Can Government Employees Own Businesses?

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A government employee can do business on his own time, whether it's working for someone else or running a business of his own. This "yes" is hedged around with all kinds of "buts" such as not having a conflict of interest with your government work. A state or federal employee moonlighting should seek approval before their business opens.

TL;DR (Too Long; Didn't Read)

Usually, a government employee can do business besides their day job if there's no conflict of interest. However, some agencies may not allow state or federal employee moonlighting. Always clear your plans with your employer before going ahead.

Conflicts of Interest

It's legal to take the job skills you've developed as a government employee and put them to use in the private sector. If, however, the government sees a conflict of interest between your side hustle and your day job, that's another story. You aren't allowed to exploit your government position for private gain, or to run a business that might compromise your official duties:

  • A prison doctor can't send inmates to the doctor's private practice for treatment.
  • You cannot sell products or services to the federal government as a contractor. Some states will allow this, provided you compete for the contract like anyone else. 
  • You can't represent clients before your agency. An IRS worker could prepare tax returns for clients, but they couldn't represent clients in an IRS tax court.
  • If you work for a regulator, such as the Food and Drug Agency, you can't open a business you or your colleagues would be responsible for overseeing.
  • You can't use nonpublic information you gained in your government work to benefit your business.
  • Your new business can't create a scheduling conflict for your government job. The government expects you to put them first.
  • You can't take office supplies for business use.
  • You can't work on business matters while you're on the government's clock.
  • You can't market your business to coworkers you have authority over. 

Every branch or agency will have specific guidelines about state or federal employee moonlighting. The Department of Defense, for example, says making speeches or writing could be a problem if it's based on your government position, rather than your expertise.

Illegal Federal Employee Moonlighting

In the worst-case scenario, federal employee moonlighting doesn't just violate your agency's regulations, it breaks the law. If you're involved in an official capacity with government decisions or policies that would directly affect your business's bottom line, that's a criminal conflict of interest. So is acting as an agent or attorney for anyone in a legal or regulatory matter in which the government is a party.

The Appearance of Impropriety

It's not enough that there's no conflict of interest between your two careers. It's also important your business avoid any appearance of impropriety, government-speak for things that look shady even though they're legit. If members of the public look at your business and think it might create bias or a conflict of interest, your agency will not be happy.

Pre-Approval For Business

To stay within the law, don't launch your business without clearing it with the government first. Depending on which government or agency you work for, you may have to run it by the agency head or an ethics official. Many agencies make prior approval mandatory if you want to keep your job.

Assure the official you talk to that you're not looking to quit, and that you won't be any less committed to your government work. Then keep your two careers strictly segregated. Even if you don't break the rules, handling your second career on the government's dime doesn't look professional.

References

Resources

About the Author

Fraser Sherman has written about every aspect of business: how to start one, how to keep one in the black, the best business structure, the details of financial statements. He's also run a couple of small businesses of his own. He lives in Durham NC with his awesome wife and two wonderful dogs. His website is frasersherman.com

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