In a 6-3 vote, the US Supreme Court struck down a California law that forced non-profits to annually disclose their major contributors (i.e. those who contribute more than $5,000). The case, Americans for Prosperity Foundation v Bonta, was split down liberal/conservative lines, where Chief Justice Roberts wrote for the plurality, holding that the disclosure requirement infringed on the Freedom of Association found under the First Amendment.
Drawing from history, Chief Justice Roberts pointed to how states such as Alabama had previously used similar laws to punish contributors to nonprofits that enriched the lives of minorities, such as the NAACP. Even though sent to the state government confidentially, Chief Roberts highlighted the potential that these records could be accidentally leaked or posted online, and therefor risked reprisal to those who contributed to unpopular organizations. He acknowledged these laws were created in California to fight fraud; however, he then pointed to the alleged lack of evidence that California’s law alone had successfully assisted with any “investigative, regulatory or enforcement efforts.”
Dissenting opinions stressed the incompatibility with using judicial precedent meant to protect civil-rights offences to those created to assist with financial fraud, as well as the impossibility to provide evidence that this law, as one tool of many, to fight fraud was not helpful. However, the Court was obviously not swayed. Therefore, for now, non-profits will not need to provide California with their list of donors. Even so, this list will still likely be required for the federal government, i.e. the IRS. As such, the administrative perks of having this law struck down is so far seen to be minimal.
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California has required employers to “indemnify” employees for “necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties, or of his or her obedience to the directions of the employer” in substantially the same terms since 1937 under Labor Code § 2802.
