Earlier this year, a government contractor lost just over $7 million in New Jersey state government contracts because of a single political contribution that was inadvertently made payable to the WRONG political recipient. Don’t let this happen to your company:
- If an invitation for a political event gives you a choice of recipients to which you can write your check, always evaluate your options and understand the pay-to-play limits with respect to each recipient committee. Different pay-to-play restrictions apply to different types of recipients. Choose wisely …
- Always have a clear understanding of each type of recipient committee. Ask yourself – are we writing our check to a candidate, party, PAC, Super PAC or legislative leadership committee?
- Look at the check before it goes out to make sure the check is payable to the intended recipient. Ask yourself – does the name on the check match up with the name on the invitation? Is this the committee to which we want to contribute?
- Use a cover letter with each contribution. Stick to the basics – Who, What , When, Where – remember less can sometimes be more – there is no need to include a Why!
- Review your canceled checks on a regular basis to make sure your check was deposited by the intended recipient and didn’t end up in the wrong pile of checks (sometimes recipient committees share a Treasurer).
- Train relevant people within your company about the “Dos and Don’ts” of political activity compliance (although too many cooks in the kitchen can sometimes be a recipe for disaster, having more than one set of eyes involved in the process is usually helpful).
- Do not participate as a matter of routine – recipient committees will always be happy to accept your contribution after an event – contact the recipient committee if you need additional information and take your time to make an informed decision – remember – political contributions are NOT an emergency!
- And, if a mistake occurs because you did not have (or follow) the proper procedures at the time of the contribution, review the refund provisions and do everything in your power to get the check back within the correct time-frame.
For more information on how you or your company may safely participate in the political process while preserving eligibility for government contracting opportunities, please contact Rebecca Moll Freed, Esq., Chair of the Corporate Political Activity Law Group, at firstname.lastname@example.org or 973-230-2075.
On the same day that it was announced that Kim Guadagno and Phil Murphy both qualified for public matching funds in New Jersey’s 2017 gubernatorial election, the New Jersey Election Law Enforcement Commission issued a News Release reporting that independent spending reached an all-time high in New Jersey’s 2017 primary election. This means that, as we look toward the general election, our gubernatorial candidates will be limited in what they can spend in the general election ($13.8 million to be precise) while independent groups will not be subject to contribution or expenditure limits—this type of “outside spending,” which arises from sources other than candidates, is likely to become increasingly important in the 2017 gubernatorial election.
Under the First Amendment, independent groups are permitted to spend unlimited amounts of money in connection with an election provided they do not coordinate their activities with a candidate, his or her agents, or his or her campaign. Many think that Super PACs and independent-expenditure only committees are the only outside groups that play a role in elections; however, individuals, corporations, labor organizations and trade associations are also free to engage in the process and spend unlimited funds in New Jersey elections so long as there is no coordination with the candidate, his or her agents, or his or her campaign. Especially in New Jersey, home to strict pay-to-play restrictions that limit contributions to no more than $300 per election to a gubernatorial candidate and no more than $300 per calendar year to a party committee by a government contractor (and certain individuals associated with that contractor), independent spending is likely to play a big role in the upcoming general election.
For more information on how you or your company may participate in the political process, please contact Rebecca Moll Freed, Esq., Chair of the Corporate Political Activity Law Group, at email@example.com or 973-230-2075.
On Tuesday, June 6th, New Jersey held its 2017 gubernatorial primary election. Voters went to the polls to choose the Republican and Democratic candidates for Governor. Now that we know that the general election will feature a race between Phil Murphy and Kim Guadagno, here are a few campaign-finance and pay-to-play reminders to keep in mind as you decide how you would like to participate:
- If your company holds New Jersey State government contracts or would like to remain eligible for New Jersey State government contracts in the future, you should limit your corporate contribution to a gubernatorial candidate to no more than $300 per election per candidate.
- Compliance Tip – Regardless of how your company is organized, contributions by your company’s shareholders, officers, equity partners, equity members and the spouses, resident children and civil union partners of these individuals may impact your company’s eligibility for State government contracts.
- If remaining eligible for New Jersey State government contracts is not a concern, and your company is organized as a corporation, your company may contribute up to $4,300 per election per candidate.
- Compliance Tip – Please note that affiliated corporations may share a contribution limit.
- If your company is organized as a corporation, shareholders, officers and directors enjoy individual contribution limits that are separate from the limit enjoyed by the company.
- Compliance Tip – Please note that certain regulated-industry companies may not contribute with corporate funds, but individual officers and directors may participate individually.
- If your company is organized as a partnership or limited liability company, your company may not contribute as an entity, but each partner or member is entitled to his or her own limit.
- Compliance Tip – If your contribution is drawn upon a partnership or limited liability company check, be sure to follow the allocation rules set forth under NJ campaign finance law.
- Even though the primary election was held two days ago, any contribution received thru June 23rd counts toward your 2017 primary election limit. So, if you already maxed out in connection with the primary, you should wait until June 24th to write your next check. On the flip side, if you have yet to contribute (and would like to), you still have time!
- Compliance Tip – To help properly track your contribution with the relevant election cycle, use the memo line of your check and review relevant ELEC reports to make sure your contribution was reported in connection with the appropriate election.
Tuesday’s primary made it clear that New Jersey’s 2017 election season is now in high-gear! As we head into the summer months, it is the perfect time to focus on political-activity compliance.
After ELEC sent out its reminder email on March 6, we are reproducing below a Genova Burns LLC client alert that was distributed last week for any potential filers who may require additional information about the annual pay-to-play disclosure.
The New Jersey Election Law Enforcement Commission (“ELEC”) requires each business entity that received payments of $50,000 or more (in the aggregate) as a result of government contracts during the 2016 calendar year to electronically file a Business Entity Annual Statement (“Form BE“) with ELEC no later than Thursday, March 30, 2017.
The obligation to file arises whenever payments from New Jersey government entities reach the $50,000 threshold. This includes contracts with the State of New Jersey Executive and Legislative branches, counties, municipalities, boards of education, fire districts, and independent authorities, regardless of method of award.
Additionally, detailed contract and contribution information must be disclosed whenever the business entity or a covered individual made a “reportable” contribution during 2016. A contribution is “reportable” when it exceeds $300 per reporting period. In light of these requirements, it is necessary to review personal political contributions made by a business entity’s partners, officers, and directors (and certain members of their families). Additionally, because of varying election cycles, it may be necessary to review contributions made over the course of several years to determine whether any 2016 contributions are reportable.
Companies that fail to file on time may be subject to monetary penalties. To ensure a timely and accurate filing, companies that have yet to begin preparing Form BE should not delay.
Genova Burns LLC can help your company comply with the Form BE filing requirements. Contact Rebecca Moll Freed, Esq., Chair of the Corporate Political Activity Law Group, at firstname.lastname@example.org or 973-230-2075 or Avi D. Kelin, Esq. at email@example.com or 973-646-3267.
With only 19 days until the presidential election and the final debate being held tonight, most of the country is focused on national politics. Although the presidential election may be taking center stage, now is the time for companies to focus on their New Jersey political-activity compliance.
We are currently within the 18-month period before the inauguration of New Jersey’s next governor, which means that a contribution made today may impact your company’s eligibility for contracts with the State of New Jersey for years to come. If your company or even one covered individual (including officers, shareholders, equity partners or their spouses, civil-union partners and resident children) contributes more than $300 to a gubernatorial candidate or certain other political recipients, your company could be declared ineligible for contracts with the State of New Jersey through January of 2022!
Focusing on political-activity compliance is important for all companies, but it is especially important if your company has recently gone through a merger, conducted a re-organization, hired new officers or partners, promoted individuals within your company to new roles or simply needs a refresher. If you have no policy is place, it is not too late to adopt one before New Jersey’s gubernatorial election kicks into full swing and you find yourselves ineligible to compete for government-contracting opportunities.
Yesterday we celebrated Independence Day. In the next three weeks, the Nation will focus on the Republican and Democratic National Conventions. We cannot turn on the television without catching a political ad. Some ads will be run by the candidates themselves. Based on recent reports filed with the Federal Election Commission (“FEC”), there is a good chance that many ads will be run by Super PACs.
Although Super PACs are required to disclose their donors, it is not always clear who is behind a Super PAC ad and whether a Super PAC is truly independent from a candidate, a party or their agents. The FEC has, therefore, adopted a three-prong test to determine whether a Super PAC is acting independently and is, therefore, entitled to receive unlimited contributions.
Under the FEC’s coordination test, when an election-related communication (content prong) has been paid for by a third-party (payment prong), the FEC will ask the following questions (conduct prong) to determine whether the ad was coordinated:
- Was the communication created, produced or distributed at the request or suggestion of the candidate, party or their agents?
- Was the candidate, party committee or their agents materially involved in decisions related to the ad’s content, intended audience, mode of communications, etc.?
- Were there substantial discussions between the Super PAC and the candidate, party or their agents?
- Does the Super PAC share a common vendor with the candidate, party or their agents?
- Does the Super PAC employ an employee or independent contractor who worked for the candidate or party committee during the previous 120 days?
Because proving an ad was not coordinated, isn’t always as easy as 1-2-3, it is not too late for Super PACs involved in the 2016 presidential election to develop policies, procedures and protocols to help protect against potential allegations of coordination.
As the 2016 presidential primary season concludes, we are quickly approaching the summer conventions and the November presidential election. With the political contests becoming more heated, this post is part of a new series on what different entities and groups need to know about their political activity as the 2016 election approaches.
The 2016 presidential election poses unique challenges for companies and organizations. As we discussed here and here, both for-profit and not-for-profit corporations need to be mindful of their involvement in the electoral process. Corporations also need to make sure that their employees are not improperly using corporate resources for individual political activity. While it is easy to develop a policy prohibiting employees from using copy machines, conference rooms and other organizational resources in connection with federal political activity, it is not as easy to measure the potential reputational risk associated with their activity.
What if the CEO of the company decides to hold a political fundraiser for one candidate over the other?
The CEO of Intel “took heat” over an event that he was planning to host for Donald Trump. The event ultimately got canceled because customers were questioning whether the event signaled that Intel supported Donald Trump.
What if your organization decides to support one candidate over another by participating in independent expenditure activity?
Target faced backlash in 2011 when it supported an organization that in turn supported a candidate that many considered a bigot. The support drew criticism from customers, celebrities with products in Target stores and shareholders alike.
What if your connected federal PAC fails to get shareholder approval before making political contributions?
Corporations need to determine whether their company will suffer negative consequences if their connected federal PAC makes contributions to candidates that do not support the corporation’s overall goals and mission.
Many of these consequences are difficult to predict – it is not always clear at the outset how a decision to participate in an election as an individual, through independent expenditures or through a connected corporate PAC will ultimately impact your organization and its reputation. Although hindsight is always 20/20, corporations need to be forward thinking so they do not find themselves at the center of political controversy.
New Jersey held its 2016 primary election on Tuesday, June 7, 2016. While most of the focus has been on the presidential primary, individuals and entities that contribute in connection with New Jersey state and local elections need to keep the following in mind:
- New Jersey campaign finance law sets “per election” limits for contributions to candidate committees; however, the limit does not automatically reset the day after the primary election. Rather, the 2016 primary election cycle remains open until Friday, June 24, 2016 (candidates are required to file a 20-day post-election report with ELEC on Monday, June 27, 2016). So, any contribution made between the primary election and June 24, 2016 will count toward the 2016 primary and not the 2016 general. This is an important consideration if a contributor is concerned with pay-to-play compliance and wants to limit contributions to a particular candidate to no more than $300 per election.
- If a contributor wants a contribution to count toward the 2016 primary, the contributor should make sure that the check arrives before June 24, 2016 and that the recipient committee will report the contribution in connection with the 2016 primary.
- If a contributor wants a contribution to count toward the 2016 general, the contributor should wait to send the check after the June 24 “cut off” date to avoid any confusion (and the possibility of exceeding a pay-to-play limit).
- New Jersey campaign finance law sets “per calendar” year limits for contributions to party committees, PACs and legislative leadership committees. So, if a contributor is concerned with pay-to-play compliance and wants to limit contributions to $300 or less, the limit does not re-set now that the primary is over.
- Some New Jersey pay-to-play ordinances set “per calendar year,” “per contract” or “per election cycle” limits for contributions to candidates. Some even prohibit contributions in any amount during certain periods of time. So, if your company does business with a particular county or municipality or wishes to remain eligible for future contracts with a particular county or municipality, do not assume that because the 2016 primary election is over, it is now safe to write another check.
Recent changes in the annual filing requirement for companies doing business with local, county or state government in New Jersey may make the process for completing this year’s ELEC Business Entity Annual Statement (“Form BE”) more complicated and time consuming. Although ELEC has yet to issue guidance on these additional requirements, government vendors must still electronically file the disclosure form by the March 30 submission deadline.
In effect since 2006, Form BE requires every company that receives payments of $50,000 or more from New Jersey government entities to disclose those contracts as well as its reportable New Jersey political contributions. All businesses that receive such payments must file regardless of whether the company or certain associated people have made any reportable contributions, but the level of detail required by Form BE depends on whether you have any contributions to report.
There are two new requirements for the 2015 reporting year (due March 30):
- Fair-and-Open Check Box Requirement: Check a box to indicate whether each contract was awarded pursuant to a “fair-and-open-process”; and
- Certification Requirement: Certify that the statements and/or information contained in Form BE are true and acknowledge that if any of the statements or information are willfully false that you may be subject to punishment.
Expect completing your 2015 Form BE to be more time consuming than in the past. Here are some obstacles to be on the alert for:
- Businesses may find it challenging and time consuming to identify whether a contract was awarded pursuant to a “fair-and-open-process” given that your 2015 Form BE may cover long-term contracts that could very well have been awarded years ago.
- In many cases it will be unclear how vendors should classify Executive Branch contracts awarded pursuant to a competitive process because the phrase “fair-and-open process” is a term of art with respect to county, municipal and legislative contracts.
- In past years, ELEC asked the person filing Form BE to simply “acknowledge” that he or she was familiar with the information contained in the Form BE. Now, ELEC is asking the person filing Form BE to certify to the accuracy of the statement and to acknowledge that he or she may be subject to punishment for willfully false information.
As we approach the end of the first work week of 2016, companies should be thinking about their “pay-to-play resolutions” in the upcoming year. New Jersey is home to numerous and varied pay-to-play restrictions. One misstep can have severe consequences. New Jersey’s pay-to-play restrictions may make your head spin, but any company that does business (or wants to do business) with the New Jersey government needs to make compliance with these laws part of its 2016 business plan.
Although many companies think that they have their political activity compliance program under control, companies often ignore these key facts:
- The laws change;
- Similar laws are often interpreted differently; and
- Those covered by pay-to-play restrictions within your organization may change from year to year as people join your team, leave your team or change positions within your company.
As 2012 came to a close, we discussed 2013 Pay-to-Play Resolutions. Given, however, that we are now in a Presidential election year and New Jersey’s gubernatorial election is not far behind, it is important to address pay-to-play resolutions once again. As we enter this busy political season with many hotly contested issues (and races), thinking that individuals within your company are going to sit on the sidelines is not realistic. If you are a government contractor (or hope to be one in the future), now is the perfect time to make the adoption of a meaningful political activity compliance program a key part of your list of New Year’s resolutions.