May 5, 2014 •
Ask the Experts – California NLE Reporting Requirements
Q. My company is a registered lobbyist employer in California. I do not currently meet the threshold for lobbyist registration, however, I do engage in some lobbying activity. Am I required to disclose this activity on the company’s report?
A. In California, lobbyist employers are required to track and disclose compensation and expenditures for non-lobbyist employees (NLEs) on quarterly disclosure reports. If you meet the NLE threshold for reporting, you are required to disclose your pro-rata share of compensation and related expenditures, even if you do not meet the registration threshold. Specifically, you qualify as an NLE if you spend more than 10 percent of your compensated time in any calendar month in connection with lobbying activities. However, this does not include compensation paid to an employee whose duties are solely clerical, manual, or are limited to the compilation of data or statistics.
If you qualify as an NLE, you must track your compensation and reimbursed expenditures dedicated to state lobbying activities. This combined figure is included on the employer report (Form 635) in Part D, Other Payments to Influence Legislative or Administrative Action. When estimating your time, you will need to include all time spent in connection with lobbying activities, including direct communications with public officials in the presence of your company’s or trade association’s contract lobbyist. Although there is an exception in the Fair Political Practices Commission regulations allowing employees to not count this type of direct communication towards the registration threshold, you must nevertheless track and disclose this time on your company’s employer report if you exceed the NLE reporting threshold. You will also need to include grassroots activity, research, and preparation time.
Be mindful of the gap between the NLE reporting threshold and the lobbyist registration threshold. If your level of activity exceeds the lobbyist registration threshold, you are required to register within 10 days. The registration threshold for in-house employees is defined as spending one-third or more of your compensated time in any calendar month engaging in direct communications with a qualifying official for the purpose of influencing legislative or administrative action.
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