Renaud: Business Leaders Have Opening to Sway Voters

Posted October 13, 2010 at 5:44pm

With 20 days left before this year’s general election, time is running out for business leaders and others to have an effect. Leaders of businesses large and small should not overlook a strong and easy-to-implement option available to them for the first time — direct communications to rank-and-file employees expressly about the election or defeat of clearly identified candidates.

Such all-employee communications will go a long way toward battling electoral indifference among employees and turning an election or two toward pro-market, pro-prosperity candidates.

This new election-related opportunity arises out of the Supreme Court’s January opinion in Citizens United v. Federal Election Commission. Although express advocacy to all employees was possible in about half of the states prior to January, the court’s ruling demands that domestic corporations be permitted to communicate independently with anyone about the election or defeat of any federal, state or local candidate — and this includes a company’s own employees.

These employee communications can be very effective given that the speaker will be known to every recipient and is likely to be seen as at least reasonable by many employees (although we all have disgruntled employees). The addresses or e-mail addresses are known to the company, which makes this exercise of free speech easy to implement at this late date — a quick e-mail, a letter, a memo or an intranet site.

E-mails also make the all-employee communications cheap to implement, although other, more expensive forms, such as letters and postcards, may be more effective, depending on the company’s culture. (For state law reasons, it is best to avoid paycheck stuffers and messages about the imminent demise of the business if a particular candidate loses.)

Because of Citizens United, the electoral possibilities are unlimited. The express advocacy may be tied to legislative records, a comparison of candidates’ platforms or general get-out-the-vote messages. The audience can be as wide or narrow as the corporation prefers, although many businesses may want to avoid public advertisements because of a fear of the loss of goodwill or for other reasons.

Although these all-employee advocacy pieces are exercises of First Amendment rights, there are several regulatory requirements that business leaders must consider before embarking on their electoral drive. These boil down to independence, disclaimers and reporting, and the rules may vary depending on the candidates for whose benefit the communications are being made — federal candidates, state candidates and/or local candidates. (Note that in response to Citizens United, some states also have adopted provisions meant to stall corporations, such as same-year board authorizations. Such roadblocks to corporate free speech are likely to increase in the future.)

Independence. At the federal level and in 24 states, any communication that expressly advocates the election or defeat of a clearly identified candidate must be made independently of the candidate, his or her campaign committee, a political party committee and their agents. Communications lacking this independence are considered in-kind contributions, and the federal government and these states ban corporate contributions.

This means that a company must ensure, at the least, that the executives in charge of or advocating for the all-employee communications are not tied to a benefiting campaign or political party, are not communicating with the campaign or party and are not vetting the communication with the campaign or party.

Disclaimers. Even when independent, a corporate communication to employees that contains express advocacy likely also must contain a disclaimer. Depending on the jurisdiction (federal law applies to communications about federal candidates, etc.), these disclaimers can be simple, in that only the name of the payor and the words “paid for by” need to be provided, or they can be more complicated — involving text boxes, mandated font sizes, the name and title of the CEO, etc.

Reporting. While all-employee communications are permissible, such communications, depending on their costs, may trigger reporting obligations. Federal reports start with expenditures of more than $250, and 24-hour reports are required at the $1,000 level within 20 days of the general election. State reporting requirements are all over the board, with reporting thresholds as low as $25 (Wisconsin), multiple reporting requirements with their own thresholds (e.g., Washington state) and requirements that reporting be electronic (e.g., Texas).

Fortunately, many states have statutory exceptions to their reporting (and, often, disclaimer) requirements for communications to employees, so such requirements are not always applicable (for example, California and Kansas). The use of low-cost e-mails may prevent a corporation from exceeding a given threshold and incurring the reporting obligation.

With a little due diligence on, among other things, the independence of their communications, the required disclaimers, and the required reporting regimes, business leaders can exercise their constitutional rights in a focused and effective manner at this late date.

In the process, the executives will help persuade their employees to cast a vote for future prosperity — for themselves, their businesses and the nation.

D. Mark Renaud is a partner in Wiley Rein’s Election Law & Government Ethics Practice, where he advises corporations, trade associations, their political action committees and others on laws related to elections, political involvement, lobbying and ethics.