A state official or state employee, in the exercise of that official’s or employee’s duties, may not serve in a supervisory capacity over, or enter a personal service contract with, that official’s or employee’s parent by birth or adoption, spouse, son or daughter by birth or adoption, stepchild, brother or sister by whole or half blood or by adoption, brother-in-law or sister-in-law, or son-in-law or daughter-in-law. As used in this section, “supervisory capacity” means the authority to appoint, employ, hire, assign, transfer, promote, evaluate, reward, discipline, demote, or terminate. As used in this section, “evaluate” does not include evaluations by peers or subordinates. This section does not apply to an employment relationship or contract entered before August 1, 1999; nor to any employment relationship or contract entered before the state official or employee assumed the supervisory capacity; nor to any temporary work arrangement necessary to meet a critical and urgent agency need.