasonable reading. The DF&A form does not ask whether the work is full- or part-time, and the law does not explicitly address part-time work. The AG explicitly called for legislative clarification and was clear that no wrongdoing was attributable to either the hired spouse or the hiring agency in the scenario described.

Currency note

This opinion was issued in 2015. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Background and statutory framework

The general rule (§ 21-1-402(b)) requires executive and legislative approval before a state agency hires the spouse of a sitting constitutional officer. The exception (§ 21-1-407) applies when the entry salary does not exceed a specified state pay-plan threshold (Level 4, Grade 13 of § 21-5-209). That exception was added in 1999 (Act 34) and used the phrase "as now or hereafter amended," signaling that the legislature intended the threshold to track future iterations of the pay plan.

The pay plan in § 21-5-209 was completely reorganized in 2009 (Act 688). The new plan uses different grade naming (Cl 17 instead of Grade 17, etc.) and has no Level 4 or Grade 13. DF&A, which has rulemaking authority over the state pay plan and personnel administration (§ 21-1-404), continued to use $37,649 (the pre-reorganization figure) on its Employee Disclosure/Certification and Employment of Family Members Form (Form F3/F4).

The opinion relied on standard Arkansas statutory-construction principles:

• Long-standing agency interpretations get judicial deference, particularly when the statute is ambiguous (Pledger v. Boyd; Leathers v. W.S. Compton).
• The interpretation will not be disregarded unless it is clearly wrong.
• Statutes are construed so as not to be a nullity (no plausible reading would leave the threshold meaning "nothing at all").

For the part-time issue, the opinion drew on § 21-5-101(b)(2) (which states that "the maximum annual salary authorized is for full-time employment") and § 21-5-106(a)(1)(C) and § 21-5-1101(b)(2) (which treat part-time employees as receiving recognition payments and merit pay "on a pro rata basis"). The system's structure treats pay-plan figures as annual full-time amounts. Translated to part-time work, the equivalent threshold becomes hourly: $37,649 divided by 2,080 hours, or $18.10/hour.

Common questions

Who is a "constitutional officer" for this rule?

Arkansas constitutional officers are the Governor, Lieutenant Governor, Attorney General, Secretary of State, Treasurer, Auditor, Land Commissioner, and Supreme Court Justices, among others created by the constitution. The anti-nepotism rules in § 21-1-402 et seq. apply to their spouses being hired by state agencies.

Does the rule apply if the spouse is already a state employee and just gets a promotion?

Yes, in some circumstances. Section 21-1-402(d)(1) applies executive and legislative approval requirements to certain existing-employee moves regardless of salary.

Does this rule apply to political-subdivision hiring (cities, counties)?

No. Section 21-1-407 is part of the state-agency framework. Cities and counties have their own nepotism rules.

If a part-time hire is below the $37,649 annual threshold but above $18.10/hour, what should the agency do?

Under the AG's reading, the agency should seek the executive and legislative approvals. The opinion explicitly called for legislative clarification because the DF&A form does not ask about full- vs. part-time, but the AG read the statute to require approval in that case.

Could the legislature change this?

Yes, and the AG flagged that as the cleanest fix. Legislative clarification on (a) the proper threshold figure post-2009 and (b) the treatment of part-time hires would resolve the ambiguity.

Citations

• Ark. Code Ann. § 21-1-407 (Repl. 2004) (salary-threshold exception)
• Ark. Code Ann. § 21-1-402(b) (Supp. 2013) (approval requirement)
• Ark. Code Ann. § 21-1-402(d)(1) (existing employee provisions)
• Ark. Code Ann. § 21-1-404 (Repl. 2004) (DF&A rulemaking authority)
• Ark. Code Ann. § 21-5-209 (state compensation plan)
• Ark. Code Ann. § 21-5-101(b)(2) (annual salary for full-time employment)
• Act 34 of 1999, § 7 (added the exception with "now or hereafter amended" language)
• Act 688 of 2009, § 7 (replaced the state pay plan)
• Matter of Sugarloaf Mining Co., 310 Ark. 772, 840 S.W.2d 172 (1991) (deference to agency)
• Pledger v. Boyd, 304 Ark. 91, 799 S.W.2d 807 (1990) (long-standing interpretation)
• Leathers v. W.S. Compton Co., Inc., 316 Ark. 10, 870 S.W.2d 710 (1994) (ambiguous statute)

Source

• Landing page: https://arkansasag.gov/divisions/opinions-foia/attorney-general-opinions-search/

Original opinion text

Opinion No. 2015-045
August 28, 2015
Roger A. Norman
Legislative Auditor
STATE OF ARKANSAS
ATTORNEY GENERAL
LESLIE RUTLEDGE
500 Woodlane Street, Suite 172
Little Rock, Arkansas 72201-1099
Dear Mr. Norman:

This is my opinion on your questions about the law governing state agency hiring of a constitutional officer's spouse. It will be helpful before setting out your questions regarding this law to first outline the background information you provided.

BACKGROUND

Generally, a state agency's hiring of a current constitutional officer's spouse must be approved by (1) the Governor and (2) the Joint Budget Committee or Legislative Council.

Approval is not required, however, if the spouse's "entry salary does not exceed the amount prescribed by Level 4 of Grade 13 of the state compensation plan found in § 21-5-209."

The state compensation plan referred to was replaced in 2009. The replacement plan is codified at § 21-5-209, as was the old plan. Thus there is still a "state compensation plan" to be found in that code section. But the plan found there now has no "Level 4" or "Grade 13." "There is not a direct correlation of old and new grades. [For example,] Grade 17 in the current pay plan is not equal to a Grade Cl 17 on the new pay plan."

In asking job candidates about this law and others, state agencies use a form promulgated by the Department of Finance and Administration ("DF&A"), which has rulemaking authority in this area. The form asks whether the person is a constitutional officer's spouse and, if so, whether the "expected salary" is more than $37,649, which is the amount that corresponded to the old pay plan's level 4, grade 13, just before the new pay plan took effect in 2009. The form advises state-agency recruiters that executive and legislative approvals are required to hire a person who answers both questions "yes," but not one who answers the salary question "no."

You state that a constitutional officer's spouse accepted part-time state employment at an annual salary less than $37,649 but at a rate of pay that would result in an annual salary of more than $37,649 if the spouse worked full time. The approvals were not obtained.

QUESTIONS

You ask in essence what "the amount prescribed by Level 4 of Grade 13 of the state compensation plan found in § 21-5-209" and "entry salary" mean in these circumstances. Your inquiry encompasses two issues: (1) whether $37,649 is "the amount prescribed by Level 4 of Grade 13 of the state compensation plan found in § 21-5-209," and (2) whether the amount a person would earn annually working full time should be deemed to be his "entry salary" for purposes of the statute, notwithstanding that his actual, part-time annual pay is less than the statutory threshold.

RESPONSE

In my opinion, $37,649 is the appropriate amount. While I am unable to give an unequivocal answer to the question concerning part-time work, in my opinion it is more likely than not that "entry salary" refers to the amount a state employee initially earns working full time or, with respect to a part-time employee, the amount he would earn in a year were he to work full time at the rate he is paid for his part-time work. Legislative clarification is warranted on this issue.

DISCUSSION

I. "Amount prescribed by Level 4 of Grade 13"

I conclude, for the following reasons, that when Ark. Code Ann. § 21-1-407 refers to "a salary that does not exceed the amount prescribed by Level 4 of Grade 13," the salary threshold being referred to is $37,649.

First courts generally defer to a statutory interpretation adopted by the regulatory agency responsible for administering and enforcing the statute, particularly where the administrative interpretation is of longstanding or where the statute is ambiguous. In such a case, the administrative interpretation will not be disregarded unless it is clearly wrong. Here, DF&A's interpretation, as evidenced by the form, has been consistent since the old pay plan was replaced in 2009. While the statute may or may not be formally ambiguous in the legal sense, it unquestionably does not provide an express answer on its face. Accordingly, I believe a court would defer to DF&A's interpretation, namely, that $37,649 is the salary threshold above which the approval outlined above is required.

Second, there really is no plausible alternative interpretation available. The only possibilities, in my view, are that the language means: (1) $37,649; (2) $37,649 as adjusted for inflation or in some other manner; or (3) nothing at all (due to the pay plan's replacement and the absence of any "Level 4 of Grade 13" in current law). Possibilities (2) and (3) are, in my estimation, quite unlikely. Only by speculation could one read an inflation or similar adjustment into the law. The pay plan's details are not relevant to the law at issue except regarding the exception to the approval requirement. So there is no reason to think the General Assembly meant to abolish the approval requirement, or perhaps make it universal, by the exceptionally indirect method of changing the pay plan. Because the other two possibilities are so unlikely, the first must be correct.

II. The Meaning of the Term "Entry Salary"

Approval is only required if the "entry salary" is more than $37,649. But the term "entry salary" is not defined, whether by the law governing state employment generally, nor by the laws establishing the approval requirements. The term only appears in one other code section, where it refers to pay levels specified in the compensation plan.

Pay levels in the compensation plan are clearly annual salary amounts for full-time work. Yet state law contemplates that some state employees will be part-time state and that they may be paid a percentage of a compensation-plan amount equal to the percentage of full time they work.

A person's salary can be thought of annually or hourly. The foregoing section of this opinion makes it clear that, annually, the salary threshold for seeking approval is $37,649. A full-time employee who is paid $37,649 annually is being paid half as much, on an hourly basis, as a half-time employee who is paid $37,649 annually. So if the full-time employee must seek approval, then the part-time employee must also seek approval if his actual hourly rate-of-pay, when multiplied by 2,080 (i.e. the total number of work hours in a full-time employee's year) exceeds $37,649.

Therefore, approval must obtained under two scenarios: (1) the employee's annual pay exceeds $37,649; or (2) the employee's hourly pay exceeds $18.10 ($37,649/2080 = $18.10).

My conclusion is consistent with the purpose apparently underlying the approval requirement and the exception. The approval requirement likely was enacted to require executive and legislative review and approval of hirings that might appear to be based on factors other than the spouse's job qualifications. The exception acknowledges the fact that hirings at relatively low rates of pay are not likely to give a significant appearance of impropriety, and therefore need not be subject to oversight at the highest levels. But it is easy enough to imagine an egregious "low-salary" case, one where the spouse's annual pay is just less than $37,649, and his duty hours are just greater than zero, that clearly calls for oversight. The fact that a person works part time is not relevant, in my view, to whether his hiring may give an appearance of impropriety, particularly when the person's pay per unit of time worked is relatively high.

In my opinion, then, the exception to the approval requirement is not available to a person who is to be paid for part-time work an annual amount greater than the amount a level 4, grade 13, state employee would be paid pro rata for working the same percentage full time.

I recognize that the statute does not expressly address part-time work or pay and that my conclusion is not the only one that could reasonably be reached. The form discussed above does not ask whether the work is to be full- or part-time, and that omission is some evidence that DF&A has not to date affirmatively adopted the interpretation I suggest here. This opinion should not be read to suggest that DF&A should have done so or, until now, has had any occasion to do so. Neither should this opinion be read to suggest any wrongdoing on the part of the constitutional-officer spouse you describe or the hiring agency. To the contrary, the facts you provide indicate that the agency used the appropriate form and the person hired answered the form's questions truthfully. Because the law's meaning is not necessarily apparent on its face and because compliance with the law is a matter of great public interest, legislative clarification of this issue would be beneficial.

Sincerely,
LESLIE RUTLEDGE
Attorney General

LR/JMB:cyh