On December 14, 2023, the Federal Election Commission voted 5-1 to revise its personal use rules on the use of campaign funds to pay candidate salaries to “‘compensate candidates for lost income that is forgone due to becoming a candidate.’” FEC Agenda Document No. 23-30-A at 13 (citing 2002 Final Rule, 67 FR at 76962). The final rules will be published in the Federal Register and become effective at a future specified date. The Commission significantly changed the criteria for determining whether a candidate is eligible to receive compensation, the maximum amount of compensation that a candidate may receive, and the period during which a candidate may receive compensation.
Key Takeaways: The Commission’s revisions substantially reduce the maximum amount of campaign salary a candidate can receive, while also extending the length of time that a salary may be drawn and making it easier to take a salary despite gaps of unemployment. The new rules do not affect past Commission precedent on the use of campaign funds for candidate childcare or candidate healthcare premiums. Federal officeholders are still prohibited from accepting campaign salary payments as a candidate.
Any candidate currently accepting a salary from their campaign, or planning to do so in the future, should consult counsel about the impact of these new rules.
The Commission has long permitted the use of campaign funds to pay candidate salaries, with various safeguards in place to prevent abuse. Such safeguards include a salary cap based in part on pre-candidacy earned income and a limited timeframe in which a candidate may draw a salary. The rule currently in effect sets a salary maximum at the lesser of (1) the minimum salary paid to a federal officeholder of the office sought and (2) the earned income received by the candidate the year before becoming a candidate. Earned income that a candidate received from any source other than campaign funds counts towards that calculation. In most cases, a candidate cannot draw a salary before the filing deadline to access the primary election, which varies widely based on state law.
In March 2021, the Commission received a petition for rulemaking from a former federal candidate asking it to expand the access to, and amounts of, campaign funds to compensate candidates. The petition alleged the salary rules “leave[] candidates who are full time caretakers or who have had gaps in employment out in the cold,” and that rising health insurance costs act as a barrier to the prospective candidacies of “working class people.”
After receiving extensive comments and holding a hearing, the Commission formally revised its rules to address several of the concerns raised in the petition. Notably, in doing so, the Commission also reduced the new maximum amount of campaign funds that can be used to compensate candidates. Once effective, the maximum amount of campaign funds that a candidate can receive as salary will be the lesser of (1) the daily rate of 50% of the minimum annual salary paid to a Member of the U.S. House and (2) the daily rate of the average annual income that the candidate earned during the most recent five calendar years in which the candidate earned income prior to becoming a candidate. Those two figures must be calculated at the daily rate, rounded to the nearest dollar, and the candidate may only receive the lower of the two figures. The maximum amount also must be reduced by the amount of any earned income the candidate receives from any other source after filing a Statement of Candidacy.
Under the new rules, a candidate is permitted to receive a campaign salary even if the candidate did not receive income in the year prior to becoming a candidate. The salary average calculation only takes into account the most recent five calendar years in which the candidate earned income prior to becoming a candidate; if the candidate only earned income in five of the last eight years, those five years would be included in the calculation (even if some of those years are more than five years in the past). A candidate who did not earn income in the most recent calendar year prior to becoming a candidate is therefore no longer precluded from receiving salary from their campaign.
The new rules also expand the time frame during which a candidate can receive a salary from their campaign. Currently, a candidate is prohibited from receiving a salary from their campaign before the filing deadline for access to the primary election ballot, as determined under state law, or January 1 of each even-numbered year (if the state does not conduct a primary). Under the new rules, a candidate may begin to accept a salary on the date the candidate files their Statement of Candidacy with the FEC.
Additionally, current rules prohibit a candidate from receiving a salary with campaign funds after the date the candidate loses their primary, withdraws from the race, or ceases being a candidate. Further, a candidate who wins the primary may not receive a salary after the date of the general election or general election runoff. Under the new rules, a candidate may accept a salary for 20 calendar days after the candidate wins the general election or otherwise ceases to be a candidate. These changes are a nod to the modern reality that candidates often are running for federal office for years and there can be intensive campaign wind down procedures for candidates to manage.
The new rules do clarify that any campaign seeking to settle debts for less than the full value is restricted from compensating its candidate. Further, candidates must maintain and preserve evidence of the candidate’s earned income for three years after their campaign files a report disclosing salary payments to the candidate.
Significantly, the Commission did not use this rulemaking to address campaign payments for candidate health insurance premiums and dependent care costs, explaining that the advisory opinion process is better suited to address these issues on a case-by-case basis.
Please consult counsel for specific questions regarding candidate compensation.