Pay-to-Play Resolutions

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:

  1. The laws change;
  2. Similar laws are often interpreted differently; and
  3. 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.

 

DC Circuit Upholds Federal Contractor Pay-to-Play Ban

Today, the DC Circuit issued its decision in Wagner v. FEC and upheld the 75 year-old pay-to-play prohibition applicable to federal contractors.

The Federal Election Campaign Act prohibits federal contractors from making contributions to party committees and candidates for federal office.  As we previously described here, three federal contractors had challenged the provision.

In addressing the correct scrutiny to apply, the court found that the “closely drawn” standard remained the appropriate standard for review of a ban on campaign contributions, notwithstanding Citizens United as that case involved independent expenditures rather than contributions.  Because this was a restriction on government contractors, the court noted that Congress had greater latitude to restrict the expression of both employees and government contractors than it did with the general public.

As such, the government’s stated interests in: 1) protecting against quid pro quo corruption and; 2) protecting merit-based administration of government contracts were compelling.  Delving into the 75 year-old history of the provision, the court found that “more recent evidence confirms that human nature has not changed since corrupt quid pro quos and other attacks on merit-based administration first spurred the development of the present legislative scheme,” citing to corruption scandals in Congress as well as the passage of pay-to-play laws in at least seventeen states, including New Jersey, Illinois, Connecticut and New York City, due to corruption scandals.

The court also found that the ban as applicable to political parties was narrowly tailored because there “is no meaningful separation between the national party committees and the public officials who control them.”

The court made specific reference to independent expenditure-only committees, finding that the challenge at issue did not involve the “law as the [FEC] might seek to apply it to donations to PACs that themselves make only independent expenditures, commonly knowns as ‘Super PACs.’”  Instead, the only issue before the court was the application of the ban by an individual contractor to a federal candidate or political party.

As acknowledged in today’s decisions:

  • Corporate federal contractors remain able to form political actions committees (i.e. separate segregated funds)
  • Officers, employees and shareholders of such contractors remain free to make contributions from personal assets.

Calling All New Jersey Government Contractors: The Clock is Ticking . . . Are you Ready for the March 30th Pay-to-Play Filing Deadline?

As we have previously discussed here, the New Jersey Pay-to-Play Annual Disclosure filing deadline is right around the corner.

Any entity that received payments of $50,000 or more as a result of payments from a New Jersey government entity during the 2014 calendar year is required to file Form BE electronically with the New Jersey Election Law Enforcement Commission no later than Monday, March 30, 2015.

Not sure whether your company is required to file Form BE? If you are not sure whether you are required to file Form BE, you may want to start your information-gathering process by compiling all of your New Jersey government-contract information. As you compile this information, please keep in mind that:

• Contracts with bi-state agencies, such as the Port Authority of New York & New Jersey and the Delaware River Port Authority, are not included.

• Contracts with Boards of Education and Fire Districts are included.

• The $50,000 threshold is an aggregate threshold – so, if you hold ten (10) contracts with New Jersey government entities and received payments totaling $10,000 for each contract during the 2014 calendar year, you are required to file Form BE.

Not sure whether you have any political contributions to report? Whether you need to file a “detailed” Form BE setting forth both contract and contribution information depends on whether you have any political contributions to report. So, if you know that you exceeded the $50,000 threshold and are not sure whether you have any contributions to report, you may want to start your information-gathering process by compiling contribution information. As you compile this information, please keep in mind that:

• The “reportable” threshold is $300 per election when the contribution was made to a candidate committee (election cycles may span multiple calendar years) and $300 per calendar year when the contribution was made to a party committee, political action committee/continuing political committee or a legislative leadership committee.

• The group of covered contributors is broader than under other pay-to-play laws (in addition to surveying owners of your company or firm, you will also need to survey officers and directors).

• The group of covered political recipients is broader than under other pay-to-play laws (with the exception of contributions to federal recipients, you are required to disclose contributions to all other New Jersey political recipients from the State level down to the school board level).

Not sure whether you are on the right track to file a timely and accurate disclosure? You still have time to gather all relevant information to make that determination. The key is to designate a point person within your organization who is responsible for gathering all contract and contribution information.

Remember – you may need to reach out to various individuals within your company so the sooner you begin to gather the information, the better!

Calling All Government Contractors: Upcoming Maryland Political Contribution Disclosure Form

For government contractors, the start of a new year brings with it a host of filing requirements in many states along the Northeast Corridor. Although some states (such as New York and Connecticut) do not impose annual or semi-annual filing requirements on government contractors, other states such as New Jersey, Pennsylvania, and Maryland require government contractors to file reports. This is the first in a series of blog posts that focuses on the upcoming filing deadlines in Maryland, Pennsylvania, and New Jersey. These reports generally require government contractors to disclose certain information about their political contributions, but no two filing requirements are the same. As your company prepares to put its best foot forward in 2015, this series will share what you need to know about these disclosure requirements and some compliance tips to make sure that your company is accurately capturing all relevant information.

Maryland (Filing Deadline – February 5, 2015 & August 5, 2015) 

The filing requirements applicable to Maryland government contractors changed on January 1, 2015. This means that all Maryland government contractors need to familiarize themselves with new filing requirements this year! Maryland law now requires businesses that hold a single contract worth at least $200,000 with the state to electronically file the Contribution Disclosure Form semi-annually with the Maryland Board of Elections. The first semi-annual report must be filed no later than Thursday, February 5, 2015.

Compliance Tip – Companies subject to this disclosure requirement must not only disclose information specific to each of their Maryland government contracts, but they must also disclose contributions that exceed $500 per reporting period to covered candidates and officeholders made by the company; a subsidiary of the company; an officer, director, or partner of the company or of the subsidiary; a Political Action Committee sponsored by the company; and an employee or agent of the company or the subsidiary, if the employee or agent made the contribution at the direction of the company or the subsidiary. Regardless of whether a company has contributions to report, the company must still file a Contribution Disclosure Form if the company holds Maryland government contracts.