Changes to Georgia’s Ethics Laws and the Impact on Businesses

Businesses that sell goods or services to state and/or local governments in Georgia may be subject to new regulations as a result of recent changes to that state’s ethics laws. As a result, any company that sells goods or services to state or local governments in Georgia should consult with an attorney to determine whether or not members of its sales force are required to register as lobbyists and disclose “lobbying activities.” If so regulated, a company may be restricted in the way that its personnel uses and accepts contingent compensation.

Ethics Law Changes as of January 10, 2011

Effective January 10, 2011, Georgia’s ethics laws changed substantially. Several of the changes have received considerable media attention, such as the requirement that candidates for county and municipal elections file their campaign finance disclosures with the Georgia Government Transparency and Campaign Finance Commission (the “Campaign Finance Commission”) (formerly known as the “State Ethics Commission”). However, several important changes have not received the same attention, and these changes could affect companies’ compliance with state law.

1. Expanded Definition of “Lobbyist”

Senate Bill 17, which became law on January 10, expands the definition of “lobbyist” to include some individuals who were not previously regulated. Now, in addition to those previously regulated as lobbyists, the term “lobbyist” includes anyone who, for compensation, either individually or as an employee of another person, is hired specifically to influence a public officer or agency in the selection of a vendor to supply goods or services to any branch of state government or any agency, authority, department, board, bureau, commission, council, corporation, entity or instrumentality of Georgia or of a local subdivision of the state. Previously, only those who solicited statewide agencies and officials were considered lobbyists under the law.

According to Stacey D. Kalberman, the Commission’s executive secretary, “hired specifically,” as used in the definition of a vendor lobbyist, means “hired specifically to sell” and excludes from the definition those who perform more administrative tasks, such as preparing orders for shipment.

As a result, starting on January 10, 2011, salespeople who encourage city and county agencies to buy their company’s goods or services must register with the state as lobbyists and must make multiple filings with the state throughout the year. Such salespeople need not sell exclusively to government agencies to be regulated. Under the new law, any employee who in the normal course of business communicates with a person on a government payroll and encourages that person to select their employer for a goods or services contract will need to register as a lobbyist.

2. Restrictions on Who May Engage in Lobbying Activities

In addition to expanding the group of individuals who are regulated as lobbyists, Georgia’s revised ethics laws restrict who may engage in lobbying activities. Now, no one who has been convicted of a felony involving moral turpitude¹ may engage in lobbying unless 10 years or more have passed since the completion of the person’s sentence. As lobbyists have previously been required to report any substantial changes concerning the information reported in their application, now too must lobbyists report changes involving their conviction status.

3. Registration Fee

The annual lobbyist registration fee is $300, plus $10 for each additional client, and $20 for each lobbyist identification card.

4. Penalties

The penalties associated with violating the new ethics laws are significant and go as high as $10,000 for a late filing. In addition, the Campaign Finance Commission may now retain many of the penalties associated with violating the laws, giving the Commission more incentive to strictly construe and vigorously enforce the new laws.

Conclusion

The definition of a “lobbyist” is very fact-specific, and the penalties for getting it wrong are very high. Therefore, a company that believes that any of its employees may now be considered “lobbyists” under the law should contact an attorney to determine if its employees must register with the state of Georgia.

¹ “In Georgia, the test for whether a felony is one involving moral turpitude is ‘does the [crime], disregarding its felony punishment, meet the test as being contrary to justice, honesty, modesty, good morals or man’s duty to man?’ There are a variety of crimes that have been deemed to involve moral turpitude as well as a variety that have been deemed not to involve moral turpitude.” Georgia Professional Standards Commission, http://www.gapsc.com/Ethics/MoralTurpitude.asp, quoting Handbook of Criminal Evidence by Davis, 2000 edition.