As we approach the November elections, it may be time to replenish your corporate PAC, also known as your Separately Segregated Fund (SSF). In early June, the Chairman and two commissioners of the Federal Election Commission (FEC) offered a "statement of reasons" that offers some guidance on soliciting PAC contributions from employees.
In the matter of Murray Energy Corporation, et al. MUR 6661, the FEC deadlocked 3-3 on the general counsel's recommendation to bring charges against Murray for pressuring employees to make contributions. The three commissioners voting against proceeding did so based on several factors including the lack of evidentiary support and concerns about the statute of limitations. But the statement of reasons offers some valuable insight into how the FEC may treat allegations of pressure to make political contributions. The chairman and two commissioners who declined to proceed, did so because there was no evidence showing the contributions were obtained using "physical force, job discrimination, financial reprisals or threats thereof."
The commissioners did not appear to believe the following actions would be evidence of unlawful coercion:
- A letter to employees from the CEO/Chairman of the Board lamenting that the response to PAC solicitations had been "poor" and stating "if we do not win this election, the coal industry will be eliminated and so will your job." The CEO's letter contained a disclaimer that contributions were strictly voluntary.
- A memo from the CEO to managers asking them to "rally all salaried employees and have them make their contributions" directly to a candidate. He also encouraged managers to "see that our salaried employees 'step up', for their own sakes and those of their employees." The FEC wrote that the CEO not did instruct managers to coerce contributions.
- Testimony that the CEO asked for a show of hands of managers who had made contributions to political candidates while explaining why they should donate.
- A suggestion from the company that management personnel donate 1 percent of their salary to the company's PAC.
- A statement that bonuses would "more than make up" for any contributions made.
- Multiple solicitations to the allowed class with follow up questions about why they had not contributed.
The commissioners wrote it does not matter whether an employee "feels" coerced or compelled, rather there must be actual evidence of some sort of coercion. The "Statement of Reasons" makes clear that corporate leadership has a first amendment right to encourage – even strongly encourage – employees within the allowable class to make contributions. Doing so does not violate federal election law. When soliciting contributions for a Corporate PAC, it is important to communicate in writing that "contributions are strictly voluntary" but that does not mean the company, and senior leadership may not encourage participation.