New LM-2 Regulations Set to Improve Union Transparency

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The Department of Labor’s financial reporting forms are a work in progress.  And officials there have proposed some fine tuning they believe will make labor unions more accountable to their members and the public at large.  On May 12, the department’s Office of Labor-Management Standards (OLMS) released new “LM-2 Form and Regulations,” part of a larger effort to expand its authority under the Labor-Management Reporting and Disclosure Act of 1959 (LMRDA).  The rules, whose comment period closes on June 26, are designed to close loopholes not addressed during the previous round of reforms a half-decade ago.

 

Specifically, the new LM-2 form would clarify several corruption-prone areas.  Unions would have to:  

     

Specify the costs of benefits provided to officers and employees.  At present, benefit costs are reported as a lump sum.  The rule change would allow individual union members to see how much they are paying in benefits for each officer and employee, thus discouraging union officials from hiding excessive benefits.

 

Identify persons to whom they sell assets.  This would enable union members to spot transactions involving union purchases of assets at large discounts. 

 

Report “indirect” travel and entertainment expenses.  This requirement would facilitate a more accurate accounting of lavish expenses, especially resort vacations, disguised as “business expenses.”

 

DOL officials believe union officials will oppose these reforms “every step of the way, as they have with previous reforms.”  That alone ought to suggest the rule changes are a response to legitimate concerns.  All persons seeking to comment can go to http://www.regulations.gov, and enter “Labor Organization Annual Financial Reports” in the search box for “Comment or Submission.”  The regulations, contained in a 103-page pdf document, are available for viewing at http://edocket.access.gpo.gov/2008/pdf/E8-10151.pdf.  (U.S. Department of Labor, 5/08).