The Power of Refunds

Although refunds can be a powerful tool under New Jersey’s pay-to-play laws, all contributions should still be carefully reviewed for compliance with appliable limits so that a company or individual is not in the position of having to ask for a refund. Many companies think that if somebody makes or approves a contribution that they should not have made or approved, the company will simply request a refund. It’s not quite so simple…

Under New Jersey’s statewide pay-to-play laws, the period for requesting and receiving a refund ranges from 30 days to 60 days (30 days under Executive Branch pay-to-play restrictions and 60 days under the statewide pay-to-play law applicable to legislative, county, and municipal contracts). This limited window means that you need to track contributions in real-time so that if your company or a covered individual makes a contribution in excess of applicable pay-to-play limits, you are able to act quickly to request and receive your refund within the allotted time period. One additional fun fact is that under Executive Branch pay-to-play restrictions, there is essentially a black-out period when we get within 60 days of a gubernatorial primary or general election. This means that you need to be extra vigilant during these time periods because a refund will not cure a violation!

The ability to use refunds to cure a violation varies on the local level. Some local pay-to-play ordinances contain specified time-periods similar to those set forth under statewide law. Other local ordinances allow vendors to request and receive a refund within 30 days after the applicable ELEC report is published. So, your company could conceivably make a contribution in excess of applicable pay-to-play limits on January 1st, discover the mistake on April 20th (just after the relevant ELEC report is published) and still have time to request and receive a refund!

Compliance Tip: Although refunds are a useful mechanism for curing a violation of a pay-to-play law IF you request and receive the refund in a timely fashion, refunds should be a last resort – not your primary tool for adhering to pay-to-play limits. If your company holds government contracts or wishes to pursue government contracts in the future, track contributions in real-time and pay attention to refund provisions in case you ever need to use them!

For more information, please contact Partner and Chair of the Firm's Corporate Political Activity Law Practice Group Rebecca Moll Freed via email here, Senior Associate Avi D. Kelin via email here, or call 973.533.0777.

An earlier version of this post appeared in InsiderNJ.