New laws are in effect that restrict campaign contributions by people who have government contracts.  At NJBIA’s June 23 seminar on “Navigating New Jersey’s Pay-to-Play Laws,” government contractors were warned to pay close attention to the details.

In general, the laws require contractors to report to the contracting authority all campaign contributions if they have State or local government contracts worth more than $17,500. 

This includes contributions made by the company, their principals, partners, officers or directors of the bidder and their spouses; subsidiaries directly or indirectly controlled by the bidding company; and political action committees or continuing political committees directly or indirectly controlled by the bidder.  Where the bidder is a natural person (i.e., a sole proprietor), the definition also includes that person’s resident spouse and children.

Additionally, a business that has received an aggregate of $50,000 or more through government contracts in a calendar year must separately disclose its contributions to the New Jersey Election Law Enforcement Commission (ELEC).  The regulations detailing this disclosure have yet to be promulgated by ELEC.

The laws are complicated and compliance could prove to be difficult.  Experts encourage all government contractors to take four steps to protect themselves:

1. Identify Who Is Covered. Identify persons in your company and entities subject to the requirements of each law and alert relevant individuals to the restrictions, prohibitions and disclosure requirements of the relevant law(s).

2. Track Contributions by Covered Persons and Entities. Track and review all contributions by covered persons and entities to prevent inadvertent violations.  If an inadvertent violation occurs, request an immediate refund of the contribution in writing.

3. Use Contribution Cover Letters.  Use contribution cover letters with protective language advising all recipient committees that the contributor is a business entity subject to “pay-to-play” restrictions.

4. Adopt a Policy.  Adopt a company policy governing the making and solicitation of political contributions.  Distribute the policy to all officers, members, directors, stockholders and employees.

For more detailed information, contact John Rogers at ext. 209.

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