News Items
May 12, 2010
(Re)Defining the Solicitable Class
Federal Campaign law limits the categories of individuals who can be solicited by a company-sponsored PAC to “executive and administrative personnel” and according to The Act and Commission regulations these would be (1) individuals who are employed by the corporation, (2) are paid on a salary rather than hourly basis, and (3) have “policymaking, professional, or supervisory responsibilities.” 2 U.S.C. 441b(b)(7); 11CFR 114.1(c). The regulations provide examples of executives and managers, such as lawyers and engineers, though pointing out it’s permissible to solicit them so long as they are not represented by a labor organization. Where it gets tricky is when that policymaker, professional or manager is supervising hourly employees. In that situation, many companies have been faced with a dilemma based on Commission regulations that appear to limit the PAC from soliciting these individuals who otherwise would be eligible to contribute to the PAC. The Act’s original intention was to ensure lower level (hourly) employees would be “walled off” from PAC solicitations by their supervisors. The issue was addressed further in the Federal Election Campaign Act Amendments of 1976, clarifying that Section 441b(b)7 was not meant to include “foremen” who have direct supervision over hourly employees or other lower level supervisors such as “strawbosses.” And this problem comes up frequently when corporations are preparing or modifying their solicitation guidelines.
In a recent Advisory Opinion (AO 2010-4), however, the Commission has addressed these circumstances and determined that individuals who otherwise would be eligible to participate in the PAC are not converted from the category of “executive and administrative personnel” solely on the basis that they supervise hourly employees. In other words, they are not “foremen” in the sense that the Act intended. “As their job descriptions demonstrate, these individuals carry out major assignments in conducting the operations of Wawa’s business, provide expert advice to senior management, interpret or implement corporate policies or operating practices, investigate or resolve matters of significance, and make recommendations for action.” (See AO 2010-4 at Page 5).
Comment: This issue of “who’s in and who’s out” when it comes to the restricted class is not new. The Commission’s suggestion that PACs look to the Fair Labor Standards Act (FLSA) for guidance, while helpful, there are certainly limitations, the biggest one being that the Commission indicates that while FLSA may help, it is not determinative as a matter of law, so there you go.
The solution to this predicament is contained in a letter to the Commission’s General Counsel from two highly qualified campaign law practitioners (Ken Gross and Michael Toner) that is part of the record in this recent Advisory Opinion Request. That letter urges the Commission to take up the matter in the form of a rulemaking and make the FLSA standards “the rule.” As they state in their letter: “Adopting a FLSA-based definition of ‘executive or administrative personnel’ would provide corporations and trade associations with greater clarity and would be administratively efficient given that every employer in the United States currently must determine whether each of its employees is ‘exempt’ or ‘non-exempt’ under FLSA…” The Commission, they point out, could adopt a rule that makes clear that “exempt” employees are members of the corporation’s or trade association’s restricted class.
This would be a welcome solution to the problem.