At Heritage Foundation's Foundry Blog, Hans von Spakovsky and Cully Stimson have this post on the Sestak controversy:

The key distinction between what is legal and what is illegal under federal law is outlined in an opinion issued by the Office of Legal Counsel (OLC) at the U.S. Department of Justice in 1980. What is perfectly legal and what happens all the time in Washington is individuals being offered jobs because of their past political activity. Thus, when a new president is elected and takes the oath of office, he has several thousand patronage jobs to fill in the top ranks of the executive branch. Those jobs are filled based on a mix of professional competence and past political activity and support for the president or his party. That process does not violate federal law. Thus, if someone in the White House simply offered Sestak a job - like Secretary of the Navy - and did not tie the offer to anything related to the Senate race, then, that would arguably constitute business as usual.

However, what is illegal and not normal practice in Washington is to promise federal employment to an individual in exchange for future political activity. 18 U.S.C. § 600 prohibits public officials from using government-funded jobs or programs to advance their partisan political interests. The statute makes it unlawful for anyone to "directly or indirectly, promise[ ] any employment, position, compensation, contract, appointment, or other benefit" to any person as a "consideration, favor, or reward for any political activity or for the support of or opposition to any candidate or any political party...in connection with any primary election" (emphasis added). As the OLC opinion says, § 600 "punishes those who promise federal employment or benefits as an enticement to or reward for future political activity, but does not prohibit rewards for past political activity." Future political activity would arguably include dropping out of a contested primary in order to benefit the White House-endorsed candidate (here, Senator Specter).