GOVERNMENT : U.S. Employees Riled by Extra-Income Ban : Rank and file caught in ethics rules meant for higher officials. Now, a preacher can’t accept pay.

Federal employees are reacting with shock and anger to new restrictions on their outside activities that have been quietly imposed by Congress in the name of ethics reform. In one case, the impact of the new rules bars a Baptist minister from accepting payment for conducting weddings and funerals.

The controversy springs from an attempt by Congress to tighten its own ethical standards. But Congress, which has had a hard time writing effective rules for itself, seems to have had even more difficulty drawing legal lines that prevent improper conduct by ordinary federal workers without infringing unduly on their private lives.

THE PROBLEM: The new rules, which took effect Jan. 1 but are only now beginning to make themselves felt, bar any federal worker from accepting any payment for any type of outside activity if it involves writing, speaking or personal appearances.

The original idea was to prevent federal judges and high government officials from accepting honorariums. As written, however, the restriction applies not only to judges and upper-level policy-makers but to all government workers--including clerks and truck drivers--even when their outside activities have no real connection with their government jobs.

The result, many federal workers complain, is an unfair and arbitrary distinction between different kinds of moonlighting and outside activity, no matter how free of conflict of interest the proscribed activity may be.

Consider these examples, all involving employees of the Internal Revenue Service:

--Thomas Fishell of Dallas earned about $1,000 in outside income last year as a self-employed licensed minister of the Southern Baptist Convention. Fishell delivered sermons and performed weddings and funerals, but he will be prohibited from receiving pay for such activities under the new law because they are considered speeches.

--Jan Adams-Grant of Ogden, Utah, earned about $3,000 in 1990 by writing articles and giving speeches on earthquake preparedness. She has a master’s degree in geophysics from Utah State University. But she no longer may receive this outside income, even though it has no relation to her IRS work.

--John Shelton, who works in the IRS office in St. Louis, also covers professional baseball and hockey games as a part-time reporter for the Associated Press. He has earned from $1,500 to $2,000 annually from his sports writing in recent years. But he, too, is now banned from outside earnings from his writings, even though his superiors say the work does not conflict with his government job.

THE BACKGROUND: The new restrictions are contained in the Ethics Reform Act, in which the House of Representatives banned the receipt of honorariums for its members in return for a 25% pay hike, which took effect this year. In an attempt to achieve uniformity throughout government, and recognizing that judges and many senior government workers also were getting a pay raise, lawmakers imposed a prohibition on payments for outside writings and speeches throughout government.

The Senate voted to allow its members to continue to accept honorariums because it approved only a small cost-of-living increase for senators; but the senators accepted the House language on federal workers, and it was included in the final bill signed by President Bush.

Members of two federal unions, the National Treasury Employees Union and the American Federation of Government Employees, have gone to court to seek relief, but that is likely to take time because the courts have refused to consider the issue on an emergency basis. And a parallel effort to win changes in Congress also will be a protracted process.

Meantime, said Robert M. Tobias, president of the union that represents 140,000 Treasury employees nationwide, “The ethics law stopped the gravy train for members of Congress, but it also derailed ordinary, enterprising federal workers from using their right to free speech to make an honest buck--on their own time and in totally non-government-related ways.”

RULES FOR FEDERAL EMPLOYEES

The new congressional restrictions on federal employees come on top of a host of rules and regulations designed to ensure ethical conduct and lack of bias in the performance of their duties. Among the activities that are restricted or proscribed: * POLITICAL ACTIVITY: The Hatch Act outlaws political activity by federal workers, such as openly campaigning for candidates for federal office or speaking at political rallies. Federal employees, however, are free to engage in such ordinary activities as making political donations or speaking to friends about candidates.

* GIFTS AND GRATUITIES: A number of civil as well as criminal laws bar federal workers from accepting gifts or other gratuities from persons who have business under their jurisdiction or, in some cases, before the agencies that employ them. A procurement officer at the Defense Department, for example, may not receive a gift from a defense contractor seeking to sell the government a weapon system.

* SELF-BENEFIT: Similarly, a federal worker is barred from taking any official action that would benefit his own financial interest. An official of the Environmental Protection Agency, for instance, may not take any action affecting a company in which he owns a substantial interest.

To protect against such practices, the government has long required high-ranking officials to file annual financial disclosure statements listing the corporate stocks and properties they own. The nation’s top 12,000 officials, mainly presidential appointees, must file such statements publicly, whereas 200,000 middle-level officials must file them confidentially with their agencies or departments.