LobbyComply Blog

Q: My company is a government contractor. What do I need to know about pay-to-play laws?

A: “Pay-to-play” laws are a set of laws that can restrict contributions from, or require disclosures of contributions made by, current and prospective government contractors. The purpose of such laws is to remove the appearance of quid pro quo between contractors and government officials.

The most common type of pay-to-play laws are those restricting contributions. Such laws will typically ban current and prospective contractors from making political contributions during a period which begins with the government putting the contract out for bid and ending when a bidder either fails to be awarded the contract, for a set time after the contract is awarded to the successful bidder, or when the contract ends. The ban on contributions may apply to the contractor and to employees and political action committees associated with the contractor. 

Some jurisdictions also require the extra step of submitting a certification or a disclosure during the bidding process. Contractors or prospective contractors may be required to certify they have not made contributions in violation of the pay-to-play restrictions prior to the bid award. Disclosures of contributions made may also be required. Updates of these certifications or disclosures may be required on a set schedule based on when the bid was awarded.

The restrictions and disclosures may apply to all contractors or they may be specific to certain industries. For example, Georgia’s law includes provisions specific to electric membership corporations, while Indiana’s law only applies to those who contract with the State Lottery Commission. 

Maryland, New Jersey, and Pennsylvania require disclosure of contributions made by state contractors or their employees on set dates, regardless of when the contracts were awarded. Each state is unique in what contractors are required to disclose, but for each state it is important to know which contracts trigger the disclosure requirements, what the reporting threshold is, and what contributions need to be disclosed. Reportable contributions can include those made by the corporation itself, by political action committees associated with the corporation, by executives and directors of the corporation, or by employees. Maryland’s pay-to-play law is unique in that it requires a registration to be filed as well as a disclosure. It also extends the list of who must file reports to include corporations with registered lobbyists in the state, regardless of the contracting status of the entity. 

Penalties for violations of the pay-to-play laws can be severe. Fines for missed reports may be imposed. More importantly, contracts can be voided at the discretion of the government, and a ban on future contracting may follow. You can learn more about these pay-to-play provisions and avoid the many pitfalls by consulting State & Federal Communication’s Procurement Lobbying Compliance Guidebook.

Frequently Asked Questions About Pay-to-Play Laws for Government Contractors

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What are pay-to-play laws for government contractors?

Pay-to-play laws are federal, state, and local regulations that restrict or regulate political contributions made by companies seeking or holding government contracts. These laws are designed to prevent the appearance of a quid pro quo relationship between contractors and public officials responsible for awarding contracts.

Depending on the jurisdiction, pay-to-play requirements may include contribution bans, disclosure obligations, bid certifications, or post-award reporting. Because these rules vary significantly by state and sometimes by agency or industry, contractors must evaluate compliance obligations on a jurisdiction-by-jurisdiction basis.

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Do pay-to-play laws apply only to the company, or also to executives and employees?

In many jurisdictions, pay-to-play laws extend beyond the corporate entity itself. Coverage may include executives, directors, board members, certain employees, political action committees affiliated with the company, and in some cases subsidiaries or related entities.

This broad scope means individual political contributions can trigger corporate consequences. For that reason, contractors must understand how “covered individuals” are defined in each jurisdiction and how those definitions affect disclosure or contribution restrictions tied to public contracts.

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When do pay-to-play restrictions begin and end?

The timing of pay-to-play restrictions varies by state and locality. In some jurisdictions, restrictions begin when a request for proposal is issued or when negotiations for a public contract start. Other laws trigger compliance obligations upon bid submission or contract award.

Restrictions may continue through the evaluation process and extend into a defined post-award period. Because timing provisions differ significantly, contractors should carefully assess when restrictions apply in each jurisdiction where they pursue public business.

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What happens if a contractor violates pay-to-play laws?

Consequences for violations can be substantial. Depending on the jurisdiction, penalties may include monetary fines, late reporting penalties, voided contracts, disqualification from a pending procurement, or temporary or permanent bans on future contracting.

In some cases, awarding authorities retain discretion to cancel contracts if a violation is discovered after award. Beyond financial and legal exposure, enforcement actions can create reputational risk that affects future government opportunities. Given the potential impact, proactive compliance oversight is critical.

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Are pay-to-play laws the same in every state?

No. There is no uniform national pay-to-play framework. Each state designs its own regulatory structure, enforcement mechanisms, reporting thresholds, and definitions of covered individuals.

Some states require ongoing disclosure of contributions by contractors regardless of when a contract was awarded. Others impose industry-specific restrictions or apply additional rules to entities with registered lobbyists. This fragmented regulatory environment makes multi-state compliance particularly complex for contractors operating across jurisdictions.

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What types of contracts trigger pay-to-play requirements?

Triggering contracts vary by jurisdiction. Some states apply pay-to-play rules broadly to most state-level contracts above a specified monetary threshold. Others limit coverage to contracts with particular agencies or within designated industries.

Certain laws may apply only to executive branch contracts, while others extend to local government entities or public authorities. Understanding which contracts activate disclosure or contribution restrictions is an essential first step in evaluating compliance exposure.

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How can government contractors stay compliant with pay-to-play requirements?

Effective compliance typically involves understanding jurisdiction-specific rules, identifying covered individuals, monitoring political contribution activity, and ensuring required disclosures and certifications are submitted accurately and on time.

Because pay-to-play laws change frequently and vary significantly between states, contractors often rely on regulatory monitoring, compliance resources, and advisory support to stay informed of evolving requirements. A structured compliance approach helps reduce risk while preserving eligibility for public contracting opportunities.

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How often do pay-to-play laws change?

State and local jurisdictions regularly amend campaign finance and procurement-related statutes, including pay-to-play provisions. Changes may affect contribution thresholds, reporting deadlines, covered officials, or certification requirements.

In addition, enforcement interpretations and agency guidance can evolve over time. For contractors engaged in ongoing public business, continuous monitoring of regulatory developments is essential to maintaining compliance.

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Is pay-to-play compliance the same as procurement lobbying?

While related, pay-to-play compliance and procurement lobbying compliance are distinct regulatory areas. Pay-to-play laws generally focus on political contributions tied to public contracting, whereas procurement lobbying laws regulate registration and reporting obligations related to sales-oriented communications with public officials.

However, Maryland expanded pay-to-play reporting to include entities with registered lobbyists, creating overlap between the two areas. Contractors should evaluate both regulatory frameworks when assessing overall government relations compliance risk.

Gov. Jerry Brown signed into law a bill requiring persons submitting bids or proposals of $100,000 or more to state agencies to certify they are in compliance with the Unruh Civil Rights Act and the California Fair Employment and Housing Act.

The law is aimed at preventing state agencies from contracting with businesses that boycott Israel.

This law becomes effective January 1, 2017.

New Jersey law requires every business receiving $50,000 in government contracts in a calendar year to file a Business Entity Annual Statement (Form BE) with the Election Law Enforcement Commission (ELEC) by March 30 of the following year. ELEC recently amended Form BE to require filers to certify the statements on the form as accurate, to acknowledge penalties for willfully filing a false statement, and to identify whether each contract was awarded pursuant to a fair and open process.

Businesses completing Form BE for 2015 can expect to spend more time filing, as determining if a contract was awarded pursuant to a fair and open process may not be as simple as it sounds. The term may be defined differently at the state, county, and municipal levels, and some long-term contracts to be listed on the form may have been awarded years ago.

The fair and open certification is just another addition to New Jersey’s notoriously complex pay-to-play rules. Because certain laws apply only to contracts not awarded through a fair and open process, identifying a contract awarded through any other process will likely highlight the contract for regulatory agencies.

Although the changes will certainly make filing more complicated, ELEC has yet to issue guidance on the new requirements.

President Obama could soon issue an executive order requiring federal contractors to disclose political campaign contributions, according to the New York Times. On January 19, White House officials said the president is “seriously considering” the order, as reported by the paper. The order has been pushed by many outside groups and by Democratic members of congress, who have in the past, and as recently as January 7th, presented the president with letters urging executive action.

Those opposed to an executive order argue, among other things, disclosure requirements encroach on free speech and are politically motivated. “The real goal of the disclosure proponents is to harass, intimidate and silence those with whom they disagree,” Blair Latoff Holmes, a spokeswoman for the U.S. Chamber of Commerce, is quoted as saying in the Times.

On January 19, the U.S. Supreme Court denied an appeal arguing against a federal law banning political contributions to candidates from federal contractors. Last year, in Miller v. Federal Election Commission, formerly Wagner v. Federal Election Commission, the U.S. District Court of Appeals for the District of Columbia unanimously upheld the constitutionality of the law barring contractors from contributing to candidates, parties, and candidates’ and parties’ committees.

Plaintiffs had challenged the constitutionality of 52 U.S.C. § 30119(a)(1), which prohibits any vendors with contracts with the federal government from making political contributions to federal candidates or political parties. The plaintiffs had asked the court to declare the law unconstitutional as applied to individuals who have personal services contracts with federal agencies. Because federal workers who are not contractors may make federal political contributions while contractors performing the same work may not, the suit argued the law violates both the Equal Protection Clause of the Constitution and the First Amendment.

Photo of the United States Supreme Court by UpstateNYer on Wikimedia Commons.

The South Carolina Department of Transportation is instituting a new rule regarding employees who leave state employment to work for state contractors.

The new policy will prohibit former employees from working on new road construction projects for 365 days after leaving the department.

The department’s acting secretary says the new policy will help clarify state ethics law and ensure there is no perception of impropriety.

Gov. Mike Pence has cancelled a contract between the state Bureau of Motor Vehicles (BMV) and Express MVA and requested an investigation due to possible ethics violations.

Shawn Walters, formerly the BMV chief of staff, had approved Express MVA’s opening of a private license branch in 2010. However, when Walters moved from state employment to become the chief operating officer of Express MVA in 2014, he did not ask the state Ethics Commission if such a move would violate the state’s law requiring a one-year cooling-off period.

In addition to ending the contract, Pence has asked the inspector general to determine if Walters violated any ethics law by accepting a job with Express MVA.

Federal contractors may be required to provide “paid leave to employees who are sick, are seeking medical attention or need to care for a sick relative,” according to an article published in today’s New York Times.

The paper says it obtained a confidential draft of a presidential executive order, marked “pre-decisional and deliberative,” requiring all federal contractors and subcontractors to provide leave for illnesses and for care of “a child, parent, spouse, domestic partner ‘or any other individual related by blood or affinity whose close association with the employee is the equivalent of a family relationship.’” The White House has refused to comment on the draft document.

Last week the U.S. District Court of Appeals for the District of Columbia unanimously upheld the constitutionality of the law barring contractors from contributing to candidates, parties, and candidates’ and parties’ committees.

Plaintiffs had challenged the constitutionality of 52 U.S.C. § 30119(a)(1), which prohibits any vendors with contracts with the federal government from making political contributions to federal candidates or political parties. In Wagner v. Federal Election Commission, the plaintiffs had asked the court to declare the law unconstitutional as applied to individuals who have personal services contracts with federal agencies.

Because federal workers who are not contractors may make federal political contributions while contractors performing the same work may not, the suit argued the law violates both the Equal Protection Clause of the Constitution and the First Amendment.

Gov. Tom Corbett has signed a bill to curtail pay-to-play politics in state procurement contracts. House Bill 201 prohibits individuals who were employed by an offeror within the previous two years from participating in the evaluation of proposals.

The new law will prevent recently hired government workers from rewarding their former employers with large state contracts.

This provision will go into effect on December 20.

The Pennsylvania House of Representatives approved a bill Wednesday to curtail pay-to-play politics in state contracts.

House Bill 201 prohibits state employees from evaluating contract proposals submitted by companies they worked for during the previous two years.

The legislation has been sent to Gov. Tom Corbett for his signature.

Photo of the Pennsylvania State Capitol by ThePlaz on Wikimedia Commons.

Cuyahoga County Executive Ed FitzGerald proposed an amendment at Tuesday’s County Council meeting seeking to clarify the county’s code in light of an independent county board ruling. The Debarment Review Board, a panel largely made up of FitzGerald appointees, effectively shortened the county contracting ban for a former contractor convicted of corruption.

The board ruled William Neiheiser’s ban should have begun the day he was convicted of bribery in July 2011 and run through July 2016. County Inspector General Nailah Byrd imposed the ban from June 2014 to June 2019.

FitzGerald’s proposed amendment stipulates contracting bans are to begin the day they are publicly handed down by the county inspector general enforcing the policy.

Republican attorney general candidate Shane McCormack is calling for tougher campaign finance rules for those holding the office. McCormack’s proposal would ban current service providers from contributing to a sitting attorney general and would prevent a donor from becoming a contractor after a successful campaign.

During a debate on Vermont Public Radio, McCormack revealed current attorney general Bill Sorrell accepted $8,000 from Dallas-based Baron & Budd, a law firm later hired as counsel. Sorrell defended the contribution by stating it was properly disclosed and the law firm was hired due to its expertise in the area being litigated.

Baron & Budd was hired following a recommendation from the Agency of Natural Resources to litigate a contaminated groundwater case against the fuel industry. Sorrell claims the agency was unaware of the contribution prior to making the recommendation.

On Monday, October 8, 2014, the Metropolitan King County Council passed an ordinance establishing a living wage. Ordinance 2014-0299 applies to all county employees and to county contractors with contracts totaling more than $100,000.

Beginning April 1, 2015, Schedule I employers, which are companies with more than 500 employees in the U.S., must pay their employees $11 per hour. The hourly living wage rate will increase on January 1, 2016, to $13 per hour or $12.50 if the employer contributes to its employees’ health plan. The hourly wage will increase yearly as provided in the ordinance until 2018, when all further increases will be tied to the national inflation rate. Beginning January 1, 2019, payment by the employer of health benefits will no longer affect the hourly rate.

Schedule II employers, which are companies with 500 or fewer employees in the U.S., must pay their employees $10 per hour. Beginning January 1, 2016, the hourly rate increases yearly to reach $17.25 by 2024. Beginning January 1, 2025, Schedule II employers must pay their employees a living wage equal to that of Schedule I employers.

The living wage ordinance applies to any contract over $100,000 entered into on or after April 1, 2015, the effective date of the ordinance.