Volume 41 - Issue 26 - June 30, 2022
State of Kansas
Governmental Ethics Commission
Opinion No. 2022-04
Written June 22, 2022 to John Cozine, Esq., Associate Director, Compliance Services, State and Federal Communications, Inc., 80 S. Summit St., Suite 100, Akron, Ohio 44308.
Synopsis: Under the facts provided, this opinion provides an analysis of the “employed in a considerable degree for lobbying” statutory language defining lobbyists, and the prohibition on contingency compensation for lobbying.
Cited herein: K.S.A. 46-222, 46-225, and 46-267; K.A.R. 19-62-1; and Ethics Opinions 1974-56, 1975-7, and 1975-85.
This opinion is in response to your May 9, 2022, request for an opinion from the Kansas Governmental Ethics Commission concerning the lobbying provisions of the state level conflict of interest laws, K.S.A. 46-215 et seq. We note at the outset that the Commission’s jurisdiction is limited to the application of K.S.A. 46-215 et seq., and whether some other statutory system, common law theory or agency rule or regulation applies to your inquiry is not covered by this opinion.
The opinion request provides the following facts:
In light of the broad registration requirements and contingency fee bans, we request an advisory opinion to assist in determining the parameters under which a salesperson who receives sales commissions for completed contracts with the state as part of his or her employment contract can sell to the state without running afoul of either the lobbyist registration requirements or contingency fee ban.
Company employees engaged in sales to government entities are paid under compensation plans which pay them commissions based on successfully completed contracts with governmental entities. Other employees, serving in more of a support role, received bonuses based on the overall sales success of their organization within the company. Employees may be assigned to sell, or support sales, exclusively in Kansas, or may have Kansas as a part of a larger, multi-state territory.
- If a person is hired primarily to engage in government sales in a territory which includes Kansas and the employee engages with executive agency officials in an attempt to sell its company’s products and services to the government and the employee does not engage with the legislative branch, are they considered by K.S.A. 46-222(a)(1) to be a person employed in considerable degree for lobbying requiring registration as a lobbyist in Kansas?
- Does the answer change if Kansas is the only state in the employee’s assigned territory?
- Under K.S.A. 46-222(a)(2), would a person hired primarily to engage in government sales in a territory which includes Kansas be considered the primary representative of an organization if the organization has no “traditional” lobbyists registered to represent them in Kansas? Does the answer change if Kansas is the only state in which they are engaged in sales?
- If required to register as a lobbyist are sales commissions paid upon closing a contract with the state barred by the contingency fee ban contained in K.S.A. 46-267(a)?
- If required to register as a lobbyist, are bonuses paid to employees based on the overall sales success of their organization within the company, but not tied to any particular contract, barred by the contingency fee ban contained in K.S.A. 46-267(a)?
- Are there any circumstances, other than the narrow exceptions contained in K.S.A. 46-225(g)(1), (4), and (5), that would permit a person engaged in selling to the state to be paid sales commissions?
- Can you offer any additional guidance around what constitutes a “considerable degree” of lobbying in Kansas?
Analysis and Opinion
An employee who engages with an agency of the executive branch of Kansas government for a contract of more than $5,000 is lobbying. In pertinent part, lobbying is defined in K.S.A. 46-225:
(a) Except as otherwise provided, “lobbying” means: … (2) promoting or opposing in any manner an action or nonaction by any executive agency on any executive administrative matter.
(g) Lobbying does not include … (5) communications regarding a contract, lease, or agreement of $5,000 or less.
And “executive agency matter” and “executive agency” mean:
(h) ... “executive administrative matter” means any rule and regulation, utility ratemaking decision, any agreement, contract, bid or bid process, or any procurement decision, including, but not limited to, any financial services agreement, software licensing, servicing or procurement agreement, any lease, grant, award, loan, bond issue, certificate, license, permit, administrative order or any other matter that is within the official jurisdiction or cognizance of the executive agency.
(j) ... “executive agency” means any state agency, state office or state officer, state officer elect, or employee of the executive branch and includes but is not limited to, the board of regents and state board of education, but does not include local boards of education of school districts or municipalities or other political subdivisions.
The statutory definition of “executive agency matter” includes any contract. Seeking a contract from an “executive agency” necessarily requires promoting action by an executive agency. Consequently, an employee, employed in considerable degree as described in question one, is a lobbyist pursuant to K.S.A. 46-222(a)(1). Whether the territory assigned is limited to Kansas does not affect the conclusion that the salesperson is a lobbyist.
As provided in K.S.A. 46-222(a), there are four lobbyist definitions. Meeting any one of these means the employee is a lobbyist. The premise in question three (an employee who is hired primarily to lobby executive agencies for sales) means the employee is a lobbyist as provided in subparagraph (a)(1). Question two, regarding the subparagraph (a)(2) definition of lobbyist, is moot. Notwithstanding, K.A.R. 19-62-1(b) provides that “[w]here an appointment is made in conjunction with an employment status as set out in subsection (a) of this section, the provisions of that subsection shall control as to whether the employed person must register as a lobbyist.”
We next consider K.S.A. 46-267, which provides in pertinent part:
(a) No person shall pay or accept or agree to pay or accept or arrange for a third party to pay or agree to pay present, future, promised or contingent compensation, or any part thereof, for lobbying which is contingent upon the result achieved or attained.
(b) No person shall pay or accept or agree to pay or accept present, future, promised or contingent compensation, or any part thereof, for the referral of a person or persons to a lobbyist for lobbying services.
The subsection (a) and (b) provisions apply to sales commissions paid upon closing of a contract with the state and to bonuses paid to employees based upon overall sales success even if not tied to any particular contract. Such contingency compensation arrangements are prohibited for lobbyists when lobbying as defined in K.S.A. 46-225(a). The prohibition is not applicable to interactions with executive agencies which are excepted from the lobbying definition as enumerated in subsection (g), or otherwise not meeting the definition of lobbying.
We have discussed the “employed in considerable degree for lobbying” statutory language. In Opinion No. 1974-56, we said:
The Commission now directs your attention to the employment provision. We first note that unlike the appointment provision, it is irrelevant where the employed person lobbies. In other words, if a person is employed to lobby, that person must register before engaging in lobby activities regardless of whether he or she ever contacts a state officer or employee in person on state owned or operated property in Shawnee County.
We also wish to draw your attention to the modifying parenthetical phase “(in whole or in part)”. It is the Commission’s opinion that this phrase does not include every person whose duties include to a minute degree lobbying. Rather, to be within the phrase “in part”, the purpose of the employment must be to a considerable degree for lobbying. Thus, a corporate executive who as part of his employment provision. However, where a person is hired in considerable degree to lobby, it is irrelevant that the lobbying is not a considerable amount of his or her overall business. Therefore, an attorney or other professional person who is specifically employed to a considerable degree to lobby must register regardless of the fact that the lobbying is not a considerable degree of his or her business or firm’s business.
In Opinion 1975-7, we noted:
In the situation where the individual is invited to attend such hearings in his capacity as an employee of another, however, the employment provision would be applicable but only to the extend [sic] the purpose of the employment is to a considerable degree test is met depends on a variety of factors. Without going into detail in this opinion on what factors will be considered in determining whether the considerable degree test is met, we note as a general rule that a limited number of appearances of the nature described above would not, solely on account of such appearances, require an individual to register as a lobbyist under the employment provision.
Perhaps the most definitive guidance about the “employed in considerable degree for lobbying” statutory language is in K.A.R. 19-62-1(a):
Employed lobbyists. Each person whose employment is, to a considerable degree, for the purpose of lobbying shall register as a lobbyist. A person is employed if the person receives compensation for or in direct relation to lobbying regardless of the technical legal definition of the relationship between the principal and the lobbyist. An executive of an organization who as part of the executive’s duties incidentally lobbies shall not be required to register under this subsection. However, where a person is employed to a considerable degree for the purpose of lobbying it is irrelevant that the lobbying employment is not a substantial amount of the person’s overall business. In determining whether an individual is employed to a considerable degree to lobby, that portion of the employment which relates to preparation for lobbying shall be taken into consideration.
As we indicated in Opinion 1975-85, “[w]hether the considerable degree test is met depends on a variety of factors, including the amount of time devoted to matters related to lobbying.” To the extent that the questions discussed in this opinion are general, the circumstances they present would require registration as a lobbyist. In instances of more specific scenarios, a case-by-case discussion with agency staff may be of benefit to determine whether registration is necessary.
Nicholas Hale, Chairman
By Direction of the Commission
Doc. No. 050285