Article

A Question of Ethics

How Can a Company Comply With Gift Rules?

Roll Call
April 27, 2010

Q: I am the compliance director for a company that recently decided to hire its own in-house lobbyists. I know that this creates a number of new legal obligations for us, including filing disclosure forms and monitoring lobbying activity. I think I am on top of those. What concerns me more is that our company is now bound by the Congressional gift rules. As compliance director of a company with thousands of employees, I am not sure how to go about ensuring that we comply with the rules. Is there any official guidance regarding how companies can comply?

A: With respect to the Congressional gift and travel rules, your decision to hire in-house registered lobbyists means several things. First, your company must not knowingly make a gift in violation of the rules. Specifically, your company may “not make a gift or provide travel to a covered legislative branch official [with] knowledge that the gift or travel may not be accepted by that covered legislative branch official” under House and Senate rules. This applies to gifts made on behalf of the company by all employees, not just in-house lobbyists.

Second, twice a year your company must make two important certifications regarding the rules. First, your company must certify that it “has read and is familiar with” the rules. Second, it must certify that it “has not provided, requested, or directed a gift, including travel, to a Member of Congress or an officer or employee of either House of Congress with knowledge that receipt of the gift would violate” the rules.

These new obligations present unique challenges for you as compliance director. In essence, the Congressional gift rules say that your company may not make any gift to a Congressional employee unless an exception applies. Given that you have thousands of employees and there are roughly 15,000 Congressional employees, you have quite a compliance issue on your hands.

So, is there any official guidance regarding how companies can ensure compliance? Unfortunately, no. The official guidance that does exist regarding the Congressional gift rules is published by the House and Senate ethics committees and is intended for Members and staffers themselves. It provides in-depth analysis of the rules and the exceptions, including many illustrative examples. While Companies will certainly find this guidance helpful in understanding the rules, it does not address the rules from the perspective of companies.

In the absence of any official guidance, here are a few tips. Let’s start with the general prohibition on gifts from your company to Congressional employees. While there is no one-size-fits-all approach for companies to comply with this prohibition, there are a few tools that your company might consider.

First, you might want to create a formal company policy regarding gifts to Congressional employees and communicate the policy clearly to your employees. A policy that merely exists on paper somewhere in company files will be far less helpful in compliance than one that is communicated to and generally available to employees.

Another tool to consider is training your employees regarding the rules. For many companies, it would be impractical and probably unnecessary to train one’s entire work force regarding the rules. However, training at least some significant portion of employees can help minimize risk.

In addition, if your company happens to sell services or merchandise directly to the public, you should be mindful of the risk in sales to Congressional employees. In some circumstances, special discounts or perks might be considered gifts in violation of the rules. Therefore, it can be useful to have a policy regarding sales to Congressional employees and to train salespeople regarding the rules.

Another potential tool is some mechanism that will prevent the company from inadvertently reimbursing employees for expenses associated with Congressional employees’ meals or entertainment. Many companies provide travel and entertainment reimbursements to employees for business-related expenses, such as business trips and meals. A company might consider requiring employees who seek reimbursement to certify that no Congressional employee has benefited from the expenditures for which they seek reimbursement.

While none of these tools is legally required, they all might help companies comply with not only the prohibition on gifts but also their certification requirements. Twice a year your company must certify that it has read the rules, is familiar with the rules and has complied with the rules. The government can seek stiff penalties for false certifications, including heavy fines and jail time.

Thus, you should prepare your company for government scrutiny of your certifications. For example, suppose the government were to initiate an investigation focused on the truth of your company’s certifications. The employee who certifies on behalf of your company should be prepared to respond to pointed questions like: Before certifying, what did you do to confirm that your company complied with the rules? What did you do to confirm that your company had read the rules? What did you do confirm that your company was “familiar with” the rules?

These are all difficult questions. Written policies, training programs and employee certifications like those discussed above all would make them a little bit easier to answer. Be prepared.


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