May 23, 2016, Covington Alert

As we move toward the 2016 general election, campaign activity at the federal, state, and local levels continues to heat up. Super PACs again promise to play a prominent role in federal races, while at the same time impacting a wider range of non-federal races further down the ballot.

May 12, 2016, Covington Alert

Corporate mergers and acquisitions often overlook political law compliance issues—including whether the acquired company has a PAC—until after the transaction is complete and Day One has come and gone. We recommend considering PAC issues during the due diligence review to ensure there are no legal issues to be addressed in the acquired entity, and to prepare for how the FEC will treat the two PACs immediately after the merger. This alert provides information and resources for the necessary due diligence and for preparations to integrate the PACs after the acquisition is complete.

April 29, 2016, Covington Alert

The Supreme Court’s decision in Citizens United expanded the rights of corporations to engage in political activity, particularly concerning their First Amendment right to express their views to the public about candidates for public office. With the upcoming 2016 presidential election and the increased use of mobile technology for personal political activities, corporations should become acquainted with the fast-changing and conflicting laws that regulate electoral politics in the workplace.

Managing a company’s involvement in electoral politics used to be a relatively simple matter of ensuring that the PAC was well run, that personal political activities stayed outside the workplace, and that if an executive wanted to engage in personal fundraising, she or he was clear on how the event was to be organized and paid for. No more.

April 13, 2016, Covington Alert

Federal Election Commission (“FEC”) regulations permit a corporation to communicate with its “restricted” or “solicitable class” on any subject, including electoral advocacy and political fundraising. See 11 C.F.R. § 114.3(a). This includes solicitations of contributions to the corporation’s PAC. We frequently see questions arising about who falls within the restricted class in one of two contexts: (a) in an effort to ensure the class is not too narrowly defined, depriving the PAC of potential donors; and (b) when a company reads the definition of “professional or administrative personnel” in the statute to only be a question of whether the employee is “salaried” or not, not considering the second prong of the test described below.

Congress has defined a corporation’s restricted class as consisting of the following:

• The corporation’s “executive or administrative personnel.”
• The corporation’s “stockholders,” as defined by FEC regulations.
• Individuals who are members of the restricted class of any subsidiary, branch, division, or “affiliate” of the company (the FEC has a multi-part test for determining which entities count as affiliates”).
• Immediate family members of the above individuals.

February 2, 2016, Marketplace

Robert Kelner speaks to Marketplace about what super PACS are able to do with leftover funds once candidates suspend their campaigns, in light of Martin O’Malley and Mike Huckabee’s exits from the 2016 presidential primaries. According to Kelner, “Super PACS have very wide discretion on what they can do with left over funds." He continues, “They can’t start ...

October 8, 2015, Covington Alert