PACs Collect Millions From Workers’ Paychecks
Mary Jackson supports her company’s political action committee one paycheck at a time.
The senior vice president of Cash America International Inc. allows her employer to withdraw $92 straight from her paycheck every two weeks as a contribution to the financial services company’s PAC. So far, Jackson has donated more than $2,500, and her co-workers have contributed a total of $315,000 to Cash America’s PAC through payroll deductions.
As this year’s election season draws to a close and experts begin the traditional lament of too much money in politics, the common but little-discussed practice of fueling major PACs with employee payroll deductions thrives. In recent years, professional associations have joined corporations and unions in using the mechanism to gather millions of dollars.
Jackson’s company is one of more than 800 employers that reported using some type of payroll deduction during the 2010 cycle, according to a CQ MoneyLine study of campaign finance records. Nationwide, well more than 100,000 salaried workers authorized their employers to withdraw a total of more than $70 million from their paychecks through June.
Instead of putting this money toward their 401(k)s, the employees are paying into corporate PACs. The committees then donate these funds — regardless of their employees’ political beliefs — to lawmakers and candidates to get a foot in the door on legislative issues.
[IMGCAP(1)]”The political action committee allows our employees to participate in the political process,” Jackson said. “I give money individually as well as through my political action committee.”
The use of payroll deductions as a way to fund PACs isn’t illegal, but for some it raises questions about how easily employees can decline to participate.
“There’s a lot of ways to get a not-so-subtle message to your employees. Some companies are kind of blatant about it. They can’t make you do it, but they can make a pretty heavy-handed pitch,” said Meredith McGehee, policy director at the Campaign Legal Center.
Campaign finance laws forbid anyone from coercing employees to make donations, and companies are not allowed to compensate workers for contributing to the PAC through bonuses, raises or promotions. But company executives — along with the general public — can see who made donations because each PAC must disclose all donors who contribute more than $200 per year.
“It’s very clear that if you want to be seen as someone who is supportive of the company, wants to move up in the company and be seen as a team player,” McGehee said, “then you are not only going to get the automatic deduction from your paycheck, but you are also going to contribute from your own funds.”
Jackson, who is the Cash America PAC’s treasurer, sees value in being part of the company’s political efforts.
“Our political action committee helps us get a seat at the table, but it doesn’t necessarily change the debate,” she said. “Whether it is positive legislation that we are trying to influence or negative legislation, the only way to participate in this way is through a political action committee.”
Many treasurers do not break out paycheck deductions in their campaign finance reports, so experts say much more money is probably donated to PACs through this type of transaction than the FEC data show.
“It’s the way that virtually all corporate PACs collect their money,” said Jan Baran, who heads the election law and government ethics group at Wiley Rein. “I bet you almost all union money is also collected through payroll deductions, but it just would not be visible because of the nature of how it’s reported.”
One of the top recipients of listed PAC payroll deductions is Lockheed Martin, which raised more than $2 million through these types of transactions this election cycle. Others raising more than $1 million directly from employee wages include the National Air Traffic Controllers Association with nearly $1.9 million and Federal Express and Union Pacific with close to $1.5 million each.
How Legal Is the Pitch?
The practice itself is legal, but what about the pitch? Some companies are very aggressive in asking for PAC donations, campaign finance watchdog say, sending letters and e-mails to employees and holding meetings to pass around payroll deduction forms.
Solicitations may even be placed in the envelopes that contain employees’ paychecks.
While employers can’t reimburse employee donations, company or union funds often are used for events and creative incentives for PAC donations. For instance, Halliburton uses its corporate treasury to match PAC donations dollar-for-dollar with donations to charities selected by employees. So an employee can give up to $5,000 per year to HalPAC, and the company will cut a matching check in their name to the employee’s favorite church, school or other 501(c)(3) charity.
In 2008, Halliburton wrote $5,000 checks to charities in the names CEO David Lesar, Chief Financial Officer Mark McCollum and Executive Vice President Albert Cornelison Jr., according to documents filed with the Securities and Exchange Commission. Such practices are legal under campaign finance rules, and the FEC has upheld this practice in advisory opinions.
The solicitation for corporate PAC donations often happens in person. For instance, Burger King’s PAC treasurer Craig Prusher said he occasionally stands up at the firm’s regular management meetings and asks employees to enroll in the company’s payroll deduction program.
All Burger King officers and managers are expected to attend the meeting — even by phone or via webcast. Following the meeting, the CEO follows up with a letter to each officer or director “making the case of why PAC contributions are important.”
“The pledge card” that authorizes the payroll deduction “is connected to the letter,” Prusher said. “But we make very clear in [the letter] that for PAC contributions to be legal that they must be voluntary. There are no ramifications to you, your job or your position if you decide not to give to the PAC.”
Burger King’s payroll deduction has been essential to the PAC this cycle, providing 96 percent of its individual receipts, according to FEC documents.
“It’s just a little bit more convenient from just a cash flow perspective when you are doing your family budgeting,” said Prusher, who participates in the restaurant chain’s payroll deduction program in addition to running its PAC. While Prusher said he could solicit all the way down to the restaurant management level, he instead chooses to solicit a smaller number of executives and directors at the corporate level.
While Burger King is selective with its donors, those who donated wages to other corporate PACs represent a broad range of job titles, from CEOs to custodians.
A large percentage of deducted funds come from executives. At companies around the country, those listing vice president in their job title ponied up more than $16 million from their salaries during the first 18 months of this cycle.
But blue-collar employees also made significant donations, including more than $570,000 from people listing their positions as laborers and $300,000 from people listed as mechanics and maintenance personnel. Even civil servants contributed to their causes, with firefighters donating more than $436,000 and postal employees giving more than $140,000.
After PACs dole out the money, some employees complain about the company supporting candidates the individuals oppose.
“When we give to the candidates they don’t like, we hear about it,” said Jackson, Cash America’s PAC treasurer. Cash America is more bipartisan than most PACs, giving $183,000 to Democrats and $101,000 to Republicans so far this election cycle.
“I understand your position,” she explains to those employees, “but this individual gets our business, has been supportive and the PAC gives for those reasons and not any of your personal reasons.”