Nonprofit Report - October 2016

Date: October 27, 2016

The 2016 Elections and Beyond -- Last Minute Opportunities and Compliance Challenges Ahead
By: Jeffrey Altman & James Kahl

The final weeks of the 2016 election season continue to offer unique opportunities to drive interest and support for your industry, profession or cause. Whatever your tax status, you have a constitutionally protected right to conduct a wide range of educational, issue advocacy and lobbying activities in order to engage your members, donors, the general public, policy makers, and candidates. Trade associations and social welfare organizations can do much more to help elect their preferred candidates. Although compliance with tax, election, ethics and lobbying laws can be challenging, they also offer opportunities, not obstacles, to generate interest and support for your public policy goals in these final days of the 2016 election season and beyond. 

While Section 501(c)(3) organizations are prohibited from engaging in political campaign activities to elect or defeat candidates, they are permitted to conduct voter education activities (including the presentation of public forums and the publication of voter education guides), as well as voter registration and get out the vote drives, as long as these activities are carried out in a non-partisan manner. With some longer range planning, they also can set up an affiliated Section 501(c)(4) or 501(c)(6) organization to engage in political campaign activities and/or to sponsor or help establish a PAC or SuperPAC.

Section 501(c)(6) Trade Associations and Section 501(c)(4) Social Welfare Organizations can accept unlimited corporate and individual contributions to engage in campaign communications and other political activities under the Citizens United Supreme Court decision as long as it is not their primary purpose.  Such activities cannot be coordinated with candidates, however, and federal corporate campaign contributions are prohibited.  But PACs and individuals affiliated with organizations can contribute, and there are many states in which corporate political contributions are permitted, although often subject to limits. 

There is much talk about changing some of these rules after the elections and it is not too soon to start thinking about how these changes might impact your organization.  Depending upon who wins, possible changes may include:

  • Revising the tax code to allow certain Section 501(c)(3) organizations to engage in limited political campaign activities. 
  • Eliminating the Congressional freeze on proposed IRS regulations that would drastically curtail election related activities by nonprofit organizations.
  • Changing lobbying registration, ethics and revolving door rules by eliminating the 20% of time threshold in the LDA definition of a “lobbyist” (in order to require advisors and consultants to register); imposing a 5-year revolving door rule to bar legislative and executive branch officials and staff from moving to private sector lobbying firms or positions; banning foreign lobbyists form campaign fundraising; and establishing Congressional term limits.
  • Increased scrutiny by the FEC of foreign sourced contributions to PACs, SuperPACs and politically active trade associations and social welfare organizations.
  • Greater scrutiny of foundations associated with public figures.
  • Possible legislation to prohibit the IRS from requiring donor disclosure in IRS Form 990, Schedule B.
  • Increased efforts at the state and local level to restrict or regulate campaign and lobbying activities as well as to broaden donor disclosure and impose more stringent pay-to-play rules.
  • Requiring federal contractors to disclose political spending. 
  • Changes in the composition of the Supreme Court that could result in reconsideration of the Citizens United decision.

Whiteford Taylor Preston has launched a new quarterly political law newsletter to keep our clients and friends informed about developments in the fast-changing world of federal and state campaign finance, lobbying, tax, and government ethics laws. If you did not receive it, you can access the inaugural issue of Whiteford Political Law Notes at our website. 

Please also be on the lookout for special updates (such as the following alerts issued this past year and other materials that can be found at our Political Law Compliance home page): 

Montgomery County Employers Must Provide Paid Sick and Safe Leave Effective October 1, 2016
By: Tiffany Releford

Effective October 1, 2016, all employers in Montgomery County, Maryland with one or more employees are required to provide employees with paid sick and safe leave.  All employees must earn one hour of paid leave for every 30 hours an employee works in Montgomery County, up to 56 hours a year.  Employers with 5 or more employees must provide paid sick and safe leave; whereas, employers with less than 5 employees must provide 32 hours of paid sick and safe leave, as well as 24 hours of unpaid sick and safe leave per year.

The new law covers all employees except: individuals who do not have a regular work schedule with the employer; individuals who contact the employer for work assignments and are scheduled within 48 hours; individuals who have no obligation to work for the employer unless they initiate contact; individuals not employed by a temporary placement agency; individuals who regularly work 8 hours or less each week; or an individual who is an independent contractor.  

An employer has the choice to provide sick and safe leave as it accrues throughout the year or award it all at the beginning of the year.  If an employer uses an accrual method for sick and safe leave, an employer must allow the employee to carryover up to 56 hours of the leave to the next year. 

Although sick and safe leave starts to accrue at the time of hire, employers may prohibit use of sick leave until an employee has completed the employer’s 90 day probationary or introductory period.

Likewise, an employer is not required to pay out accrued but unused sick and safe leave at the time of termination; however, an employer may be required to reinstate accrued but unused sick and safe leave if an employee is reinstated within 9 months, unless the employee is determined not eligible for unemployment benefits because the employee voluntarily left without good cause.

It is important to note that the sick and safe leave can be used for reasons other than the employee’s own illness.  The uses include:

  • To care for the employee’s or a family member’s mental or physical condition
  • To care for a family members who presents a risk to the community because of exposure to a communicable disease
  • To allow the employee or a family member to obtain preventative medical care
  • If the place of business is closed due to a public health emergency
  • If the school or childcare center of a family member is closed due to a public health emergency
  • To seek any medical attention, legal services or any services provided by victim’s organizations or to temporarily relocate due to domestic violence, sexual assault or stalking

Under the new law, a family member is defined as a biological, adopted, foster, stepchild or grandchild of the employee; a child that the employee has legal or physical custody of or is the primary caregiver; a biological, adoptive, foster or step parent of the employee or the employee’s spouse; legal guardian of the employee who has been the primary caregiver of the employee when he/she was a minor; a spouse; a grandparent or the spouse of a grandparent of the employee; and a biological, adopted or foster sibling or spouse of a sibling of the employee.  

If an employer’s policies currently provide employees 56 or more hours of vacation or paid time off, the only change an employer may need to make is to ensure their policies state the uses set forth above for sick and safe leave.  Please note an employer is not required to allow an employee to use more than 80 hours of sick and safe leave in a year, and may request documentation if an employee is out for more than 3 consecutive days.

All employers should be mindful that the new law prohibits employers from retaliating against employees who exercise their sick and safe leave rights.  In addition, all employers must keep records of sick and safe leave accrued and used by employees for at least 3 years.  Lastly, employers must provide notice of this new law to all employees.  Sample notices can be found on the County’s website at   

Employers are encouraged to review their current policies to make sure they are in compliance with this new law, as well as consult with legal counsel should they have any questions.