On May 30, 2019, the Office of Labor-Management Standards (“OLMS”) within the U.S. Department of Labor issued a notice seeking comments on a proposed rule that would require labor organizations to submit annual financial reports for trusts in which the labor organization has an interest.
The OLMS oversees the financial disclosure statements required of labor organizations and employers under the Labor-Management Reporting and Disclosure Act (“LMRDA”), as well as investigates alleged wrongdoing. As described in the recent notice, the purpose of the various reports required of labor unions is to, “empower labor organization members by providing them the means to maintain democratic control over their labor organizations and ensure a proper accounting of labor organization funds… By reviewing a labor organization’s financial reports, a member may ascertain the labor organization’s priorities and whether they are in accord with the member’s own priorities and those of fellow members.”
The proposed new rule is designed to provide union members and others with information relating to trust funds that unions have historically used for a variety of purposes, such as to fund apprenticeship programs, credit unions, strike funds, redevelopment or investment groups, training funds, building funds and educational funds. The OLMS noted in its May 30 notice that, “While these trust funds can serve valid purposes, they can also be used to circumvent the reporting requirements for labor organizations.”
Accordingly, the proposed rule would establish a “Form T-1”, which a labor organization would have to complete if a majority of the trust’s governing board were selected or appointed by the labor organization, or if the labor organization contributed more than 50% of the trust’s funds. Information required by the T-1 includes loans made to officers or employees, details about disbursements, and the identification of people receiving more than $10,000 from the trust.
A similar rule was previously proposed on two prior occasions, and each time the rule was challenged by the AFL-CIO. In the first instance, which occurred in 2005 during the administration of President George W. Bush, the D.C court of appeals found the rule overly broad, and a year later the same court vacated a revised rule on the basis that it had not been published and the public had not been given an opportunity to submit comments to the proposed rule. It remains to be seen whether the AFL-CIO will challenge this newly proposed rule.
The public has until July 29, 2019 to submit comments to the proposed rule.