1. Skip to navigation
  2. Skip to content
  3. Skip to sidebar

DC Circuit Court of Appeals Provides Major Support For the Constitutionality of Pay-to-Play Laws . . . And Probably Makes an Executive Order Mandating Contractor Disclosure of Political Spending Likely

Ever since the US Supreme Court’s landmark rulings in Citizens United and McCutcheon, significant questions have been raised (mostly by real scholars but also by agitators and pot-stirrers such as myself) as to whether pay-to-play laws – based as they are on appearances of potential corruption and not direct bribery – are constitutional.   The DC Circuit has now weighed in to provide significant legal and factual justification for the constitutionality of laws limiting personal campaign activity in order to prevent the appearance of corruption and to promote the “merit-based administration” of our government (which is only a GRADE 3 oxymoron, falling as it does on the scale between “pretty ugly” and “jumbo shrimp”).

The case in question is Wagner v. FEC in which a number of federal contractors brought free speech and associational challenges to a federal law prohibiting their planned contributions to federal candidates and political parties.  Federal law (2 USC 441c) prohibits government contractors from making campaign contributions to candidates, political committees, or political parties. 2 USC 441b imposes similar restrictions on corporations, national banks, and labor unions.  Of most importance to those of us tasked with pay-to-play compliance is not that 2USC 441c was upheld, that law has been on the books a long time and really only impacts individuals who directly contract with the federal government (in contrast with the myriad of people who work as employees of government contractors).  The Court also did not examine the issue of whether federal contractors may give to independent expenditure groups (SuperPACs).  What is significant about Wagner is the fact that the DC Circuit appears to contravene the US Supreme Court’s analysis in McCutcheon to hold that federal and state governments may enact pay-to-play laws admittedly abridging speech and associational rights in order to assure the public believes that government servants are not corruptible and are fulfilling their public duties “effectively and fairly”, free of “improper influence or corruption”.  (Wagner, Slip Op. 12-15).

Other federal courts have not agreed with the DC Circuit’s reading of McCutcheon to allow such latitude:

Our Supreme Court has made clear that only certain contribution limits comport with the First Amendment. Since contributing money is a form of speech, preventing quid pro quo corruption or its appearance is the only governmental interest strong enough to justify restrictions on political speech. Citizens United v. FEC, 558 U.S. 310, 357-61 (2010). More recently in McCutcheon, the Court concluded that “the possibility that an individual who spends large sums may garner influence over or access to elected officials or political parties . . . does not give rise to such quid pro quo corruption.” Id. at 1438. In effect, it is only direct bribery—not influence—that the Court views as crossing the line into quid pro quo corruption.

New York Progress and Protection PAC v. James Walsh, 13 Civ. 6769, S.D.N.Y, April 24, 2014, Slip Op. 3.

It will be interesting to see whether the Supreme Court reads its own opinion in McCutcheon as the DC Circuit does.  Recent reversal statistics of DC Circuit cases might indicate that the DC Circuit’s reading is not a slam dunk.

One civil servant who might not be inclined to wait for additional guidance from the Supreme Court on the issue is the one who resides at 1600 Pennsylvania Avenue.  As we have written previously, the White House is very serious about mandating contribution and issue advocacy disclosure obligations on federal contractors.  There are many who now believe that the Wagner decision will encourage President Obama to issue a long-awaited Executive Order mandating contractor disclosure of all political spending.  Recent reports by The Brennan Center that in the 2014 cycle, the top 25 federal contractors all made disclosed contributions through their PACs and, in total, gave more than $30 million are sure to spur additional calls for mandatory contractor disclosure.

DC Circuit Court of Appeals Provides Major Support For the Constitutionality of Pay-to-Play Laws . . . And Probably Makes an Executive Order Mandating Contractor Disclosure of Political Spending Likely

MLA Government Contracts Advisory: President Obama’s Executive Orders Regarding Labor Relations in Government Contracting

MLA Government Contracts Advisory: President Obama’s Executive Orders Regarding Labor Relations in Government Contracting

What Is EFCA?

The “Employee Free Choice Act” (EFCA) is a bill intended to lower substantially the bar for labor unions to organize private sector workplaces. EFCA aims to amend the National Labor Relations Act in three significant ways:

Certification of Union by Card-Check: The bill replaces the secret-ballot election as the primary vehicle for employees to decide upon union representation. It will instead require an employer to recognize a union as soon as the National Labor Relations Board finds that a majority of employees in an appropriate unit has signed union authorization cards.

Mandatory Interest Arbitration for First Contracts: EFCA provides if an employer and union are unable to settle upon a first collective-bargaining agreement within ninety (90) days, it must be submitted to mediation by the Federal Mediation and Conciliation Service (FMCS). If after thirty (30) days, mediation does not result in an agreement, the dispute is to be submitted to a panel of arbitrators who will impose the terms of a two-year contract binding upon the parties.

Increased Legal and Economic Penalties Against Employers for Violations During Organizing Drives or First Contract Negotiations: The bill would change the National Labor Relations Act’s remedial provisions to impose greater penalties during any period while employees are attempting to organize a union or negotiate a first contract:

a. Mandatory Injunctions: It would require the National Labor Relations Board to seek a federal court injunction against an employer whenever there is reasonable cause to believe that the employer has discharged or discriminated against employees, threatened to discharge or discriminate against employees, or engaged in conduct that significantly interferes with employee rights.

b. Treble Backpay: It would require an employer to pay three times back-pay to any employee who is discharged or discriminated against during an organizing campaign or first contract drive.

c. Civil Penalties: It would provide for civil fines of up to $20,000 per violation against employers found to have willfully or repeatedly violated the law.

The full text of EFCA, as introduced in the 110th Congress, is located here. The MLA white paper, analyzing EFCA in greater detail and exploring its prospects in the 111th Congress is available here.

EFCA Report tracks developments, compiles resources and discusses management perspectives related to the Employee Free Choice Act.

What Is EFCA?