III. Background on the Restrictions on Outside Employment and Income

At times a newly elected House Member or a new House employee wishes to continue, in some limited form, the private or other outside employment in which he or she had been engaged. Also, a House Member, officer, or employee may wish to accept a part-time job or a position with an outside entity or otherwise commence outside employment simultaneously with their service in the House.

As detailed in the remainder of this chapter, federal law and House rules include restrictions on the types of outside employment and a limit on the amount of outside earned income that Members, officers, and employees of the House may accept. “Earned” income is income that constitutes compensation for services. The fundamental purpose of the restrictions and limit is to ensure that Members and staff do not use the influence or prestige of their position with the House for personal gain, and to preclude conflicts of interest.

While certain laws, rules, and standards of conduct apply to all House Members and staff (as discussed previously in this chapter), other, more specific restrictions on outside earned income and employment apply only to Members and certain highly paid staff, who are referred to in this chapter as “senior staff,” “senior employees,” or individuals “paid at the senior staff rate.” As detailed below, the salary rate at which a House officer or employee becomes subject to these specific limitations is determined for each calendar year by a formula established in both federal law and House rules. In calendar year 2008 the “senior staff rate” is an annual rate of $114,468. The senior staff rate for other years is available from the staff of the Standards Committee.

The restrictions on the outside earned income of House Members and senior staff are far more detailed and extensive than those applicable to so-called “unearned” income – that is, income that constitutes a return on capital. The House approved the establishment of an annual limitation on outside earned income in 1977 at the recommendation of the House Commission on Administrative Review, and the Commission’s report explains the basic reasons that outside earned income presents significantly greater ethical concerns:

Earned income creates a variety of more serious potential conflicts of interest than does investment income, ranging from overt attempts to curry favor by private groups to subtle distortions in the judgment of Members on particular issues. The Member who has stock holdings can transfer his holdings at any time to another company, and, thus, is not as subject to the same degree of potential conflict as a Member whose salary [from a private company] could be cut off arbitrarily.

Outside earned income also presents a “time conflict” between the Member’s private interest and the public interest. Supplementing salary with outside earned income can detract from a Member’s full time and attention to his official duties and creates subtle distortions in judgment as to how Members should use their time. . . .

Moreover, many citizens perceive outside earned income as providing Members with an opportunity to “cash in” on their positions of influence. Even if there is no actual impropriety, such sources of income give the appearance of impropriety and, in so doing, further undermine public confidence and trust in government officials.[57]

[57] Comm’n on Admin. Review, Financial Ethics, H. Doc. 95-73, 95^th Cong., 1^st Sess. 10 (1977).

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Twelve years later, in 1989, the House approved additional, significant restrictions on outside employment and earned income of Members and senior staff upon the recommendation of the House Bipartisan Task Force on Ethics. The report of the Task Force explained the purposes of the limitations then in effect as follows:

The current limitations on outside earned income and honoraria were prompted by three major considerations: First, substantial payments to a Member of Congress for rendering personal services to outside organizations presents a significant and avoidable potential for conflict of interest; second, substantial earnings from other employment is inconsistent with the concept that being a Member of Congress is a full-time job; and third, substantial outside earned income creates at least the appearance of impropriety and thereby undermines public confidence in the integrity of government officials.
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The earned income limitation was intended to assure the public that (1) Members are not using their positions of influence for personal gain or being affected by the prospects of outside income; and (2) outside activities are not detracting from a Member’s full-time attention to his or her official duties.[58]

[58] Bipartisan Task Force Report, supra note 8, at 12, 135 Cong. Rec. at H9256.

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