Refresher course needed for federal election season

By G. Phillip Shuler

In this federal political season, it is timely to review the federal rules relating to corporate participation in federal elections.

The Federal Election Campaign Act of 1971 prohibits all corporate financial contributions in connection with federal elections except through corporate Political Action Committees (PACs) regulated by the Federal Election Commission (FEC). Notwithstanding this broad prohibition, some employers desire to participate in the political process as well as encourage their employees to participate.

Generally, the prohibition on corporate contributions in federal elections is broad and extends to the use of corporate resources to facilitate what may otherwise be legal personal contributions. It is illegal for a corporation, including trade associations and not for profit membership organizations, to permit the uncompensated use of corporate facilities for political activity.

This is true because contributions include anything of value used in connection with a federal election - including use of corporate resources (offices, phones and equipment), personnel, employee's time - and reimbursement of personnel for their political contributions.

Employees are, of course, permitted to volunteer to work for a candidate or political party but the corporation may not compensate them while they are volunteering other than pay them earned vacation or accrued leave time; the distinction being a corporation may not compensate an employee who takes unearned leave to work on a federal campaign, which includes payment for employee benefits such as life and health insurance unless pursuant to a general policy which provides benefits to other employees on leave.

Of course, employees are entitled to engage in political activity outside their working hours or during working hours if their lost time is made up in a "reasonable" time.

Employees may use corporate facilities and equipment for political activity but such use must be only "occasional, isolated or incidental" and must not prevent employee's regular work performance or interfere with normal business activities. A safe harbor has been established for these occasional, isolated or incidental activities at one hour per week or four hours per month but this is only a guideline and other amounts may be deemed reasonable.

If the use of facilities or equipment is other than incidental, the employee must timely reimburse the corporation fair market value of such services as telephones, reproduction equipment and the like.

If a candidate visits a corporate facility and uses corporate resources such as meeting rooms, vehicles, etc., the candidate must reimburse the corporation at the fair market value of such resources. A candidate may use corporate staff to assist in political activities if uncoerced staff agrees and the corporation received fair market value compensation in advance from the candidate.

A corporation may invite a candidate to appear at a corporate facility or function to address employees and the candidate may solicit contributions but the corporation may not indicate preference for a candidate or party or encourage employees to support a particular candidate or solicit contributions for a candidate. The corporation may advocate public policies favorable to its business while mentioning the candidate's support of those policies.

Of course, a corporation may communicate with a restricted class composed of its shareholders, executives, administrators and their families. A corporation may invite a candidate to corporate facilities or a corporate function to address the restricted class and may endorse the candidate and advocate their support.

Corporations may also solicit, but not facilitate, contributions from the restricted class but the contributions should be delivered directly to the candidate. Furthermore, the corporation may provide transportation to and from the polls to the restricted class but not predicated upon their individual preference for a candidate.

Finally, a corporation may prepare and distribute voter guides or voting records to its employees (as well as to the public) as long as they do not clearly advocate the election or defeat of a candidate or contain an electioneering message.

Editor's Note: G. Phillip Shuler is a partner in the New Orleans office of Chaffe, McCall, Phillips, Toler & Sarpy.