Advisory Opinion NO 2011-08

QUESTION PRESENTED

If the below conditions are met and neither entity is a parent or subsidiary business entity to the other, the employer corporation and the employee-sponsored PAC would be unaffiliated, would it be permissible for the two entities to each make a maximum contribution to the same candidate under O.C.G.A. $ 21-5-41(c)?

Conditions:
An employer corporation would share no common ownership or control with an incorporated employee-sponsored political action committee (“PAC”), and neither entity would exhibit control over the other:
(1) The employer corporation has different directors and different officers than the incorporated employee-sponsored PAC,
(2) Neither entity pays the administrative fees for or contributes to the other entity in any way, and
(3) The directors and officers for each entity lack authority concerning disposition of funds by the other entity.

ADVISORY OPINION

The Georgia Government Transparency and Campaign Finance Commission (the “Commission”) has received this request for advisory opinion from the law firm of Holland & Knight LLP (“H&K”) based upon the above hypothetical. H&K asserts (1) that an employer corporation lacks common ownership or control with an incorporated employee-sponsored political action committee (“PAC”) and (2) that neither entity exhibits control over the other if the following conditions are met:

1. The employer corporation has different directors and different officers than the incorporated employee-sponsored PAC;
2. Neither entity pays the administrative fees for or contributes to the other entity in any way; and
3. The directors and officers for each entity lack authority concerning disposition of funds by the other entity.

According to H&K, so long as these conditions are met and neither entity is a parent or subsidiary business entity to the other, the employer corporation and the employee-sponsored PAC would be unaffiliated and it would be permissible for the two entities to each make a maximum contribution to the same candidate under O.C.G.A. § 21-5-41(c).
The Georgia Government Transparency and Campaign Finance Act (the “Act”) provides that no business entity

shall make any election contributions to any candidate which when aggregated with contributions to the same candidate from any affiliated corporations exceed the per election maximum allowable contribution limits for such candidate as specified in subsection (a) of this Code section.

See O.C.G.A. § 21-4-41(c).

The Act defines a “business entity” as

any corporation, sole proprietorship, partnership, limited partnership, limited liability company, limited liability partnership, professional corporation, enterprise, franchise, association, trust, joint venture, or other entity, whether for profit or nonprofit.

See O.C.G.A. §§ 21-5-3(1) & 21-5-40(3).

The Act further states that “Affiliated corporation”

means with respect to any business entity any other business entity related thereto: as a parent business entity; as a subsidiary business entity; as a sister business entity; by common ownership or control; or by control of one business entity by the other.

See O.C.G.A. § 21-5-40(2).

If the conditions listed above are met, the Commission finds that an employer and an employee-sponsored PAC do not have common ownership. The Commission’s inquiry, however, cannot end there.

The Act includes in its definition of “affiliated corporation” a business entity that has common “control” or that is controlled by another entity. See O.C.G.A. § 21-5-40(2). The Commission can imagine situations where an employer could still exert “control” over an employee-sponsored PAC that does not share common ownership. Obviously, an employer has direct control over its employees. For example, within the confines of the law, an employer has the ability to direct and control when an employee must arrive at work and when an employee may leave. The employer sets an employee’s job title and job duties. The employer decides an employee’s salary and whether or not an employee will receive a raise. Most importantly, an employer has the power and ability to fire an employee.
Because of the unequal position of power an employer possesses in the employer-employee relationship, whether an employer explicitly directs its employees to use an employee-sponsored PAC to contribute to a candidate of the employer’s choosing or implicitly communicates its desire that such a contribution be made, the employer has more than sufficient opportunity to influence and/or control the employee-sponsored PAC. Moreover, an employer could implicitly require its employees to form and/or contribute to an employee-sponsored PAC. With such influence and power, the employer could effectively “control” the employee-sponsored PAC. For this reason, the burden will be on the employee-sponsored PAC to demonstrate that there is no control.

For these reasons, the Commission finds that an employer corporation and an incorporated employee-sponsored PAC can each make maximum contributions to the same candidate under O.C.G.A. § 21-5-41(c) where:

1. The employer corporation has different directors and different officers than the incorporated employee-sponsored PAC;
2. Neither entity pays the administrative fees for or contributes to the other entity in any way;
3. The directors and officers for each entity lack authority concerning disposition of funds by the other entity; and
4. The employer corporation does not exert control over the employee-sponsored PAC.

Because questions of control are fact-specific, the Commission expresses no opinion on what would constitute control under the Act.

The Commission states that this opinion is limited to the hypothetical described above and should not be read to hold that an employer corporation and an incorporated employee-sponsored PAC may each make maximum contributions to the same candidate only if the above-listed circumstances are met.

Prepared by Jonathan E. Hawkins
April 11, 2012


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