Ground Rules Needed for the Overnight Lobby

Posted September 14, 2009 at 6:21pm

‘What can Brown do for you?— Besides delivering packages, the men and women in UPS uniforms now have lobbying as part of their portfolio. Depending on which side of the story one believes, UPS either has requested or ordered its employees to write thousands of letters to Members of Congress in the increasingly ugly death match with archrival FedEx over labor regulation. The epic clash highlights the important laws that corporations must consider when corralling rank-and-file employees into their lobbying campaigns.

First, some context: UPS, which started out as a truck-based service, falls under the jurisdiction of the National Labor Relations Act. Its rival FedEx is subject to the Railway Labor Act, which makes unionization, bargaining and striking tougher. UPS, having lost its earlier round of lobbying to be placed under the RLA like FedEx, is now lobbying for Congress to revoke FedEx’s competitive advantage and to similarly hamstring it under the NLRA.

According to press reports, UPS workers are writing letters during work hours to support their employer’s position, and the company is also supplying the talking points, stationery and postage. (UPS has accused FedEx of doing the same.) All of which raises the question: What are the lobbying laws that apply to this activity? Both UPS and FedEx are “registrants— under the Lobbying Disclosure Act, and they file regular reports with the offices of the Secretary of the Senate and the Clerk of the House. Both have reported multimillion-dollar lobbying expenses over the years on all sorts of policy issues.

As its name implies, the Lobbying Disclosure Act is all about disclosure, and there is nothing in that law that prohibits the type of activity that UPS (and perhaps FedEx) is engaged in. (Labor laws may be another matter, but they are beyond the scope of this writer’s expertise.) Nonetheless, companies should be concerned about employees’ lobbyist registrations and disclosure of employee names and expenses for lobbying activities.

Employees must be registered as lobbyists (on top of their employer’s registration) if they spend more than 20 percent of their individual work time on lobbying activities. Employees registered as lobbyists face additional reporting requirements. They must disclose, for example, their individual campaign contributions (exceeding $200) to candidates, leadership PACs and party committees, as well as donations to entities connected with federal officials. Registered lobbyists also face increasing social and political stigma, as evidenced by President Barack Obama’s refusal to accept their campaign contributions. Perhaps more importantly, failure to register may result in penalties.

It appears, however, that the individual rank-and-file employees in the present UPS lobbying campaign are not required to be registered as lobbyists because of the 20 percent threshold. Here, the UPS employees’ letter-writing campaign almost certainly would constitute lobbying activities under the LDA, but they appear to be incidental to their primary work of sorting and delivering packages.

That is not the end of the story, however. UPS also must report all expenses “reasonably allocable— to lobbying activities, including employee compensation and office overhead and supplies. The official LDA guidance emphasizes that this requirement applies even to employees who are not registered lobbyists. Thus, the wages UPS pays to its employees while they are writing the letters, as well as the stationery and postage costs, must be disclosed. Since the LDA requires only an aggregate report of all lobbying expenses, these wages and costs will not be itemized.

A more meaningful and administratively burdensome disclosure, however, is Line 18 in the LDA disclosure form. Here, after companies describe each general issue area and specific issues that they are lobbying on, they must itemize the names of all individuals who have “acted as a lobbyist— in each general issue area. Again, the official LDA guidance emphasizes that this itemization requirement applies regardless of the 20 percent threshold for the lobbyist registration determination. In this case, the UPS employees are making “lobbying contacts— under the LDA (i.e., contacting Members of Congress about legislation) and are generally involved in lobbying activities. Thus, their names probably would have to be listed in Line 18 of UPS’s lobbying disclosure reports, even though they are not registered lobbyists.

Despite the administrative chore UPS (and perhaps FedEx) likely faces, at least tracking is one of the company’s core competencies. Here, one might recall Sprint/Nextel’s “What if delivery people ran the world?— commercial, in which a delivery company locates a student playing hooky and delivers him straight to detention. The moral here is that companies should use that same type of precision in tracking their employees’ lobbying activities for LDA disclosure.

Eric Wang, a political law attorney, has advised clients on all aspects of government ethics laws. He can be reached at ericwang@alumni.princeton.edu.