Many vendors to state and local governments (such as contractors, subcontractors, and architects) market their services to public officials and governmental employees. But they rarely consider such marketing efforts to be lobbying, nor would they consider themselves to be lobbyists. Before the recent amendments to the Ethics in Government Act (the “Act”), they may have unwittingly qualified as lobbyists — and in violation of the Act.
The 2011 amendments to the Act (the “2011 Amendments”) narrowed the definition of “lobbyists” to exclude certain activities that would normally be considered as basic marketing. To understand how the 2011 Amendments limited the definition, it is helpful to understand the activities that may qualify as lobbying.
Who is a Lobbyist?
The Act identifies a number of activities that may qualify as lobbying, such as the following:
- Promoting or opposing the passage of legislation by the General Assembly or its committees, or the approval or veto of legislation by the Governor (“State Actions”);
- Promoting or opposing the passage, approval or veto of any ordinance or resolution by a public officer of a local government, or any committee of such public officers (“Local Government Actions”);
- Making expenditures of more than $1,000 (previously $250) to promote or oppose State Actions or Local Government Actions;
- Influencing a public officer or state or local government in the selection of a vendor or supplier to any state or local government (subject to the Vendor-Supplier Exclusion discussed below);
- Promoting or opposing the passage of any rule or regulation of a state or local government; and
- Promoting or opposing any matter before the State Transportation Board, or spending more than $1,000 (previously $250) for such purposes.
How Did the 2011 Amendments Narrow the Scope of Lobbying?
The 2011 Amendments narrowed the scope of persons who may qualify as lobbyists. First, a person who promotes or opposes a State Action or Local Government Action, or a state or local government rule, must be specifically compensated to perform such activities to qualify as a lobbyist. Second, the definition based on amounts expended was revised to increase the amount a person must spend to qualify as a lobbyist from $250 to $1,000. Third, as discussed below, the Vendor-Supplier Exclusion was expanded.
The Vendor-Supplier Exclusion is Expanded.
More importantly for public contractors, vendors, and suppliers, the 2011 Amendments expanded the exclusions under the vendor-supplier provision. The 2005 amendments to the Act previously excluded from the definition of “lobbyist” certain activities involved in soliciting a bid or preparing a written bid, proposal, or other document relating to a potential public contract (the “Vendor-Supplier Exclusion”). The 2011 Amendments expanded the Vendor-Supplier Exclusion by excluding “bona fide salespersons.” Bona fide salespersons include persons who sell to or contract with a state or local government for goods or services (as long as they do not otherwise qualify as a lobbyist under other provisions).
A Brand New Exclusion is Added: The 10 Percent Test.
Public contractors and their employees can now rely on another exclusion from the definition “lobbyist.” The 2011 Amendment excludes persons who spend no more than 10% of his or her working hours engaged in “lobbying” activities (the “10% Test”). The exclusion does not apply, however, where the person expends more than the $1,000 thresholds noted above.
In applying the 10% Test, a person should consider his or her working hours with respect to each employer or client. In other words, if a person is employed by a single employer, the test is applied to all time worked for that employer. If the employee is employed by multiple employers or clients, the test is applied separately with respect to time worked for each employer and client. Time spent planning, researching, or preparing for lobbying activities will be treated as time engaged in the lobbying activities.
The 10% Test must be performed each month. If at the end of a month, a person fails to satisfy the 10% Test, he or she must register as a lobbyist within five days after the last day of that month and shall report all prior lobbying expenditures for that calendar year.