PACs Can Solicit Campaign Contributions from Employees

Many businesses take part in financing campaigns. In recent years, businesses have formed their own political action committees (PACs) to fund the business’s campaign activities. Those corporate PACs are called Separate Segregated Funds (SSFs).

They were created to get around the prohibition of corporate campaign contributions and are a business’s only direct way to contribute to a campaign. Under certain circumstances, federal election law allows corporations and their connected PACs to solicit contributions to the connected SSF from employees.

A campaign contribution is anything of value given, loaned, or advanced to influence a federal election. That includes money and in-kind contributions, which are goods or services offered free of charge or at less than the usual and normal charge. Fundraising and requests for contributions are considered solicitation.

However, any communication about the SSF could constitute a solicitation if it publicizes the SSF’s right to accept unsolicited contributions from any lawful contributor, provides information on how to contribute to the SSF, or encourages support for the SSF.

Contact an experienced attorney for legal advice regarding PAC contributions and solicitations.

Which Employees May Be Solicited?

An SSF or connected organization may generally solicit only the restricted class of persons associated with the connected organization.

The restrictive class of a corporation consists of:

• The corporation’s executive and administrative personnel
• The stockholders with voting rights
• Compensated members of the board of directors

The immediate family members of these two groups are also within the restrictive class. Executive and administrative personnel include employees paid on a salary, rather than hourly, basis who have policymaking, managerial, professional, or supervisory responsibilities.

Employees outside the restrictive class include:

• Professional employees represented by a labor union
• Lawyers, consultants and other personnel employed by firms retained by the corporation and who are not employees of the corporation
• Uncompensated members of the board of directors who aren’t executive or administrative personnel
• Salaried foremen and others who supervise hourly employees
• Former or retired personnel

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What Are the Contribution Limitations on SSF Solicitation?

A corporation or its SSF may solicit its restricted class at any time. For employees outside the restricted class, a corporation may make up to two written solicitations per calendar year for contributions to its SSF, subject to federal conditions. The business may never solicit the public for contributions to its PAC.

Employers that solicit contributions from employees for their corporate PACs must ensure employees feel their contributions are voluntary. Under federal law, contributions may not be secured by the use or threat of physical force, job discrimination, or financial reprisal.

Employees who believe an employer has violated the law can file a complaint with the Federal Election Commission (FEC), which enforces federal election law and can levy civil penalties.

Notice Requirements for Solicitations

Certain notices are required for all solicitations, oral or written, and the SSF must provide them. Each time the SSF or a connected business solicits contributions from individuals, those individuals must be informed of the SSF’s political purpose.

It’s not enough for the notice to say only that a contribution to the SSF is voluntary; it must inform the employee of their right to refuse to contribute without reprisal from their employer.

If an SSF or connected organization suggests a specific contribution amount, the solicitation must also state that the amount is only a suggestion, is not enforceable, and will not disadvantage the employee if they refuse to contribute.

Indiana State Law on Campaign Finance

The rules on SSFs apply to federal elections, but Indiana also has its own campaign and voter intimidation laws that regulate political party solicitation for state election activities, whether for the Senate, Congress, or another public office.

Indiana law forbids employers from exhibiting political messages that inform employees their employer’s business will close, that the employee’s pay might decrease, or that are intended to influence the employee’s vote in any way.

Also, Indiana law generally prohibits all forms of voter intimidation, and a violation of either is a class 6 felony.

Find Legal Help

Before your business begins soliciting contributions from employees to its connected PAC, sit down with an experienced corporate law attorney to ensure no violations of federal or state law.