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Client Alert: Maryland Expands Lobbyist Employer Reporting Requirements and Increases Penalties for Political Contribution Disclosure Violations

Date: June 3, 2022
A new Maryland law, which will go into effect on July 1, 2022, requires all organizations that pay lobbyists at least $500 in compensation to file reports on a semiannual basis disclosing contributions to candidates for Governor, Lt. Governor, Attorney General, Controller and Members of the General Assembly.  Reports must be filed even if no political contributions are made during a six-month reporting period (November – April and May – October).  As a result, many corporations and associations that employ or retain lobbyists will now have Maryland reporting obligations.       

Maryland has long required certain state and local public contractors to file semiannual contribution reports. Organizations that paid lobbyists more than $500 in a semiannual period were also required to file similar disclosure reports, but only if they made at least one contribution of $500 or more to a statewide or General Assembly candidate.  The new law removes this condition – employing a lobbyist alone will trigger reporting obligations.

Organizations that are required to file disclosure reports should keep the following points in mind:
  • Contributions by other persons are attributed to the organization for reporting purposes.  For business entities, this includes contributions from officers, directors and partners; contributions made by others at the suggestion or direction of officers, directors, partners or employees; and contributions made by subsidiaries at least 30% of the equity interest of which is controlled by the business entity.  For nonprofit organizations, contributions by trustees, board members and officers are attributable to the nonprofit if the contribution is made at the recommendation of the organization or the individual is compensated for services by the nonprofit.
  • A reporting organization must maintain detailed records of its contracts with lobbyists, and the contributions made by and attributed to the organization.
  • Records relating to the reports must be retained for three years after creation.

The new law also increases penalties for violations of the both the lobbyist employer and public contractor contribution disclosure laws.  For example, civil penalties of up to $1,000 may be imposed for failure to report all applicable contributions, failure to maintain detailed and accurate records, and late filing of reports.  Penalties for knowing and willful violations are increased from $1,000 to $25,000.
 
The first report for newly covered organizations must be filed by November 30.  Lobbyist employers should start planning now to implement procedures for collecting relevant information, including surveying covered employees to identify applicable political contributions made by or attributed to the organization.   

The Associations, Nonprofits and Political Organizations practice group at Whiteford, Taylor & Preston has in-depth experience advising clients with regard to campaign finance and lobbying laws across the country.  Please feel free to contact one of our attorneys if you would like more information about the new Maryland legislation or if you have other political law compliance questions.
The information contained here is not intended to provide legal advice or opinion and should not be acted upon without consulting an attorney. Counsel should not be selected based on advertising materials, and we recommend that you conduct further investigation when seeking legal representation.