It’s Golf Outing Season: Do You Know Where Your Check Is Going?

Although it has been a long winter, we have recently had a taste of spring (or maybe even summer) here in New Jersey. The warmer weather means that golf outing season is upon us. In the political world, this means that your company may soon be receiving invitations to sponsor a hole, beverage cart or foursome at a golf outing. Before you register for the golf outing, you should ask yourself the following questions:

  • Who is hosting the event? Is it a political party committee, candidate committee, political action committee or not-for-profit entity?
  • If the host is a political recipient, does your company currently hold or are you seeking contracts in the jurisdiction where the political recipient is located?
  • Have you evaluated all applicable campaign finance and pay-to-play limits? Do they apply on a calendar year, per election or per election cycle basis?
  • Are you inviting anyone outside of your company to attend as your guest? If so, are they an elected official or government employee? If they are, is your invitation in compliance with relevant gift rules?

To assist compliance with campaign finance pay-to-play and gift rules, these questions should be a part of your company’s internal review process for each and every political event you are asked to attend. The bottom line is that your company should not write a check without knowing the exact name of the recipient committee, how it is organized and whether the sponsorship will jeopardize your eligibility for current or future government contracts.

Genova Burns LLC can help your company comply with campaign finance pay-to-play and gift rules. Contact Rebecca Moll Freed, Esq., Chair of the Corporate Political Activity Law Group, at rfreed@genovaburns.com or 973-230-2075 or Avi D. Kelin, Esq. at akelin@genovaburns.com or 973-646-3267.

Deadline for New Jersey’s Annual Pay-to-Play Disclosure is Approaching: Is Your Company Ready to File?

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 2017 calendar year to electronically file a Business Entity Annual Statement (“Form BE”) with ELEC no later than Monday, April 2, 2018. (Although the Form BE must be filed in most years by March 30, the deadline has been extended this year because of Good Friday.)

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.

Whether the $50,000 filing threshold is reached depends on payments received by the business entity during 2017. Therefore, the obligation to file may vary from year to year—a business entity that was not required to file in previous years may still be obligated to file for calendar year 2017.

Last, detailed contract and contribution information must be disclosed whenever the business entity or a covered individual made a “reportable” contribution during 2017. 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 2017 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 rfreed@genovaburns.com or 973-230-2075 or Avi D. Kelin, Esq. at akelin@genovaburns.com or 973-646-3267.

No Room for Refunds: Pay-to-Play Limits and New Jersey’s Upcoming Gubernatorial Election

With summer vacations over and the New Jersey political world focused on the November gubernatorial election, Friday, September 8, 2017 marks an important milestone under New Jersey’s pay-to-play laws.

Under the law, a business entity can find itself ineligible for New Jersey Executive Branch contracts if the business entity or its covered individuals have made a reportable political contribution (a contribution greater than $300) to a gubernatorial candidate, political party committee, or legislative leadership committee. As previously discussed here, a contribution in excess of pay-to-play limits can have a devastating effect on a company.

The good news is that, generally, if a company or a covered individual makes a contribution in excess of the applicable pay-to-play limit, the contributor can request and receive a refund within 30 days of the contribution without jeopardizing eligibility for New Jersey Executive Branch contracts. The bad news is that, for contributions made within 60 days of a gubernatorial election, a refund will not cure a violation.

As New Jersey draws closer to electing its next Governor and companies and individuals are increasingly engaged in the political process, government contractors (and prospective government contractors) must understand pay-to-play limits. Smart companies know that each contribution must be reviewed and approved in advance and that relying upon obtaining a refund is not a prudent strategy for compliance.

For more information on how you or your company may safely participate in the political process, please contact Rebecca Moll Freed, Esq., Chair of the Corporate Political Activity Law Group, at rfreed@genovaburns.com or 973-230-2075

Lessons Learned from the Della Pello Decision

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 rfreed@genovaburns.com or 973-230-2075.

Candidates, Contributions & Compliance in Connection with New Jersey’s 2017 Gubernatorial Election

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.

Is New Jersey’s Regulated-Industry Ban on Political Contributions Ripe for Challenge?

Since 1911, New Jersey law has prohibited the making of political contributions by such highly regulated industries as banks, utilities, and insurance companies. The reasoning underlying this prohibition was clarified by a New Jersey Attorney General Advisory Opinion, which explained that these “[c]omprehensive regulatory programs, vital to the protection of the public, could become prime targets of elected officials seeking to satisfy perceived debts to corporate benefactors affiliated within a regulated industry.” For more than a century, this law has remained in effect. But new legal developments raise questions about the constitutional validity of this ban on regulated-industry political contributions.

In early May of 2017, in Free and Fair Election Fund, et al. v. Missouri Ethics Commission, et al., the U.S. District Court for the Western District of Missouri declared unconstitutional a provision of Missouri campaign-finance law that prohibited banks, insurance companies, and telephone companies from making any political contributions to PACs. (Missouri law already prohibitions all contributions to candidates and political parties from corporations, without regard to whether the corporations in engaged in a heavily regulated industry.) The court determined that this complete ban on contributions from heavily regulated industries is unconstitutional because the law was not closely drawn to avoid abridging First Amendment rights to engage in the political process. This decision was based in part on the U.S. Supreme Court’s recognition that “there is not the same risk of quid pro quo corruption or its appearance when money flows through independent actors to a candidate, as when a donor contributes to a candidate directly.” In this case, making contributions to PACs did not give rise to the same risks of quid pro quo corruption or the appearance thereof because the PACs were independent entities that could determine for themselves how to use funds received from a contributor. This lessened risk was not reason, in the eyes of the court, to prohibit certain corporations from participating in the political process.

This issue is far from settled, as Missouri’s Attorney General announced that he will appeal the court’s decision, and there are key differences between New Jersey’s regulated-industry ban and Missouri’s regulated-industry ban and New Jersey campaign-finance law and Missouri campaign-finance law.  However, the Free and Fair Election Fund decision begs the question whether New Jersey’s regulated-industry ban is ripe for challenge.

 

Is the Time Ripe for New Jersey Pay-to-Play Reform?

For more than a decade, New Jersey has had in place a series of pay-to-play laws that impose reduced contribution limits and heightened disclosure requirements for government contractors. The goal of these laws is to ensure fair contracting procedures and to remove favoritism from the procurement process.

But are these laws working as intended when seemingly innocent mistakes leading to relatively small political contributions remove otherwise qualified and competitive bidders from government contracts? News last month that a paving company was disqualified from $7 million in New Jersey Executive Branch contracts because of a $500 political contribution has government contractors throughout the State understandably concerned about their own compliance procedures. The disproportionate effect of a relatively small political contribution has highlighted the need to reform New Jersey’s pay-to-play laws.

And Jeff Brindle, the Executive Director of the New Jersey Election Law Enforcement Commission, agrees. The need for reform is not a new issue, but the dramatic nature of this ineligibility determination may provide the impetus to begin this process in earnest.

In the current legal landscape and a blockbuster New Jersey election year that will see the election of a new governor as well as 120 State legislative races, government contractors need to focus on their pay-to-play compliance. Merely assuming that you are in compliance is simply not good enough, when a contribution of only a few hundred dollars can disqualify your company from millions of dollars of contracts. At this point in the election cycle, even one unintentional contribution can disqualify your company for up to 5 ½ years and, starting in April, refunds will not cure an excessive contribution once we have entered the 60 days preceding the 2017 primary election.

Genova Burns LLC has been at the forefront of pay-to-play compliance since New Jersey’s law was enacted more than a decade ago. If you are unsure of your compliance procedures, Genova Burns LLC can assist you in navigating the current legal landscape as well as any reforms that the future may bring. If you have any questions or would like to discuss your pay-to-play compliance program, please contact Rebecca Moll Freed, Esq. at 973-230-2075 or Avi D. Kelin, Esq. at 973-646-3267.

Deadline for New Jersey’s Annual Pay-to-Play Disclosure is Approaching: Is Your Company Ready to File?

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 rfreed@genovaburns.com or 973-230-2075 or Avi D. Kelin, Esq. at akelin@genovaburns.com or 973-646-3267.

Pay-to-Play for New Jersey Public-Sector Labor Unions?

New Jersey’s pay-to-play laws are perhaps the most stringent in the country, with a web of overlapping laws, executive orders, and ordinances covering procurement contracts and redevelopment agreements with all levels of government. As the law stands now, labor union collective-bargaining agreements are not covered by any of these pay-to-play restrictions. (Governor Christie issued an Executive Order in 2010 that would have expanded existing pay-to-play restrictions to cover labor unions, but this Executive Order was struck down because it didn’t advance any then-existing legislative act or constitutional mandate.)

But there have been renewed calls in recent days to enact Senate Bill 341, which would limit the political contributions of those labor unions that enter into collective negotiations agreements with the State of New Jersey, or with New Jersey counties and municipalities.  Unlike current statewide Executive Branch pay-to-play restrictions, the proposed legislation provides for monetary penalties for violations. This legislation raises the possibility of a future amendment of New Jersey’s current statewide Executive Branch pay-to-play restrictions to provide for monetary penalties in the traditional procurement context as well. If passed, these new union pay-to-play restrictions would represent a profound transformation in New Jersey’s pay-to-play regime and for New Jersey politics as a whole.

New Jersey’s 2016 Primary: Potential Pitfalls of Per Election & Pay-to-Play Limits

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.