The FEC restricted class is the defined group of people a corporate PAC (formally, a separate segregated fund or SSF) is allowed to solicit for contributions. Federal law limits that group to the corporation’s stockholders, its executive and administrative personnel, the families of both who share their household, and the executive and administrative personnel of the corporation’s subsidiaries, branches, divisions, departments, and affiliates.1Office of the Law Revision Counsel. 52 USC 30118 – Contributions or Expenditures by National Banks, Corporations, or Labor Organizations Everyone else, including the corporation’s hourly workers and rank-and-file employees, is off-limits except during two carefully regulated solicitation windows per year. Getting the boundaries right matters because the tests turn on job duties, compensation structure, and stock-ownership rights rather than titles on an org chart.
Who Counts as Executive and Administrative Personnel
The largest slice of the restricted class is the corporation’s executive and administrative personnel. To qualify, a person must meet two tests: they must be paid on a salary rather than an hourly wage, and they must hold policymaking, managerial, professional, or supervisory responsibilities.2eCFR. 11 CFR 114.1 – Definitions Professionals such as in-house lawyers, engineers, and physicians qualify even without direct reports, because professional-level work is its own qualifying category.
Two groups that look like they belong actually do not. Salaried foremen and lower-level supervisors whose main job is overseeing hourly workers fall outside the definition, even though they technically have supervisory duties.2eCFR. 11 CFR 114.1 – Definitions Professionals represented by a labor union are excluded from the corporate restricted class regardless of salary or responsibilities. Independent contractors and outside consultants are also excluded; the regulation only covers individuals who qualify as employees under the Internal Revenue Code.3Federal Election Commission. Understanding the Restricted Class for Solicitations
The practical takeaway is to audit actual job functions, not titles or salary bands. A “director” with no policymaking or supervisory role may fall outside the class, while a salaried engineer with no management duties is squarely inside it. This is where compliance mistakes happen most often, because HR titles rarely map neatly onto the regulatory categories.
Who Counts as a Stockholder
The regulatory definition of stockholder is narrower than everyday usage. To be solicitable as a stockholder, a person must have a vested beneficial interest in the corporation’s stock, the power to direct how that stock is voted if it carries voting rights, and the right to receive dividends.4eCFR. 11 CFR 114.1 – Definitions All three elements must be present. A person waiting for shares to vest, or holding unvested options, does not yet qualify.
This three-part test creates real complications for employee stock ownership plans. An ESOP participant whose shares are held in a trust, where the trustee controls the vote, likely lacks the power to direct how the stock is voted. That person is not part of the restricted class until the plan gives them individual voting control and the right to receive dividends on those shares. The same logic applies to employees who hold corporate stock indirectly through a 401(k) or mutual fund. If the fund manager votes the shares, the individual employee does not meet the stockholder definition and cannot be solicited on that basis.4eCFR. 11 CFR 114.1 – Definitions Review plan documents and vesting schedules before adding any ESOP or retirement-plan participants to solicitation lists.
Which Family Members Are Included
The restricted class extends to certain family members of qualifying executive and administrative personnel and stockholders. “Families” here means spouses, parents, and sons and daughters who live in the same household as the restricted-class member.3Federal Election Commission. Understanding the Restricted Class for Solicitations The same-household requirement is the key boundary. An adult child living in a separate residence does not qualify, and neither do siblings, in-laws, or extended relatives unless they independently meet the executive, administrative, or stockholder criteria on their own.
Accurate household data is not optional. A solicitation mailed to a family member who has moved out of the restricted-class member’s home is a solicitation to a non-eligible person. All communications directed to family members must carry the same regulatory disclosures required for employees and stockholders.
Subsidiaries, Affiliates, and Foreign-Owned Companies
A parent corporation’s PAC can reach beyond the parent’s own workforce. The restricted class includes the executive and administrative personnel of the corporation’s subsidiaries, branches, divisions, and departments, along with their families.5eCFR. 11 CFR 114.1 – Definitions The right also extends to affiliates under the affiliation factors set out in FEC regulations.6eCFR. 11 CFR 114.5 – Separate Segregated Funds
One detail that trips people up: the subsidiary extension covers only executive and administrative personnel, not the subsidiary’s stockholders. A minority shareholder in a subsidiary who has no executive or administrative role at that entity is not part of the parent’s restricted class. Map which individuals at each entity actually meet the salaried, policymaking-or-professional test before adding them to lists.
Foreign-Owned Subsidiaries
When a U.S. corporation is owned by a foreign parent, special rules apply. A foreign corporation itself cannot establish or run a PAC. A domestic subsidiary incorporated under U.S. state law may establish its own SSF if three conditions are met: the subsidiary has its principal place of business in the United States; the foreign parent does not finance contributions or expenditures, directly or by subsidizing operations, unless the subsidiary can demonstrate through a reasonable accounting method that it has sufficient domestic funds; and all decisions about the SSF’s administration are made by U.S. citizens or lawful permanent residents.7Federal Election Commission. Foreign Nationals Foreign nationals are also barred from participating in decisions about how the PAC spends money or whom it contributes to.
Reaching Employees Outside the Restricted Class
Corporations are not permanently locked into soliciting only the restricted class. Twice per calendar year, a corporate PAC may solicit all employees who fall outside that class, including hourly and non-management workers. These solicitations carry significant extra requirements designed to protect those employees from pressure.8eCFR. 11 CFR 114.6 – Twice Yearly Solicitations
The solicitation must be in writing and mailed to the employee’s home address. It must inform the employee of the PAC’s political purpose and of the right to refuse without any reprisal.9Federal Election Commission. Twice-Yearly Solicitations of Expanded Class The return envelope must be addressed to an independent custodian, not to the corporation or the PAC.
The custodian arrangement is the heart of the confidentiality protection. The custodian cannot be a stockholder, officer, executive, or employee of the corporation or its SSF, with a narrow exception allowing the SSF’s treasurer to serve if they maintain contributor anonymity and stay out of spending decisions.8eCFR. 11 CFR 114.6 – Twice Yearly Solicitations The custodian may only share contributor identity with the PAC for individuals whose single contribution exceeds $50 or whose aggregate contributions in a calendar year exceed $200. For everyone else, including non-contributors, the custodian can only report the total number of contributions received. The corporation never learns who declined to give.
Required Notices in Every Solicitation
Every written solicitation, whether it goes to the restricted class or to the broader workforce during a twice-yearly mailing, must include specific notices. It must clearly state that contributions are entirely voluntary and that the recipient has the right to refuse without any reprisal or disadvantage to their employment.10eCFR. 11 CFR 114.5 – Separate Segregated Funds If the solicitation suggests a contribution amount, it must say that the suggestion is only a guideline, that the recipient may give more or less, and that the corporation will not favor or penalize anyone based on whether or how much they contribute.
These are not soft recommendations. The federal statute separately makes it unlawful for anyone soliciting an employee to fail to inform them of the fund’s political purpose or of their right to refuse.1Office of the Law Revision Counsel. 52 USC 30118 – Contributions or Expenditures by National Banks, Corporations, or Labor Organizations Omitting the notices from even a single batch of letters creates compliance exposure.
Penalties for Soliciting the Wrong People
Soliciting outside the restricted class without following the twice-yearly procedures, omitting required notices, or using coercion to obtain contributions can all trigger enforcement action. The FEC’s adjusted civil penalty amounts for 2025, which remain in effect for 2026, range from $7,445 to $87,056 depending on the violation.11Federal Election Commission. Commission Adjusts Civil Penalties for 2025 The statute also specifically prohibits securing contributions through physical force, job discrimination, financial reprisal, or threats of any of these.1Office of the Law Revision Counsel. 52 USC 30118 – Contributions or Expenditures by National Banks, Corporations, or Labor Organizations
Beyond formal fines, an FEC investigation is costly and disruptive on its own. The commission may require the PAC to return contributions that were improperly solicited, and the investigation record becomes public. The cleanest protection is a regularly audited solicitation list that tracks each person’s qualifying basis, whether as executive or administrative personnel, a stockholder, or a same-household family member of either.