Labor Dept. Proposes Reforms of Union LM-2s

The U.S. Dept. of Labor (DOL), on Dec. 27, proposed a major reform of the financial disclosure forms filed by the nations’ largest unions with the fed. govt. The proposed rule comes seven months after NLPC Chairman Kenneth Boehm petitioned DOL to undertake many of the changes now proposed. The proposed rule can be read at http://www.tgci.com/fedrgtxt/02cn1227.html. Scroll down to “Labor-Management Standards Office,” then click on either TEXT or PDF.

The most important changes are proposed for the LM-2 form, required of unions with yearly receipts of at least $200,000. Under the proposal, those unions would be required to list their expenses for eight new “functional categories: Contract Negotiation & Administration, Organizing, Political Activities, Lobbying, Contributions, Gifts & Grants, Benefits, and General Overhead.

With these changes, unions would finally be forced to account for their finances in terms laid out by the U.S. Supreme Ct. in their 1988 decision, Communications Wrkrs. v. Beck. In that ruling, the Court held that forced union dues could not be spent on political and other non-bargaining activities. In addition to those direct expenses, unions would also be required to allocate the salaries of their officers and employees by the time spent on the eight functional categories.

The proposed rule defines political activities as any expenses “intended to influence the selection, nomination, election, or appointment of anyone to a Federal, State, or local executive, legislative or judicial public office, or office in a political organization, or the election of Presidential or Vice Presidential electors, and support for or opposition to ballot referenda.” Also included are “political communications with members (or agency fee paying nonmembers) and their families, registration, get-out-the-vote and voter education campaigns.”

Currently, unions must only report the finances of “subsidiary” organizations that are “wholly owned, wholly controlled, and wholly financed by the reporting union.” To cover groups like the insurance company, Ullico–financed by several union pension funds, but not controlled by any one union–any “trust in which a labor organization is interested” with at least $200,000 in yearly receipts must be reported on a proposed new form, T-1 (Trusts Annual Report).

Boehm expressed concern about the proposed requirement of the itemization of “major” expenses paid to an individual or group within the fiscal year. The proposed rule leaves open whether unions will be required to itemize payments to individuals or groups at either $2,000, $5,000, or somewhere in between.

“Unions already have to report PAC expenses of at least $200 to the Federal Election Commission,” Boehm said, “so they ought to be able to report them to the Labor Department. And it’s very worrisome that union bosses could steal up to $5,000 a year for a decade and never have to account for it under the proposed rule.”

Individuals and groups have until Feb. 25 to send their comments on the proposed rule to the Labor Dept. Comments should be sent to Victoria A. Lipnic, Assistant Secretary for Employment Standards, U.S. Department of Labor, 200 Constitution Avenue, NW., Room N-5605, Washington, DC 20210. Comments may be transmitted by e-mail to [email protected] or by facsimile (FAX) machine to (202) 693-1340. To assure access to the FAX equipment, only comments of five or fewer pages will be accepted via FAX transmittal, unless arrangements are made prior to faxing, by calling the number below and scheduling a time for fax receipt by OLMS. Confirmation of receipt can be made by contacting (202) 693-0122. [DOL 12/27/02]