Question: I am planning to give a state legislator a permissible gift. I know I need to include it on my next lobbying disclosure report. Do I need to worry about anything else to make sure I am compliant with state laws?

Answer: Yes, some states have additional requirements when an expenditure is made on a covered state official or employee. You may be required to provide the official with a notification or file additional reports.

California requires filers reporting gifts aggregating $50 or more in a calendar year to an official to provide the beneficiary with the date and amount of each gift reportable and a description of the goods or services. This information must be provided to the beneficiary within 30 days following the end of each calendar quarter in which the gift was provided.

In Virginia, lobbyists must send each legislative and executive official who is required to be identified by name on schedule A or B of the Lobbyist’s Disclosure Form a copy of schedule A or B or a summary of the information pertaining to that official. Notifications are due to the official by January 10 for the preceding 12 months. Additionally, lobbyists must send post-session notifications to covered officials summarizing all gifts made by the lobbyist during the period beginning on January 1 complete through adjournment sine die of the regular session.

Maryland requires additional reporting for certain permissible expenditures. A lobbyist who invites all members of a legislative unit to a meal or reception must, at least five days before the date of the meal or reception, extend a written invitation to all members of the legislative unit and register the meal or reception with the Department of Legislative Services on Form 13E by filing the report electronically. A post-event filing is then required within 14 days after the date of the meal or reception meal or reception.

Proper gift disclosure can involve more than simply including the gift on your normal lobbying disclosure reports. It is always a good idea to check the jurisdiction’s specific disclosure requirements on our website prior to giving a gift.

You can find this information under the “Reports Required” section of the U.S. Lobbying Compliance Laws online publication.

QUESTION:  Are there any rules that pertain to making contributions in the weeks leading up to an election?

ANSWER:  With this being an election year, it is wise to know what the rules are when making contributions in the days and weeks leading up to an election.  Usually, there is a monetary threshold that must be exceeded and typically there is a short turnaround time to disclose the contribution, usually within 24 hours.  In some instances, there is an outright ban on contributions.

In California, contributions of $1,000 or more per candidate made by a major donor during the 90-day period before an election must be disclosed within 24 hours of making the contribution.  Contributions to ballot measure committees and political party committees are also included within this reporting requirement.  The candidate and the ballot measure committee must be on the ballot at the election for which the 90-day period applies.  California’s 90-day pre-election period is the longest in the country.  If numerous special elections are being held, the 90-day periods may overlap.

In Washington, a contribution of $1,000 or more per candidate made by a registered lobbyist during the seven days before a primary election and 21 days before the general election must be disclosed within 24 hours of making the contribution.  This includes contributions to candidates and ballot measures appearing on the ballot at the election for which the seven day and 21-day period applies, as well as contributions to political party committees and PACs.  The Washington Public Disclosure Commission has a link on its home page that allows for the electronic filing of this report.

In Florida, opposed candidates must return contributions received less than five days prior to an election.

In Tennessee, a PAC is prohibited from making a contribution to a candidate for office after the 10th day before an election until the day of the election.  This prohibition only applies if the contribution is going to a candidate who is running in that election.

These are just a few examples.  As we always advise, verify the rules in your state before making political contributions.

For more information, be sure to check out the “Registration and Reports Required” section of the U.S. Political Contributions Compliance Laws online publication on our website.   Please feel free to contact us if you have any questions.

Question: Our company is in the process of hiring a former public official. Are there any issues we should be aware of during this process?

Answer: There are some jurisdictions with revolving door policies restricting what former officials or employees can do once they have entered the private sector. These restrictions are in place to avoid the appearance of impropriety.

Many states require a cooling-off period when officials leave office and transition to the private sector. In South Carolina, a former public official is prohibited, for one year after terminating public service or employment, from serving as a lobbyist or representing clients before the agency or department on which the individual formerly served in a matter the individual directly and substantially participated during public service or employment. The restriction also prohibits a former public official from accepting employment if the employment is from a person who is regulated by the agency or department on which the individual served or was employed and involves a matter in which the individual directly and substantially participated during public service or public employment. A public official who participates directly in procurement may not resign and accept employment with a person contracting with the governmental body if the contract falls or would fall under the individual’s official responsibility.

New York law includes a similar restriction but requires a two-year cooling-off period. A former state officer or employee is prohibited, within two years after termination of employment, from appearing or practicing before such state agency or receiving compensation for any services rendered by such former officer or employee on behalf of any person, firm, corporation, or association in relation to any case, proceeding, or application or other matter before such agency. In New York, a former state officer or employee is prohibited, after the termination of employment, from appearing, practicing, communicating, or otherwise rendering services before any state agency or receive compensation for any such services rendered by such former officer or employee on behalf of any person, firm, corporation, or other entity in relation to any case, proceeding, application, or transaction with respect to which such person was directly concerned and in which the individual personally participated during the period of service or employment or which was under the individual’s active consideration.

These are just a few examples of revolving door restrictions. We advise you follow best practices to verify the rules in your jurisdiction.

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Here is your chance to “Ask the Experts” at State and Federal Communications, Inc. Send your questions to experts@stateandfed.com. (Of course, we have always been available to answer from clients that are specific to your needs, and we encourage you to continue to call or email us with questions about your particular company or organization. As always, we will confidentially and directly provide answers or information you need.) Our replies are not legal advice, just our analysis of laws, rules, and regulations.

Can I use my company’s federal PAC to make contributions to candidates for state office?

With the exception of Massachusetts, contributions from a federal PAC to non-federal state candidates are permissible.  However, the challenging aspect of making these types of contributions is that every jurisdiction has different rules regarding how to register and report such contributions.  To make this a little easier to digest, we have broken down the states into five categories.  Please note:  regardless of the registration and reporting process, in all jurisdictions the federal PAC is subject to the contribution limits according to the law of that jurisdiction.

Category #1:  You do not have to do anything.  Simply make the contribution to the state candidate as you would any other contribution from your federal PAC.  This option is usually only available if your FEC filings are current and complete.  Examples of these jurisdictions include Alabama, Delaware, South Dakota, and West Virginia.

Category #2:  You must register and report as a state PAC.  In these instances, your federal PAC is treated no differently than any other out-of-state PAC.  You must register your federal PAC using that jurisdiction’s registration forms.  You must report your contributions using state forms and file your reports according to that jurisdiction’s filing deadlines.  Examples of these jurisdictions include Connecticut, Georgia, and Tennessee.

Category #3:  You may file your FEC registration and reports in lieu of state registrations and reports. The tricky thing about these jurisdictions is keeping track of whether you file your reports according to the jurisdiction’s reporting schedule or the FEC’s reporting schedule.  Examples of these jurisdictions include Kentucky, New Mexico, and North Dakota.

Category #4:  You have to register using state form and report using your FEC filings, or vice versa. Examples of these jurisdictions include Illinois, South Carolina, and Virginia.

Category #5:  You have a choice regarding how to register and report.  These two jurisdictions include Iowa and Kansas.

As was mentioned, in Massachusetts, federal PACs may not contribute to campaigns in that state.  Federal PACs must establish a separate segregated fund for contributions in Massachusetts and comply with the same requirements as in-state committees.  The separate segregated fund must be established as a depository account in a financial institution authorized to transact business in Massachusetts and having its main office, or a branch office, in Massachusetts.

We have not listed PAC rules for all the states, only examples of some states. If you have a question on a state not listed here, please contact us at 330-761-9960

My employer makes corporate contributions in California.  We have not yet exceeded $10,000 in calendar year 2018.  The primary election and special elections are taking place, along with the general election in the fall.  If we decide to make contributions, when do we have a late contribution report due?

The California “Late Contribution Report” [Form 497], sometimes referred to as the “24-hour report” is due during the 90-day period preceding any election if all of the following criteria are met:

• The contribution is $1,000 or more, or multiple contributions aggregating $1,000 or more, to a single candidate, ballot measure committee, or political party.  This includes non-monetary and in-kind contributions…Read the full article

For more information, be sure to check out the “Registration and Reports Required” section of the U.S. Political Contributions Compliance Laws online publication for California. Please feel free to contact us if you have any questions.

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Before I can make a political contribution using my own funds, my employer requires that I obtain permission first.  Can my employer legally do this?

Yes, employers may require employees to seek preapproval before making personal political contributions. Not only can your employer require this, it’s smart business to do so. Employers may even require preapproval from family members of employees.

This preapproval requirement has evolved as a result of the increased number of jurisdictions enacting pay-to-play laws. A seemingly innocuous contribution by an employee could result in the loss of government contracts, fines, and a ban on future contracting. Criminal sanctions may apply when repeated violations occur. By requiring pre-approval, your employer can properly vet the contribution for compliance with a jurisdiction’s pay-to-play law, including disclosure requirements.

In a majority of jurisdictions, employees covered by pay-to-play laws include officers, partners, directors, senior management, salespersons, and their spouses and dependent children. In Pennsylvania and Kentucky, all employees are covered in the instance of a no-bid contract.

Requiring preclearance of employee personal political contributions is certainly more preferable than imposing a ban on employee contributions, which could result in a violation of applicable labor laws. Various jurisdictions bar employers from retaliating against employees for engaging in political activities, which can include everything from participating in a political rally to making campaign contributions. Even though an employer can require preapproval, an employer cannot directly or indirectly affect an individual’s employment by means of discrimination or threat of discrimination based on the individual’s personal political contributions.

Don’t miss Nola’s October 2022 LobbyComply Pod episode for more information on this important issue.

Q. As a company, we would like to organize site visits for agency officials, so they can better understand our company and industry.  Can we cover expenditures for these visits?

A. State and local gift restrictions will apply to company expenditures associated with a site visit by a government official or employee, especially if your company is a lobbyist employer or state contractor.  Food, beverage, entertainment, travel, lodging, or other promotional/welcome gifts could be restricted or banned.  However, many jurisdictions have specific gift exceptions allowing expenditures in conjunction with site visits.  Each jurisdiction has its own requirements for gift law compliance…

Read the full article here

For more information, be sure to check out the Gift Law and Reports Required sections of the Lobbying Compliance Laws online publication for any  jurisdiction. Please feel free to contact us if you have any questions.

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Q: I have been out of the office on an extended vacation.  I just noticed a reminder e-mail that I have a lobbying report due today that cannot be filed electronically.  What are my options?

A: You still have the ability to submit the report in a timely manner.  Your first step should be to confirm the reportable activity for your report.  If it is your lobbyist report, check your calendar or records to see whether you lobbied during the reporting period.  If the report is for your employer, you must review not only your activity, but possibly information for a contract lobbyist as well…

Click here to read the full article…

Q. We file our federal LD-2 quarterly lobbying reports under the IRC definitions.  Does the IRC 5 percent de minimus rule apply to capturing reportable expenditures on our quarterly LD-2 disclosure?

A. In short, yes, but with a caveat.  If your organization has opted to compile lobbying expenditures using Method B or Method C, the 5 percent de minimus rule applies.  As a frame of reference, the IRC allows taxpayers an exception for including the time of individuals who spend less than 5 percent of their time engaged in lobbying activities as defined by the IRS…

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Here is your chance to “Ask the Experts” at State and Federal Communications, Inc. Send your questions to experts@stateandfed.com.

We are always available to answer questions from clients that are specific to your needs, and we encourage you to continue to call or email with questions about your particular company or organization. As always, we will confidentially and directly provide answers and information. Our replies are not legal advice, rather analysis of laws, rules, and regulations.

Q. Can I use my company’s federal PAC to make contributions to candidates for state office?

A. With the exception of Massachusetts, contributions from a federal PAC to non-federal state candidates are permissible.  However, the challenging aspect of making these types of contributions is that every jurisdiction has different rules regarding how to register and report such contributions.  To make this a little easier to digest, we have broken down the states into five categories.  Please note:  regardless of the registration and reporting process, in all jurisdictions the federal PAC is subject to the contribution limits according to the law of that jurisdiction…

We have not listed PAC rules for all the states, only examples of some states.
If you have a question on a state not listed here, please contact us directly
at 1-330-761-9960.

Click here to read ALL Ask the Experts articles in full

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Q: Our company is a registered lobbyist employer in many states, and we regularly do business with universities. Can my company give gifts to university officials and employees?

A: Gifts to university officials and employees fall under the purview of state ethics laws in a majority of states.  Additionally, universities will often have more restrictive gift policies with respect to vendors. It is especially important to understand what your company can and can’t do at this level, because university employees (especially professors) are sometimes unaware of potential restrictions. Potential penalties can include loss of contracts with a university and/or state fines. Further, if your company is registered as a lobbyist employer, some gifts will need to be disclosed on appropriate reports.

The first step to determine whether a gift to a university official or employee will be permissible is to determine the scope of a state’s gift restrictions…

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Here is your chance to “Ask the Experts” at State and Federal Communications, Inc. Send your questions to experts@stateandfed.com.

We are always available to answer questions from clients that are specific to your needs, and we encourage you to continue to call or email us with questions about your particular company or organization. As always, we will confidentially and directly provide answers or information you need. Our replies are not legal advice, just our analysis of laws, rules, and regulations.

Q. My company has registered lobbyists and is a member of local and regional associations in numerous states. Are there any unique disclosure requirements due to these circumstances?

A. You should always consider a couple of different aspects of reporting with this type of relationship. First and most obvious, the dues you pay to a trade association may have to be disclosed on your lobbying disclosure report.  A trade association can engage in lobbying on behalf of its members, making a portion of your dues reportable as a lobbying expense.

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You can directly submit questions for this feature, and we will select those most appropriate and answer them here. Send your questions to: experts@stateandfed.com.

(We are always available to answer questions from clients that are specific to your needs, and we encourage you to continue to call or e-mail us with questions about your particular company or organization. As always, we will confidentially and directly provide answers or information you need.) Our replies to your questions are not legal advice. Instead, these replies represent our analysis of laws, rules, and regulations.

Q. Our company is active and registered as a lobbyist employer in several states. What are best practices for record-keeping? What will we need to access and keep in the event of a state audit?

A. Each state takes a different approach to auditing, requiring registered companies and lobbyists to keep substantiating records for varying periods of time.  As a conservative rule of thumb, it’s generally advisable to keep substantiating records for seven years.  However, for each state where your company has an active registration, you should determine if there is a set document retention policy.  While some states have no set period of time for lobbyists/employers to retain records, a majority of states require retention for a set period of time, usually within a three to five year range.

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You can directly submit questions for this feature, and we will select those most appropriate and answer them here. Send your questions to: experts@stateandfed.com.

(We are always available to answer questions from clients that are specific to your needs, and we encourage you to continue to call or e-mail us with questions about your particular company or organization. As always, we will confidentially and directly provide answers or information you need.) Our replies to your questions are not legal advice. Instead, these replies represent our analysis of laws, rules, and regulations.

Q. My employer is a wholly owned subsidiary of a parent corporation.  Does a parent corporation, a subsidiary, or other affiliated entity have its own contribution limit or must the contributions be aggregated and have a shared limit?

A. This is a very important question that must be addressed when making a contribution, particularly when there is a hierarchy to the corporate structure.  If a limit is shared, the parent, subsidiary, or other affiliated entity must have an open line of communication when it comes to making political contributions.

In New York, each affiliated or subsidiary corporation, if a separate legal entity, has its own limit.

In California, contributions made by certain combinations of affiliated individuals, entities, and committees must be aggregated.  It all comes down to a matter of control:

• The contributions of an entity whose contributions are directed and controlled by any individual must be aggregated with contributions made by that individual and any other entity whose contributions are directed and controlled by the same individual.
• If two or more entities make contributions directed and controlled by a majority of the same persons, the contributions of those entities must be aggregated.
• Contributions made by entities majority-owned by any person must be aggregated with the contributions of the majority owner and all other entities majority-owned by that person, unless those entities act independently in their decision to make contributions.

So in California, a parent and subsidiary share a contribution limit if the decision to make a contribution is directed and controlled by a majority of the same persons.  If the parent and subsidiary act wholly independently of each other in deciding to make a contribution, the parent and subsidiary each have their own limit.

In New Jersey, if a corporation has subsidiaries, affiliates, branches, or locals, then the contributions of these organizations cannot exceed the applicable contribution limit in the aggregate.  Two or more corporations will be conclusively deemed to be affiliated if:

• Any individual, corporation, partnership, company, association, or other entity owns, directly or indirectly, more than a 30 percent interest in each of such corporations; or
• One such corporation owns, directly or indirectly, more than a 30 percent interest in the other such corporation.

These are just a few examples of aggregation of limits.  As we always advise, verify the rules in your state before making political contributions.

You can directly submit questions for this feature, and we will select those most appropriate and answer them here. Send your questions to: experts@stateandfed.com.

(We are always available to answer questions from clients that are specific to your needs, and we encourage you to continue to call or e-mail us with questions about your particular company or organization. As always, we will confidentially and directly provide answers or information you need.) Our replies to your questions are not legal advice. Instead, these replies represent our analysis of laws, rules, and regulations.