Does Texas nepotism law apply to relatives hired as independent contractors, not just employees?

Texas AG Opinion DM-0076: Nepotism Law, Second Cousins, and Independent Contractors

Plain-English summary

The Starr County Attorney asked two questions about the Texas nepotism law. First, whether a school board could employ a second cousin of a board member to perform legal services. Second, whether the nepotism law applied to a person hired as an independent contractor rather than as a regular employee.

On the first question, the Attorney General concluded the school board could hire the second cousin. The nepotism law, article 5996a, V.T.C.S., barred a school board from hiring anyone related to a board member within the third degree of consanguinity. In 1991, the Legislature amended the law to use the civil-law method of computing degrees of relationship instead of the common-law method. Under the civil-law method, second cousins are related in the sixth degree, which is outside the third-degree prohibition, so the law did not reach them.

On the second question, the Attorney General concluded the nepotism law does apply to independent contractors. A prior opinion, JM-45 (1983), had said the law made no distinction between employees and independent contractors. The requester suggested a later opinion, JM-492 (1986), had overruled that. The Attorney General disagreed. JM-492 dealt with a county contracting to build a fence with a company owned by a commissioner's sons, a situation governed by the 1983 conflict-of-interest statute (originally V.T.C.S. article 988b, recodified in 1987 as chapter 171 of the Local Government Code), not by the nepotism law. JM-492 was right that chapter 171 governed that contract, but wrong to suggest the 1983 conflict-of-interest law had changed the scope of the nepotism statute. The opinion explained that chapter 171 modified the common-law conflict-of-interest rules and imputes certain relatives' financial interests to a public officer, reaching some contracts that neither the nepotism law nor the old common-law rules had reached. The right question for the nepotism law, the opinion said, was simply whether the independent contractor was a natural "person," since the nepotism law applies to hiring natural persons. So the law applies whenever a governmental body hires a natural person related within a prohibited degree, employee or independent contractor alike. To the extent JM-492 said otherwise, the opinion said it was incorrect and should be disregarded.

Currency note

This opinion was issued in 1992. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. The nepotism law (then article 5996a, V.T.C.S.) was later recodified as chapter 573 of the Government Code, and both it and chapter 171 of the Local Government Code have been amended since 1992. Verify current law before relying on anything here.

Common questions

Could a school board hire a board member's second cousin?
Yes, under this 1992 opinion. After the 1991 switch to the civil-law method of counting kinship, second cousins are in the sixth degree of consanguinity, outside the nepotism law's third-degree prohibition.

Does the nepotism law cover independent contractors, or only employees?
Both. The opinion concluded the nepotism law applies whenever a governmental body hires a natural person related within a prohibited degree, whether labeled an employee or an independent contractor.

Didn't a later opinion say the conflict-of-interest law exempted independent contractors?
The opinion addressed that. It concluded JM-492 (1986) was wrong to suggest the 1983 conflict-of-interest statute (chapter 171 of the Local Government Code) had narrowed the nepotism law, and said that suggestion was incorrect and should be disregarded.

What is the difference between the nepotism law and chapter 171?
The nepotism law bars hiring relatives within a prohibited degree. Chapter 171 is a conflict-of-interest statute that governs contracts with business entities in which a member of the governmental body, or certain relatives, have a financial interest. The opinion treated them as separate statutes addressing different situations.

Background and statutory framework

The Texas nepotism law, article 5996a, V.T.C.S., prohibited a school board (and other governmental bodies) from hiring a person related to a member within the third degree of consanguinity. The 1991 amendment (Acts 1991, 72d Leg., ch. 561) substituted the civil-law method of computing degrees of relationship for the common-law method, which moved second cousins to the sixth degree and outside the prohibition; prior Opinion JM-581 (1986) had described both methods. The conflict-of-interest statute at issue, originally V.T.C.S. article 988b (Acts 1983, 68th Leg., ch. 640), was recodified in 1987 as chapter 171 of the Local Government Code; the opinion explained it imputes certain relatives' financial interests to a member within the first degree of consanguinity. The opinion relied on prior Opinions JM-45 (1983), O-718 (1939), JM-492 (1986), and JM-424 (1986), and on Bean v. State (nepotism law barred a district judge from appointing an uncle to represent an indigent defendant), Meyers v. Walker (common-law conflict-of-interest rules), and Lewis v. Hillsboro Roller-Mill Co. (judge not disqualified under former V.T.C.S. article 1138, now Government Code section 21.005, where a brother-in-law was a stockholder and president of a party corporation).

Citations

Statutory provisions:

• V.T.C.S. art. 5996a (Texas nepotism law; third-degree prohibition)
• V.T.C.S. art. 988b; Local Gov't Code ch. 171 (1983 conflict-of-interest statute, recodified 1987)
• V.T.C.S. art. 1138; Gov't Code § 21.005 (judge disqualification)

Cases:

• Bean v. State, 691 S.W.2d 773 (Tex. App.-El Paso 1985, pet. ref'd)
• Meyers v. Walker, 276 S.W. 305 (Tex. Civ. App.-Eastland 1925, no writ)
• Lewis v. Hillsboro Roller-Mill Co., 23 S.W. 338 (Tex. Civ. App. 1893, no writ)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/dan-morales/dm-0076
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1992/dm0076.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain — the linked PDF is authoritative.

Office of the Attorney General
State of Texas

DAN MORALES
Attorney General

January 17, 1992

Honorable Romero Molina
Starr County Attorney
P. O. Box 1198
Rio Grande City, Texas 78582

Opinion No. DM-76

Re: Whether nepotism law applies to individuals hired as independent contractors (RQ-111)

Dear Mr. Molina:

You ask whether a school board has authority to employ a second cousin of a member of the board to perform legal services. The Texas nepotism law, article 5996a, V.T.C.S., prohibits a school board from hiring any person related to a board member within the third degree of consanguinity. The 72d Legislature amended the nepotism law to substitute the civil law method of computing degrees of relationship for the common-law method of computing degrees of relationship. Acts 1991, 72d Leg., ch. 561, at 1979. Under the civil law method, second cousins are related within the sixth degree of consanguinity and are therefore not covered by the nepotism law. Id.; see generally Attorney General Opinion JM-581 (1986) (describing civil and common law methods for computing degrees of relationship).

You also ask whether the nepotism law applies to a person hired as an independent contractor rather than as a regular school district employee. Attorney General Opinion JM-45 (1983) stated that the nepotism law makes no distinction between "employees" and independent contractors. See also Attorney General Opinion O-718 (1939) (nepotism law prohibits county commissioners court from hiring son of county commissioner as architect). See generally Bean v. State, 691 S.W.2d 773 (Tex. App.--El Paso 1985, pet. ref'd) (nepotism law prohibits district judge from appointing uncle to represent indigent in criminal case).

You suggest, however, that Attorney General Opinion JM-492 (1986) overruled the holding of Attorney General Opinion JM-45 in regard to independent contractors. The issue in Attorney General Opinion JM-492 was whether a county could contract for the construction of a fence with a company owned by a county commissioner's sons. The opinion stated that a contract between a governmental body and a company owned by relatives of a member of the governmental body was governed not by the nepotism law but by a 1983 enactment that governs contracts between a local governmental body and business entities in which a member of the governmental body or certain relatives of a member of the governmental body have a financial interest. Acts 1983, 68th Leg., ch. 640, at 4079 (initially codified as V.T.C.S. article 988b; recodified in 1987 as chapter 171 of the Local Government Code) (hereinafter chapter 171). The opinion went on to say that the commissioners court had not violated the nepotism law because "that statute no longer controls county contracts with independent contractors." Although the opinion was correct in concluding that chapter 171 applied to the contract in question, the suggestion in the opinion that the 1983 enactment of the conflict-of-interest law somehow altered the scope of the nepotism law and thereby overruled Attorney General Opinion JM-45 was, we conclude, incorrect.

Conflict-of-interest rules existed in the common law for a considerable time before chapter 171 was adopted. See, e.g., Meyers v. Walker, 276 S.W. 305 (Tex. Civ. App.--Eastland 1925, no writ); Attorney General Opinion JM-424 (1986). The enactment of chapter 171 made some changes in the common-law conflict-of-interest rules. Unlike the common-law conflict-of-interest rules, the statutory scheme imputes to a member of a governmental body certain financial interests of his relatives within the first degree of consanguinity. It thus applies to certain contracts in which a public officer's relatives have a financial interest that before the adoption of chapter 171 would have been within neither the nepotism statute nor the common-law conflict-of-interest rules. Chapter 171 did not, as Attorney General Opinion JM-492 suggests, make changes that affected the scope of the nepotism statute. In suggesting that it did, Attorney General Opinion JM-492 erred in focusing on the fact that the contract at issue was with an independent contractor. To determine whether the nepotism law applied, Attorney General Opinion JM-492 should have considered whether the independent contractor was a "person" within the nepotism statute, since the nepotism law applies to the hiring of natural persons.[1] Thus, the nepotism law applies whenever a governmental body hires a natural person, whether as an employee or as an independent contractor. If the independent contractor is related to a member of the governing body within a prohibited degree, the nepotism law would prohibit the hiring.

In summary, the nepotism law governs the hiring of an individual, whether the individual is hired as an employee or an independent contractor. To the extent that Attorney General Opinion JM-492 stated that the enactment of V.T.C.S. article 988b (now chapter 171 of the Local Government Code) in 1983 made the nepotism statute inapplicable to an individual independent contractor who is hired to provide personal services, it is incorrect and should be disregarded. Therefore, a school district may not hire an individual related to a board member within a prohibited degree to provide legal services, regardless of whether the individual is hired as a regular employee or as an independent contractor.

SUMMARY

A county commissioners court may not hire an individual related to a county commissioner within a prohibited degree, regardless of whether the individual is hired as a regular employee or as an independent contractor. Statements in Attorney General Opinion JM-492 (1986) to the effect that the nepotism statute did not apply to an individual hired as an independent contractor are incorrect and should be disregarded.

DAN MORALES
Attorney General of Texas

WILL PRYOR
First Assistant Attorney General

MARY KELLER
Executive Assistant Attorney General

JUDGE ZOLLIE STEAKLEY (Ret.)
Special Assistant Attorney General

RENEA HICKS
Special Assistant Attorney General

MADELEINE B. JOHNSON
Chair, Opinion Committee

Prepared by Sarah Woelk
Assistant Attorney General

[1] See Lewis v. Hillsboro Roller-Mill Co., 23 S.W. 338 (Tex. Civ. App. 1893, no writ) (judge not disqualified under former V.T.C.S. article 1138, now Government Code section 21.005, to try suit when his brother-in-law is stockholder and president of plaintiff corporation).