The federal conflict of interest statutes are a set of criminal laws in Title 18 of the U.S. Code that bar executive branch employees from acting on personal financial interests, taking outside pay for their government work, or trading on their government service after they leave. The three central provisions are 18 U.S.C. § 208 (financial conflicts), § 209 (salary supplementation), and § 207 (post-employment restrictions), with penalties set by § 216. A wider layer of administrative rules, disclosure requirements, and the Hatch Act sits on top of them.
18 U.S.C. § 208: Financial Conflicts in Official Duties
Section 208 is the core statute. It makes it a crime for a federal employee to participate personally and substantially in any government matter in which they have a financial interest. “Particular matters” are specific proceedings — contracts, grants, claims, investigations, judicial and administrative cases. Participation is “personal and substantial” when the employee’s involvement is direct and meaningful, such as signing off on a decision, making a recommendation, or conducting an investigation.
The statute reaches beyond the employee’s own holdings. A spouse’s stock, a minor child’s trust, an organization where the employee is an officer or director, and a company the employee is negotiating with about future employment all count as the employee’s financial interest for purposes of the law.1Office of the Law Revision Counsel. 18 USC 208 – Acts Affecting a Personal Financial Interest Because of these “imputed interests,” an employee who owns nothing personally can still violate § 208 if a spouse holds shares in a company the employee’s work affects.
De Minimis Exemptions
Regulations at 5 C.F.R. § 2640.202 carve out safe harbors for small holdings. For matters involving specific parties, the employee, spouse, and minor children can together hold up to $15,000 in publicly traded securities of an affected company. For matters that affect companies indirectly rather than as parties, the ceiling rises to $25,000. For matters of general applicability such as rulemakings, an employee may hold up to $25,000 in any single affected company and $50,000 across all affected companies.2eCFR. 5 CFR 2640.202 – Exemptions for Interests in Securities These thresholds let employees keep ordinary investment portfolios without being disqualified from routine work.
Certificates of Divestiture
When an asset does have to go, forced sale can trigger a capital gains tax bill the employee never chose to incur. Under 26 U.S.C. § 1043, the Director of the Office of Government Ethics can issue a Certificate of Divestiture. If the employee reinvests the sale proceeds into U.S. Treasury obligations or an approved diversified investment fund within 60 days, capital gains tax is deferred.3Office of the Law Revision Counsel. 26 USC 1043 – Sale of Property to Comply With Conflict-of-Interest Requirements The certificate cannot be issued after the fact for property already sold, and it does not apply to assets already inside tax-advantaged accounts like 401(k)s or IRAs.4eCFR. 5 CFR Part 2634 Subpart J – Certificates of Divestiture The application goes through the agency ethics official before the sale.
18 U.S.C. § 209: No Outside Pay for Government Work
Section 209 bars anyone from paying, contributing to, or supplementing a federal employee’s government salary, and it equally bars the employee from accepting outside compensation for their government services.5Office of the Law Revision Counsel. 18 USC 209 – Salary of Government Officials and Employees Payable Only by United States The only carve-out written into the statute is for contributions from a state, county, or municipal treasury.
The provision catches arrangements that do not look like traditional bribery. A former private-sector employer that keeps paying an employee’s bonus or deferred compensation after they enter federal service can create a violation, even without any corrupt intent on either side. Anyone moving from the private sector into government should have their compensation arrangements reviewed by ethics counsel before the start date.
Penalties Under 18 U.S.C. § 216
Violations of § 208, § 209, and the other conflict statutes (§§ 203, 204, 205, and 207) are punished together under § 216. The criminal side has two tiers.
- General violations: up to one year in prison, a fine, or both.
- Willful violations: up to five years in prison, a fine, or both.
Fine amounts come from 18 U.S.C. § 3571, not § 216. Willful violations are felonies with a maximum criminal fine of $250,000. General violations are Class A misdemeanors capped at $100,000.6Office of the Law Revision Counsel. 18 USC 3571 – Sentence of Fine
On the civil side, the Attorney General can bring a separate action seeking a penalty of up to $50,000 per violation, or the amount of compensation the person received for the prohibited conduct, whichever is greater.7Office of the Law Revision Counsel. 18 USC 216 – Penalties and Injunctions Civil suits require only a preponderance of the evidence, which makes them easier to win than a criminal case.
18 U.S.C. § 207: Post-Employment Restrictions
Leaving government does not end the obligations. Section 207 layers several bans on former executive branch employees.8Office of the Law Revision Counsel. 18 USC 207 – Restrictions on Former Officers, Employees, and Elected Officials of the Executive and Legislative Branches
Permanent Ban on Switching Sides
A former employee may never represent anyone other than the United States back to the government on a specific matter they personally and substantially participated in while in office. The ban is limited to the specific contract, investigation, or proceeding the employee worked on, not the broader subject area. It has no expiration.
Two-Year Ban on Matters Under Official Responsibility
For two years after leaving, a former employee cannot represent anyone on a particular matter that was pending under their official responsibility during their last year of service, even if they never personally worked on it. This keeps former supervisors from immediately leaning on subordinates still handling those matters.
Cooling-Off Periods for Senior Officials
Senior officials face a one-year cooling-off period during which they cannot contact their former agency on behalf of anyone else about a matter on which they seek official action, whether or not they previously worked on it. Very senior officials — the Vice President, employees paid at Executive Schedule Levels I and II, and certain Executive Office of the President staff — face a two-year version that extends beyond their former agency to any senior executive branch official.
Procurement Integrity Act
A separate statute, 41 U.S.C. § 2104, targets the procurement world. For one year after leaving government, a former official may not accept compensation from a contractor if the official served as the contracting officer, program manager, or administrative contracting officer for a contract worth more than $10 million awarded to that contractor, or personally made a decision to award a contract, approve payments, or settle a claim exceeding $10 million with that contractor.9Office of the Law Revision Counsel. 41 USC 2104 – Prohibition on Former Officials Acceptance of Compensation From Contractor The ban does not reach a different division or affiliate of the contractor producing unrelated products or services.
The Standards of Ethical Conduct
The criminal statutes sit on top of a broader body of administrative rules at 5 C.F.R. Part 2635. These do not carry prison time on their own, but violating them can lead to discipline, and conduct that also breaches a criminal statute can be referred for prosecution.
Gifts
From a “prohibited source” — anyone who does business with the agency, seeks official action, is regulated by it, or has interests substantially affected by the employee’s work — an employee may accept unsolicited gifts worth no more than $20 per occasion, with a $50 annual cap from any single source. Cash and investment interests are excluded from the exception.10eCFR. 5 CFR 2635.204 – Exceptions to the Prohibition for Acceptance of Certain Gifts Separate rules govern free attendance at widely attended gatherings and limit gifts flowing between employees in the same chain of command.11eCFR. 5 CFR Part 2635 – Standards of Ethical Conduct for Employees of the Executive Branch
Impartiality
Even where no § 208 financial conflict exists, an employee must step aside from a matter if a reasonable person would question their objectivity — for example, when a household member, close family member, former employer, or organization in which the employee actively participates is a party. A supervisor can authorize participation if the government’s interest outweighs the appearance concern, but the authorization must be documented.
Misuse of Position and Government Resources
An employee may not use their title or authority to endorse any product, service, or enterprise.12eCFR. 5 CFR 2635.702 – Use of Public Office for Private Gain Nonpublic information obtained through federal employment is off-limits for personal use, whether for trading, sharing, or informing financial decisions.13eCFR. 5 CFR 2635.703 – Use of Nonpublic Information Government property — including office supplies, computers, vehicles, email and social media accounts, and even contractor personnel — must be used only for authorized purposes.14eCFR. 5 CFR 2635.704 – Use of Government Property
Outside Employment
Outside work is not banned outright, but it is restricted. An employee may not accept compensation from any non-government source for teaching, speaking, or writing that relates to their official duties, with a limited exception for teaching an accredited course as part of a regular curriculum.15eCFR. 5 CFR 2635.807 – Teaching, Speaking, and Writing16eCFR. 5 CFR 2636.304 – The 15 Percent Limitation on Outside Earned Income17U.S. Office of Personnel Management. Salary Table No. 2026-EX Full-time noncareer presidential appointees cannot receive any outside earned income at all during their appointment.
The Hatch Act
The Hatch Act restricts federal employees from mixing partisan politics with government work. All employees are prohibited from using official authority to influence an election, soliciting political contributions from people with business before their agency, and running for partisan office.18Office of the Law Revision Counsel. 5 USC 7323 – Political Activity Authorized; Prohibitions Most employees fall into a “less restricted” category and may take part in campaigns on their own time, off government property, and out of uniform. “Further restricted” employees — including staff at intelligence and law enforcement agencies, career members of the Senior Executive Service, and administrative law judges — face a near-total ban on active participation in partisan political management.
No employee, in either tier, may engage in political activity while on duty, in a government building, in uniform, or using a government vehicle.19Office of the Law Revision Counsel. 5 USC 7324 – Political Activities on Duty; Prohibition Penalties range from removal, reduction in grade, debarment for up to five years, suspension, and reprimand to a civil penalty of up to $1,000.20Office of the Law Revision Counsel. 5 USC 7326 – Penalties The Office of Special Counsel investigates violations and prosecutes them before the Merit Systems Protection Board.
Financial Disclosure
The disclosure system exists to catch conflicts before they become criminal violations. Senior officials — presidential nominees requiring Senate confirmation, members of the Senior Executive Service, and others in high-level positions — file the public OGE Form 278e.21U.S. Office of Government Ethics. OGE Form 278e – Overview It reports assets, income, liabilities, outside positions, and future-employment agreements, and it is available for public inspection. Annual reports are due May 15, new entrants file within 30 days of taking a covered position, and departing officials file a termination report within 30 days of leaving. A report more than 30 days late triggers a $200 fee paid personally by the filer to the Treasury, with no agency reimbursement.22eCFR. 5 CFR 2634.704 – Late Filing Fee
Employees in mid-level or sensitive positions, such as contracting officers and inspectors, file the confidential OGE Form 450 instead. It captures similar data but is not public and is used only for internal conflict screening. When a review finds a conflict, the usual remedies are divestiture (potentially with a Certificate of Divestiture) or a written disqualification agreement barring the employee from working on matters tied to the interest.
Who Administers and Enforces the Statutes
The Office of Government Ethics writes the regulations, develops training, monitors agency compliance, and reviews disclosures from the most senior officials. OGE does not handle individual cases. Each agency has a Designated Agency Ethics Official who collects and reviews disclosure forms, counsels employees on potential conflicts, runs annual training, and issues written guidance on gifts, outside employment, and post-government plans.
Ethics officials advise; they do not prosecute. When a review turns up evidence of a criminal violation under § 208 or § 209, the matter is referred to the Department of Justice, and federal prosecutors decide whether to open a formal investigation or bring charges. The advisory function is kept separate from enforcement on purpose: if asking an ethics question could itself trigger a prosecution, employees would stop asking.