The Society for Human Resource Management provide this excerpt from their sample employee handbook. I think it should be mandatory for all government agencies. It has nothing to do with the quality of the job performance of Mike Stoops, JT Gasso or Colton Coale. It is just good business, good government or good university practice. The following appears to cover most if not all circumstances.
Nepotism, Employment of Relatives and Personal Relationships
[Company Name] wants to ensure that corporate practices do not create situations such as conflict of interest or favoritism. This extends to practices that involve employee hiring, promotion and transfer. Close relatives, partners, those in a dating relationship or members of the same household are not permitted to be in positions that have a reporting responsibility to each other. Close relatives are defined as husband, wife, domestic partner, father, mother, father-in-law, mother-in law, grandfather, grandmother, son, son-in-law, daughter, daughter-in law, uncle, aunt, nephew, niece, brother, sister, brother-in-law, sister-in-law, step relatives, cousins and domestic partner relatives.
If employees begin a dating relationship or become relatives, partners or members of the same household and if one party is in a supervisory position, that person is required to inform management and Human Resources of the relationship.
[Company Name] reserves the right to apply this policy to situations where there is a conflict or the potential for conflict because of the relationship between employees, even if there is no direct-reporting relationship or authority involved.