Could a school district keep hiring an outside CPA as auditor after the CPA's first cousin joined the school board?
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This page answers the general question as of 1983. Ezel answers yours: what it means for your facts, under current Texas law, with citations.
Texas AG Opinion JM-45: Outside School Auditor and Nepotism
Plain-English summary
JM-45 concluded that the Texas nepotism statute applied to a school district's outside CPA auditor even if the CPA was technically an independent contractor rather than an employee. The statute's broad terms covered service relationships without turning on that classification.
"We think [it makes] no [difference]."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1983/jm0045.pdf"It sought, in other words, to make it clear that nepotism questions should not turn on technical distinctions between 'employee' and 'independent contractor'; instead, the relevant question should be whether the governmental body employed the individual in question to perform some service for it."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1983/jm0045.pdf
The CPA was the first cousin of a school trustee and therefore related within the prohibited degree. Continued hiring was allowed only if the CPA qualified for the statute's exception by being continuously employed as auditor for two years before the cousin became a trustee.
"He may be reemployed, in other words, only if he was 'continuously employed' by the school district for two years prior to the date on which his first cousin officially became a school trustee."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1983/jm0045.pdf
Because the annual audit was periodic, "continuous employment" did not require the CPA to perform auditing work every day. It required the CPA to remain engaged by or under contract with the district throughout the full two-year period.
"[A]n individual who performs services on a seasonal or periodic basis may be protected by the two-years' continuous service proviso."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1983/jm0045.pdf"For the proviso to apply, however, the individual must have been 'employed' by, i.e., 'engaged' by or operating under a contract with, the governmental entity that hired him for the entire two years immediately preceding the election or appointment of his relative . . . to the governing board of that entity."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1983/jm0045.pdf
Whether the CPA actually had continuous contractual status for the required time was a factual question that the opinion process could not decide.
"Of course, the question of whether the CPA was employed by the school district for the required two year period is a fact question which cannot be resolved in the opinion process."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1983/jm0045.pdf
Currency note
This opinion was issued in 1983. 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.
Common questions
What relationship created the concern?
A newly elected school trustee was the first cousin of the CPA serving as the district's auditor.
"[A]n individual was elected as a trustee of an independent school district. This trustee is a first cousin of a certified public accountant (CPA) who serves as the school district's auditor."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1983/jm0045.pdf
How long had the CPA performed the audit?
The superintendent said the CPA first received the annual-audit contract in 1972 and had served continuously for eleven years.
"[The CPA] was first awarded a contract to perform the School District's annual audit in 1972 and he has served continuously in this capacity for the past eleven (11) years."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1983/jm0045.pdf
Did the trustee have a financial interest in the audit firm?
The submitted letter said no.
"This letter also states that the trustee has no financial interest in the audit firm in which the CPA is employed."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1983/jm0045.pdf
Did independent-contractor status avoid the nepotism law?
No. The statutory language covered an office, position, clerkship, employment, or duty and was meant to reach governmental hiring for services broadly.
"[T]he legislature, in enacting this statute, chose the extremely comprehensive words 'office, position, clerkship, employment or duty' in an effort to cover every conceivable situation in which a governmental body might hire someone to perform some service for it."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1983/jm0045.pdf
Why was the CPA within the statute?
The CPA was related to a trustee within the prohibited degree, was appointed by the school board to perform a service, and occupied a covered position, employment, or duty.
"[T]he CPA (1) is related to a school trustee within the prohibited degree; (2) was hired, i.e., 'appointed' by a school board containing this trustee to perform a service for the school district; and (3) occupies a 'position' or 'employment' or is performing a 'duty' for the district within the meaning of this statute."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1983/jm0045.pdf
What did the two-year exception require?
Continuous employment during the two years before the related trustee's election or appointment.
"[N]othing herein contained . . . shall prevent the appointment . . . of any person who shall have been continuously employed . . . for a period of two (2) years prior to . . . the election or appointment of the officer or member related to such employee in the prohibited degree."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1983/jm0045.pdf
Did an annual audit count as continuous employment?
Potentially. The CPA did not have to be actively auditing every day, but had to remain engaged or under contract throughout the two-year period.
"Continuously in . . . employ does not mean continuously in . . . service. To be employed in anything means not only the act of doing it, but also to be engaged to do it, or to be under contract or orders to do it."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1983/jm0045.pdf
What period did JM-45 use?
The entire 730 days immediately preceding the cousin's qualification as trustee.
"If, during the entire 730 days immediately preceding the qualification of his first cousin as trustee, this CPA was continuously under contract with the school district to perform auditing services for it, we believe that no violation of article 5996a occurred when the school board thereafter continued to reemploy him as its auditor."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1983/jm0045.pdf
Background and statutory framework
The nepotism statute barred covered officers and boards from appointing or voting for a person related within the second degree by affinity or third degree by consanguinity when public funds paid the compensation, subject to the continuous-employment exception.
"No officer . . . [of] any . . . school district . . . shall appoint, or vote for, or confirm the appointment to any office, position, clerkship, employment or duty, of any person related within the second degree by affinity or within the third degree by consanguinity."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1983/jm0045.pdf
JM-45 assumed that the CPA was currently serving as the district's auditor.
"We assume that the CPA in question is currently serving as the school district's auditor."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1983/jm0045.pdf
Holding
"No violation of article 5996a, V.T.C.S., occurred where a CPA who had served as the school district's auditor since 1972 was reemployed in that capacity after his first cousin was elected to the school board, if the CPA was 'continuously employed' by the school district as its auditor for two consecutive years prior to the election of his cousin as trustee."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1983/jm0045.pdf
Citations and references
Statute discussed by JM-45:
- "article 5996a, V.T.C.S." Official PDF
Case cited by JM-45:
- "Cox v. Brown, 50 S.W.2d 763, 764 (Mo. Ct. App. 1932)" Official PDF
Source
- Landing page: https://www.texasattorneygeneral.gov/opinions/jim-mattox/jm-0045
- Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1983/jm0045.pdf
Original opinion text
Best-effort transcription from a scanned PDF. Minor errors may remain. The linked PDF is authoritative.
The Attorney General of Texas
JIM MATTOX
Attorney General
July 25, 1983
Honorable Bob Bush
Chairman
Committee on Judiciary
Texas House of Representatives
P. O. Box 2910
Austin, Texas 78769
Opinion No. JM-45
Re: Whether an outside auditor who contracts to perform for a school district is subject to article 5996a, V.T.C.S., the nepotism statute
Dear Representative Bush:
You have requested a construction of article 5996a, V.T.C.S., which deals with "nepotism." The facts are as follows: in April, 1982, an individual was elected as a trustee of an independent school district. This trustee is a first cousin of a certified public accountant (CPA) who serves as the school district's auditor. According to a letter from the superintendent of this school district, this CPA "was first awarded a contract to perform the School District's annual audit in 1972 and he has served continuously in this capacity for the past eleven (11) years." This letter also states that the trustee has no financial interest in the audit firm in which the CPA is employed.
Article 5996a provides in part:
No officer . . . [of] any . . . school district . . . shall appoint, or vote for, or confirm the appointment to any office, position, clerkship, employment or duty, of any person related within the second degree by affinity or within the third degree by consanguinity to the person so appointing or so voting, or to any other member of any such board . . . of which such person so appointing or voting may be a member, when the salary, fees, or compensation of such appointee is to be paid for, directly or indirectly, out of or from public funds or fees of office of any kind or character whatsoever; provided, that nothing herein contained . . . shall prevent the appointment, voting for, or confirmation of any person who shall have been continuously employed in any such office, position, clerkship, employment or duty for a period of two (2) years prior to the election or appointment of the officer or member appointing, voting for, or confirming the appointment, or to the election or appointment of the officer or member related to such employee in the prohibited degree. (Emphasis added).
You have asked whether, in the situation outlined above, any violation of article 5996a has occurred. We assume that the CPA in question is currently serving as the school district's auditor.
In the aforementioned letter, the superintendent indicated that one of his concerns is whether, under article 5996a, it makes any difference that the CPA is an "independent contractor" rather than an "employee" of the school district. We think not. In our opinion, the legislature, in enacting this statute, chose the extremely comprehensive words "office, position, clerkship, employment or duty" in an effort to cover every conceivable situation in which a governmental body might hire someone to perform some service for it. It sought, in other words, to make it clear that nepotism questions should not turn on technical distinctions between "employee" and "independent contractor"; instead, the relevant question should be whether the governmental body employed the individual in question to perform some service for it. Thus, even assuming arguendo that this CPA is an independent contractor, this employment situation is covered by article 5996a, because the CPA (1) is related to a school trustee within the prohibited degree; (2) was hired, i.e., "appointed" by a school board containing this trustee to perform a service for the school district; and (3) occupies a "position" or "employment" or is performing a "duty" for the district within the meaning of this statute.
Because this employment relationship is governed by article 5996a, the CPA may, while his relative is serving on the school board, continue to be hired by that school board to perform as the school district's auditor only if the two-years' continuous employment proviso in article 5996a is applicable. He may be reemployed, in other words, only if he was "continuously employed" by the school district for two years prior to the date on which his first cousin officially became a school trustee. See Attorney General Opinion M-857 (1971).
In his letter, the superintendent advises that the CPA conducts the annual audit for the school district. We have been unable to locate a prior opinion dealing with a situation quite like this one, in which the question is whether the "continuous employment" proviso can apply where an individual is hired to perform a service during one portion of each year rather than throughout the entire year. We conclude, however, that the proviso applies in this instance if, during the two years immediately preceding the qualification of the CPA's first cousin as a trustee, the CPA was continuously in the employ of the school district as its auditor, regardless of whether he was actually rendering auditing services for the district.
Webster's New International Dictionary, 2nd Edition, defines "continuous" as "without break, cessation, or interruption; without intervening space or time." In Attorney General Letter Advisory No. 151 (1978), which concluded that the express refusal by a school district to rehire a teacher's aide before her current term of employment ended constituted a break in her employment for purposes of the two-year proviso, this office quoted the following statement from Cox v. Brown, 50 S.W.2d 763, 764 (Mo. Ct. App. 1932):
Continuously in . . . employ does not mean continuously in . . . service. To be employed in anything means not only the act of doing it, but also to be engaged to do it, or to be under contract or orders to do it.
These authorities establish that an individual who performs services on a seasonal or periodic basis may be protected by the two-years' continuous service proviso. For the proviso to apply, however, the individual must have been "employed" by, i.e., "engaged" by or operating under a contract with, the governmental entity that hired him for the entire two years immediately preceding the election or appointment of his relative (within the prohibited degree) to the governing board of that entity.
If, during the entire 730 days immediately preceding the qualification of his first cousin as trustee, this CPA was continuously under contract with the school district to perform auditing services for it, we believe that no violation of article 5996a occurred when the school board thereafter continued to reemploy him as its auditor. The fact that the auditor was hired to perform a periodic service does not mean that he cannot be deemed to have been "continuously employed" by the school district as its auditor for that two-year period. Of course, the question of whether the CPA was employed by the school district for the required two year period is a fact question which cannot be resolved in the opinion process.
SUMMARY
No violation of article 5996a, V.T.C.S., occurred where a CPA who had served as the school district's auditor since 1972 was reemployed in that capacity after his first cousin was elected to the school board, if the CPA was "continuously employed" by the school district as its auditor for two consecutive years prior to the election of his cousin as trustee.
Very truly yours,
JIM MATTOX
Attorney General of Texas
TOM GREEN
First Assistant Attorney General
DAVID R. RICHARDS
Executive Assistant Attorney General
Prepared by Jon Bible
Assistant Attorney General
APPROVED:
OPINION COMMITTEE
Rick Gilpin, Acting Chairman
Jon Bible
David Brooks
Colin Carl
Jim Moellinger
Nancy Sutton
Bruce Youngblood
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