AO 2009-31: Employees may use credits to make contributions to SSF
MAXIMUS, a corporation whose employees earn "credits" redeemable for cash value as part of their regular compensation, may expand this credit program to allow restricted class employees to redeem these credits and use them to make contributions to its separate segregated fund, MAXPAC.
Background
MAXIMUS is a corporation whose employees earn "credits" as part of their regular compensation in addition to their salaries. These credits hold a cash value based on a pro rata share of the employee's salary, and may be redeemed for the following purposes:
- To receive pay while on personal leave;
- To receive pay during times of financial or personal hardship; and
- To receive a lump sum payment upon permanently leaving employment at MAXIMUS.
MAXIMUS wishes to revise its compensation plan to allow its restricted class employees to redeem credits for cash value for two additional purposes: to contribute it to MAXIMUS's charitable foundation, or to allow restricted class employees to make a contribution to MAXPAC, MAXIMUS's separate segregated fund (SSF). MAXIMUS would permit restricted class employees to voluntarily complete and submit a form authorizing MAXIMUS to redeem an employee-specified number of credits, the cash value of which would be contributed to MAXPAC. The form would be distributed only to restricted class employees and would contain all notifications required under the Federal Election Campaign Act (the Act) and Commission regulations for solicitations to an SSF's restricted class.
Analysis
The Act and Commission regulations permit a corporation to solicit its restricted class for contributions to the corporation's SSF. 2 U.S.C. §§441b(b)(2)(C) and (4)(A)(i); 11 CFR 114.1(a)(2)(iii), (c), (f) and (j); 114.2(f)(1) and (4)(i); 114.5(g)(1). Solicitations of the restricted class for contributions to the corporation's SSF must inform the employee of the political purpose of the SSF and of the employee's right to refuse to contribute without reprisal. 11 CFR 114.5(a). Among possible methods of solicitation for the SSF are payroll deduction, checkoff systems, periodic payment plans or return envelopes enclosed in a solicitation request. 11 CFR 114.1(f), 114.2(f)(4)(i), 114.5(g)(1) and (k); AO 1999-03. Corporations may not use treasury funds to pay any contributor for his or her contribution through a bonus or any other form of direct or indirect compensation. 11 CFR 114.5(b)(1).
Because MAXIMUS's existing credit system is part of a regular compensation plan provided to each employee, earned in the normal course of employment at a regular, predetermined rate, and because employees control the use of any credits earned and may redeem them in a variety of situations, the proposal is materially distinguishable from the proposal presented in AO 1986-41, in which the Commission concluded that providing additional compensation to some employees in recognition of their political contributions would be contrary to the Act and Commission regulations.
MAXIMUS's proposal does not augment employee compensation to effect a contribution. The proposed expansion of MAXIMUS's credit program is analogous to a corporate payroll deduction plan, which the Commission has found to be an acceptable method of facilitating contributions to a corporation's SSF. 11 CFR 114.1(c) and (f), 114.5(k)(1); AOs 1999-03 and 1996-42. As a result, the Commission concludes that the proposal by MAXIMUS would not constitute such a prohibited use of treasury funds to compensate employees for contributions to MAXPAC.
Date issued: January 29, 2010; length: 4 pages