Proposed Department of Labor Rules Could Limit Which Employees Corporations May Solicit for Political Contributions

The Department of Labor (DOL) recently published proposed rules that would significantly increase the number of workers who are eligible for overtime pay. If the rules are adopted as proposed, the DOL estimates that an additional 3.4 million U.S. workers will receive federal overtime pay protections. The impacts of these regulatory changes may extend beyond employee compensation. Employees who become newly eligible for overtime pay under the DOL regulations may no longer be solicitable as part of their employer’s restricted class under federal campaign finance law.

The Federal Election Campaign Act (FECA) and Federal Election Commission (FEC or the “Commission”) regulations limit the individuals that a corporation, trade association, or their connected political action committees (often referred to as “corporate PACs” or “separate segregated funds”) may solicit for political contributions and communicate with regarding federal elections. With limited exceptions, only those individuals who are part of a corporation’s or trade association’s “restricted class” may be solicited or receive express advocacy communications. Pursuant to FEC regulations, a corporation’s restricted class is comprised of executive and administrative personnel, certain stockholders, and the immediate family members of these individuals. Employees are considered administrative and executive personnel if they are employed by the corporation, paid on a salary rather than hourly basis, and have policymaking, managerial, professional or supervisory responsibilities.

Federal campaign finance law does not expressly define policymaking, managerial, professional, or supervisory responsibilities. FEC regulations, however, establish a non-exhaustive list of responsibilities that are indicative of executive and administrative personnel. Such responsibilities include, for example, authority over staffing decisions and directing the day-to-day activities of corporate departments. To assist a corporation or trade association in identifying its own restricted class, FEC regulations also provide that the Fair Labor Standards Act (FLSA), a federal labor law, and its implementing regulations may serve as guidelines for which employees have policymaking, managerial, professional, or supervisory responsibilities. The FLSA and its implementing regulations are not binding upon the FEC, but have been frequently cited by the Commission in advisory opinions analyzing whether employees are considered executive or administrative personnel. 

Under the FLSA and current DOL regulations, covered employers must pay premium overtime pay to certain employees who perform more than 40 hours of work during a week; however, any employee employed in a “bona fide executive, administrative, or professional capacity” is not subject to the overtime pay mandate. The existing rules provide that an employee is not required to receive overtime pay under this “EAP exemption” (sometimes referred to as the “white-collar exemption”) if: (i) the employee is paid a fixed salary that is not subject to reduction due to the quality or quantity of work performed; (ii) the employee’s salary meets a specified minimum amount; and (iii) the employee’s job responsibilities primarily involve executive, administrative, or professional duties. Currently, an employee must receive a salary of more than $35,568 per year to be considered executive, administrative or professional personnel under the FLSA.  If the proposed rules become law, the salary threshold will increase to more than $55,068 per year and would escalate automatically over time.

This change would allow an estimated 3.4 million employees to qualify for overtime pay because they will no longer be subject to the FLSA’s EAP exemption. Those same employees could also find themselves outside of their employers’ restricted classes under FEC regulations. Consistent with FEC guidance, corporations and trade associations have long excluded employees eligible for overtime pay under the FLSA from their solicitable restricted classes. If the DOL’s proposed changes take effect, an employee making $55,068 per year or less may no longer be considered a member of their employer’s restricted class. Whether the FEC would include an employee with sufficient policymaking, managerial, professional, or supervisory responsibilities whose salary is $55,068 or less per year as part of his employer’s restricted class will remain an open question until final rules are adopted by the DOL and the question comes before the Commission—likely in the form of an advisory opinion request or enforcement matter. Corporations and trade associations that use a minimum salary threshold to determine eligibility for their restricted classes may need to re-evaluate these criteria depending on the outcome of the DOL rulemaking.

Members of the public may comment on the DOL’s proposed rules for 60 days after the rulemaking petition is published in the Federal Register. After the public comment period closes, it could be months before the DOL implements final rules, if at all. 

The Akin Political Law team will continue to monitor the DOL’s proposed rules and other relevant campaign finance developments. We are available to develop and implement compliance programs for corporate and trade association PACs and review restricted class eligibility requirements.