Trial Engrossment of Amendment A00187 to Senate Bill 0166 P.N. 0271, Regular Session 2017-2018

A00187

THE GENERAL ASSEMBLY OF PENNSYLVANIA

SENATE BILL

No.

166

Session of

2017

INTRODUCED BY EICHELBERGER, REGAN, SCARNATI, MARTIN, YAW,

ALLOWAY, FOLMER, GORDNER, RESCHENTHALER, AUMENT, CORMAN,

HUTCHINSON, WHITE, STEFANO, VULAKOVICH AND DiSANTO,

JANUARY 20, 2017

SENATOR FOLMER, STATE GOVERNMENT, AS AMENDED, JANUARY 31, 2017

AN ACT

Providing for protection of paychecks of certain workers and for

the collection of political contributions.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1. Short title.

This act shall be known and may be cited as the Protection of

Public Employee Wages and Corporate Accountability Act.

Section 2. Public policy.

The General Assembly finds and declares that it is the public

The General Assembly finds and declares that:

(1) It is the public policy of this Commonwealth and the

purpose of this act to promote orderly and constructive

relationships between employers and their employees and that

this overall policy may be accomplished, at least in part, by

ensuring public employers do not collect money intended for

political or other inappropriate purposes from the wages of

public employees.

(2) The Commonwealth has a compelling interest in

regulating the affairs of certain business entities and it is

important for the shareholders of corporations to be informed

of the governance of the organizations relating to the

political process.

Section 3. Definitions.

The following words and phrases when used in this act shall

have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Department." The Department of State of the Commonwealth.

"Fair share fee." The regular membership dues required of

members of an employee organization acting as exclusive

representative less the cost for the previous fiscal year of its

activities or undertakings which were not reasonably employed to

implement or effectuate the duties of the employee organization

as exclusive representative. This definition shall stand in pari

materia with the definition of "fair share fee" in section 2215

of the act of April 9, 1929 (P.L.177, No.175), known as The

Administrative Code of 1929, and the definition of "fair share

fee" in section 2 of the act of June 2, 1993 (P.L.45, No.15),

known as the Public Employee Fair Share Fee Law.

"General treasury funds." The money in possession of a

corporation incorporated under the laws of this Commonwealth in

the normal course of business, including funds from sales,

accounts payable, loans, investments, bonds or debt instruments.

"Issue advocacy campaign." Political contributions for a

communication to the general public intended to encourage the

public to contact a government official regarding pending

legislation, public policy or a government rule or regulation.

The term shall not include political contributions for

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registered lobbyists or other persons employed by the

corporation to lobby directly Federal or State government

officials.

"Known at the time of the authorization vote." At the time

the corporation seeks authorization from shareholders to spend

corporate funds for political activities:

(1) the corporation's officers, directors or employees

have identified a specific political activity for the

corporation to support or oppose;

(2) corporate officers, directors or employees have

taken steps to obligate funds to a political activity; or

(3) the corporation has a regularly scheduled payment to

a trade association or other entity to pay for a political

activity in the next 12 months.

"LEGISLATIVE PURPOSE." THE TERM SHALL NOT INCLUDE THE

NEGOTIATION, RESOLUTION, ARBITRATION, ADMINISTRATION OR

ENFORCEMENT OF A COLLECTIVE BARGAINING AGREEMENT BETWEEN A

BARGAINING REPRESENTATIVE AND A PUBLIC EMPLOYER.

"Majority of shareholders." Fifty percent plus one of each

outstanding voting security. A shareholder not casting a vote

shall not count toward affirmative authorization under this act.

"Political activity." A political contribution made directly

or indirectly to, or in support of or opposition to, a

candidate, political party, committee, electioneering

communication, ballot measure campaign or an issue advocacy

campaign. The term shall not include an activity defined as

lobbying under a Federal, State or local law.

"Political contribution." Money or funds appropriated to be

used for:

(1) a contribution, as defined in section 1621 of the

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act of June 3, 1937 (P.L.1333, No.320), known as the

Pennsylvania Election Code;

(2) an independent expenditure, as defined in section

1621 of the Pennsylvania Election Code;

(3) an expenditure, as defined in section 1621 of the

Pennsylvania Election Code;

(4) lobbying, as defined in 65 Pa.C.S. § 13A03 (relating

to definitions);

(5) a voter registration drive;

(6) a get-out-the-vote drive; or

(7) any other electoral, political or legislative

purpose.

"Public employee." An individual employed by a public

employer, including a public school employee under the act of

March 10, 1949 (P.L.30, No.14), known as the Public School Code

of 1949.

"Public employer." The Commonwealth, a political

subdivision, a school district and any officer, board,

commission, agency, authority or other instrumentality thereof.

"Separate segregated fund." A political action committee

formed by a corporation for the purpose of making political

contributions to candidates for office or to political parties.

A separate segregated fund which supports a Federal candidate

shall have the same meaning as in section 316 of the Federal

Election Campaign Act of 1971 (Public Law 92-225, 86 Stat. 3).

"Wages." Hourly rates of pay, salary or other form of

compensation due to an employee for services rendered.

Section 4. Protection of public employee wages.

(a) Paycheck protection.--A public employer may not deduct

from the wages of a public employee money or funds to be used

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for political contributions, except as required by a valid

collective bargaining agreement entered into between a public

employer and a representative of its employees prior to the

effective date of this section. No individual or organization

shall seek to have a political contribution deducted from the

wages of a public employee. A collective bargaining agreement

entered into, renewed or extended on or after the effective date

of this section shall not contain provisions authorizing or

requiring the deduction of political contributions.

(b) Applicability.--Nothing in this section shall be

construed to preclude a public employer from:

(1) deducting a designated amount for a charitable

contribution expressly authorized by an employee; or

(2) if required to do so by a collective bargaining

agreement entered into with a representative of its

employees, deducting from the wages of an employee

organization member an amount equal to, but not greater than,

a fair share fee.

Section 5. Effective date.

This act shall take effect as follows:

(1) Section 4 shall take effect in 60 days.

(2) The remainder of this act shall take effect

immediately.

Section 5. Shareholder vote on corporate and unincorporated

association political activities.

(a) Annual vote.--

(1) A corporation organized in this Commonwealth that

spends in the aggregate $10,000 or more of corporate treasury

funds on political activities in this Commonwealth must

comply with the requirements of this section.

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(2) A proxy, consent or authorization for an annual

meeting of the shareholders of a corporation organized in

this Commonwealth, or a special meeting in lieu of the

meeting, where proxies are solicited in respect to a security

occurring on or after six months following the date on which

final regulations are published under subsection (d), shall

provide for a separate resolution subject to shareholder vote

to approve spending of $10,000 or more by the corporation for

a political activity.

(3) Notwithstanding the requirement for an annual

shareholder vote to authorize spending of $10,000 or more by

the corporation for a political activity, a corporation may

request authorization for spending on political activities on

a more frequent basis. An authorization request by the

corporation that is not made during an annual authorization

shall be deemed a special authorization.

(4) If a corporation spends less than an aggregate of

$10,000 in a 12-month period for political activities, the

corporation shall not have to seek shareholder authorization

for the spending.

(b) Shareholder approval.--

(1) If seeking shareholder authorization for

expenditures for political activities, the corporation shall

request the authority to spend a maximum dollar amount in the

next 12 months.

(2) If known at the time of the authorization vote, the

corporation shall articulate whether the corporate treasury

funds so authorized are intended to benefit or defeat

specific candidates, ballot measures or issue advocacy

campaigns or whether it will be paid to specific nonprofits

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or trade associations for political activities. The following

apply:

(i) To be effective, the authorization vote must

garner support from a majority of shareholders.

(ii) A vote by the shareholders to approve or

disapprove spending of $10,000 or more by a corporation

for a political activity shall be binding on the

corporation.

(iii) Notwithstanding the requirement for an annual

shareholder vote to authorize spending of $10,000 or more

by the corporation for a political activity, a

corporation may request a special authorization for

additional spending on political activities, provided

that:

(A) all spending on political activities of

$10,000 or more must be authorized by a shareholder

majority vote; and

(B) for any special authorization, the

corporation shall articulate whether the corporate

treasury funds so authorized are intended to benefit

or defeat candidates, ballot measures or issue

advocacy campaigns or will be paid to specific

nonprofits or trade associations for political

activities at the time the special authorization is

requested.

unauthorized political contribution for a political activity,

then the directors at the time that the unauthorized political

contribution was incurred are jointly and severally liable to

repay to the corporation the amount of the unauthorized

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expenditure with interest at the rate of 8% per year.

(d) Rulemaking.--The department shall promulgate final

regulations to implement this section no later than six months

after the effective date of this section.

(e) Sole proprietorships excluded.--Notwithstanding any

other provision of this section, nothing in this section shall

apply a new duty to the owner of a sole proprietorship.

Section 6. Notification to shareholders of corporate political

activities.

(a) Notification to shareholders.--

(1) At least quarterly during each fiscal year, a

corporation organized in this Commonwealth that makes

political contributions for political activities must notify

its shareholders and the department in writing of the nature

of all of its political activities, funded by either its

separate segregated fund or through its general treasury,

including political contributions made directly or

indirectly.

(2) A report made under this section shall include the

following:

(i) The date of the political contributions.

(ii) The amount of the political contributions.

(iii) The identity of the candidate, political

party, committee, electioneering communication, ballot

measure campaign or issue advocacy campaign.

(iv) If the political contributions were made for or

against a candidate, including an electioneering

communication as defined under Federal law, the office

sought by the candidate and the political party

affiliation of the candidate.

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(v) If the political contributions were made for or

against a ballot measure, the purpose of the measure and

whether the political contributions were made in support

or opposition to the ballot measure.

(vi) If the political contributions were made for or

against an issue advocacy campaign, the nature of the

political issue and whether the political contributions

were made in support or opposition to the political

issue.

(vii) All political contributions made by a separate

segregated fund affiliated with the corporation.

(b) Public disclosure.--

(1) The quarterly reports of political activities by a

corporation organized in this Commonwealth to shareholders

shall be public records.

(2) A copy of each report filed under subsection (a)(1)

shall be:

(i) submitted to the department; and

(ii) posted for at least one year on the

corporation's publicly accessible Internet website, if

any.

Section 7. Public disclosure of regulated political activities

by the department.

(a) Department duty.--The quarterly reports of political

activities by a corporation organized in this Commonwealth to

shareholders shall be made publicly available by the department.

(b) Electronic form.--A quarterly report required to be

filed under this section shall be filed in electronic form using

filing software approved or developed by the department in

addition to filing in any other form that the department may

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require by regulation and shall be published on the department's

publicly accessible Internet website.

greatest extent practicable, the quarterly reports on political

activities are publicly available through the department's

publicly accessible Internet website in a format that can be

searched, sorted and downloaded.

Section 8. Report by Department of the Auditor General.

(a) Audit.--On an annual basis, the Department of the

Auditor General shall audit the extent of compliance or

noncompliance with the requirements of this act by corporations

incorporated under the laws of this Commonwealth and their

management and shareholders and the effectiveness of the

department in meeting the reporting and disclosure requirements

of this act.

(b) Report.--No later than April 1 of each year, the

Department of the Auditor General shall submit to the Governor a

report on the audit required under subsection (a) for the

preceding year.

Section 9. Board approval for political expenditures.

(a) Approval required.--Notwithstanding any other provision

of law, a corporation may not make a political contribution

unless specifically authorized to do so:

(1) by the vote of the board of directors of the

corporation at a regular or special meeting;

(2) by the president, vice president, secretary or

treasurer of a corporation whom the board has specifically

empowered to authorize political contributions; or

(3) for a corporation, by any other person designated by

resolution of the board of directors of a corporation to

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authorize political contributions.

(b) Form of political contribution.--A corporation may not

make a political contribution as defined under Federal or State

law, other than an in-kind political contribution, except by

check.

Section 10. Applicability to foreign corporations.

(a) General rule.--A foreign corporation, other than a

foreign association or foreign nonprofit corporation, but

including a foreign parent corporation, even if it does not

itself transact intrastate business, is subject to the

requirements of this act if the following apply:

(1) the average of property, payroll and sales factors,

as defined in section 401 of the act of March 4, 1971 (P.L.6,

No.2), known as the Tax Reform Code of 1971, with respect to

the foreign corporation, is more than 50% during its latest

full-income year; and

(2) more than one-half of its outstanding voting

securities are held of record by persons having addresses in

this Commonwealth appearing on the books of the corporation

on the record date for the latest meeting of shareholders

held during its latest full-income year or, if no meeting was

held during that year, on the last day of the latest full-

income year.

(b) Determination.--

(1) The determination of the property, payroll and sales

factors under subsection (a) with respect to any parent

corporation shall be made on a consolidated basis, including

in a unitary computation, after elimination of intercompany

transactions, the property, payroll and sales of the parent

corporation and all of its subsidiaries in which it owns

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directly or indirectly more than 50% of the outstanding

shares entitled to vote for the election of directors, but

deducting a percentage of the property, payroll and sales of

each subsidiary equal to the percentage minority ownership,

if any, in the subsidiary.

(2) For the purpose of this section, any securities held

to the knowledge of the issuer in the names of broker-

dealers, nominees for broker-dealers, including clearing

corporations or banks, associations or other entities holding

securities in a nominee name or otherwise on behalf of a

beneficial owner, collectively considered nominee holders,

shall not be considered outstanding.

(3) Notwithstanding paragraph (2), if the foreign

corporation requests all nominee holders to certify, with

respect to all beneficial owners for whom securities are

held, the number of shares held for those beneficial owners

having addresses as shown on the records of the nominee

holder in this Commonwealth and outside of this Commonwealth,

then all shares so certified shall be considered outstanding

and held of record by persons having addresses either in this

Commonwealth or outside of this Commonwealth as so certified,

provided that the certification provided shall be retained

with the record of shareholders and made available for

inspection and copying.

(4) A current list of beneficial owners of a foreign

corporation's securities provided to the corporation by one

or more nominee holders or an agent thereof under the

requirements of 17 CFR § 240.14b-1(b)(3) (relating to

obligation of registered brokers and dealers in connection

with the prompt forwarding of certain communications to

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beneficial owners) or 240.14b-2(b)(3) (relating to obligation

of banks, associations and other entities that exercise

fiduciary powers in connection with the prompt forwarding of

certain communications to beneficial owners), promulgated

under the Securities Exchange Act of 1934 (48 Stat. 881, 15

U.S.C. 48 Stat. 881) shall constitute an acceptable

certification with respect to beneficial owners for the

purposes of this subsection.

corporation:

(1) With outstanding securities listed on the New York

Stock Exchange or the American Stock Exchange.

(2) With outstanding securities designated as qualified

for trading on the Nasdaq National Market of the Nasdaq Stock

Market, or any successor.

(3) If all of its voting shares, other than directors'

qualifying shares, are owned directly or indirectly by a

corporation or corporations not subject to this section.

(d) Liability.--A party who obtains a final determination by

a court of competent jurisdiction that the corporation failed to

provide to the party information required under this act or

provided the party information required under this act that is

incorrect, the court, in its discretion, shall have the power to

include in its judgment recovery by the party from the

corporation of all court costs and reasonable attorney fees

incurred in the legal proceeding to the extent that they relate

to obtaining that final determination.

Section 11.

The dollar figures contained in this act shall be adjusted

biennially at a rate determined by the Federal Election

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Commission as authorized under 11 CFR Pt. 110 (relating to

contribution and expenditure limitations and prohibitions). The

Secretary of the Commonwealth shall certify the calculation of

the rate as determined by the Federal Election Commission and

shall publish the new dollar figures in the Pennsylvania

Bulletin.

Section 12. Effective date.

This act shall take effect as follows:

(1) Section 4 shall take effect in 60 days.

(2) Sections 5, 6, 7, 8, 9, 10 and 11 shall take effect

January 1, 2018, or immediately, whichever is later.

(3) This section shall take effect immediately.

(4) The remainder of this act shall take effect

immediately.

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