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New Challenge Looms for Public-Sector Unions

July 23, 2018, 4:35 PM

Public-sector unions that are already tightening their belts may now face more economic pressure because of a Labor Department rulemaking receiving little attention.

The DOL plans to extend financial reporting requirements to public-sector mid-level union chapters. The rule, which is on the White House regulatory calendar but has yet to be proposed, would impose new operational hurdles on unions that are reckoning with the financial strain from the U.S. Supreme Court’s decision June 27 to remove their right to collect fees from nonmembers.

The regulatory calendar includes a notice that the DOL will issue a proposed rule covering “intermediate bodies"—such as state, regional, or district union offices. The proposal would restore a 2003 regulation that required those intermediary unions to file annual financial reporting forms when their parent organizations separately represent private-sector employees, thereby making them covered by federal disclosure law.

This mandate would apply even if the intermediate bodies themselves don’t have any members who are private-sector employees.

“From the time this proposal was first announced last year, unions representing public employees have been concerned about the burdens it would impose,” University of Baltimore law professor Michael Hayes said. “And those concerns over cost of compliance are even more well-justified after the Janus decision.” During the Obama administration, Hayes directed the DOL agency that is now drafting the rule.

In the June 27 Janus v. AFSCME decision, the high court said requiring nonmembers to make payments to public-sector unions violates those workers’ rights to free speech. Unions that represent teachers, firefighters, municipal employees, and other government employees are now concerned about a financial hit as they prepare to lose fair share fees from nonmembers covered by the union-negotiated contract.

“Public employee unions carry out important representational work, in a variety of ways and forums, through their intermediate bodies,” Hayes told Bloomberg Law. “With the Janus decision many of these bodies will have less funds than ever to carry out this important work, and now the Labor Department seems poised to force them to divert their already thin and strained resources to onerous tasks of gathering, categorizing, and reporting data in forms mandated by the government.”

But Glenn Spencer, vice president of employment policy at the U.S. Chamber of Commerce, says he is hopeful that the agency will soon return to the more expansive interpretation of the LMRDA that was in place when he worked for then-Labor Secretary Elaine Chao in 2003.

“The LMRDA is meant to be construed broadly and it’s meant to extend coverage as widely as possible,” Spencer told Bloomberg Law.

Does DOL Brief Conflict?

In 2010, the DOL Office of Labor-Management Standards rescinded a 2003 regulation that extended Labor-Management Reporting and Disclosure Act coverage to intermediate bodies. This reinstated the agency’s long-standing interpretation that the law didn’t apply to intermediary unions that lack private-sector members.

The legal matter arose in the courts this month when DOL Solicitor Kate O’Scannlain, in a July 16 brief on behalf of Labor Secretary Alexander Acosta, maintains the litigation posture taken by the previous administration on this issue. The case involves a school teacher’s allegations that the New Jersey Education Association committed union election misconduct that violated the LMRDA, which would make the election reviewable by the OLMS. The DOL asked a federal judge to toss the case because the New Jersey union isn’t subject to the statute.

The government lawyers reject the teacher’s citation of the interpretation advanced under Chao, and they make no inference to the proposal that would restore it.

“The Secretary abandoned that view in 2010, returning the DOL to its long-standing prior interpretation that LMRDA does not cover entities like the New Jersey Education Association,” the agency stated. The teacher’s “reliance on a prior interpretation of the LMRDA is irrelevant; what matters is the law in effect at the time of the events giving rise to this action.”

The absence of any mention of the new rulemaking from this brief doesn’t indicate the regulation has lost steam at the OLMS. Rather, it might serve as evidence that the department doesn’t wish to revise policy via litigation.

Further, the first politically appointed OLMS director of the Trump era only arrived this month, leaving the office behind schedule in implementing new policies and rules.

“The brief reflects the existing interpretation that was published in 2010,” a DOL spokesman told Bloomberg Law in a statement. “This interpretation will be the subject of the regulatory action as indicated in the Spring 2018 Regulatory agenda.”

Teachers’ Union Reacts

“The brief makes the case very clearly that the Department of Labor’s long history of applying the Labor-Management Reporting and Disclosure Act only to unions with private-sector members reflects the correct interpretation of the law,” Alice O’Brien, general counsel of the National Education Association, told Bloomberg Law in an emailed statement. “We don’t know if they are having second thoughts about restoring the 2003 rule, but the brief certainly shows why the rule would be misguided and contrary to the LMRDA’s text, structure and history.” The 2.6-million-member NEA is the largest public-sector union in the U.S.

Spencer, of the U.S. Chamber, defended the 2003 rule and the attempt to bring it back as an appropriate return to an era when “there was a lot more emphasis on the mission of OLMS.” The agency had a higher enforcement budget and more investigators at that time, which it used to audit unions for financial violations and corruption.

O’Brien didn’t address Bloomberg Law’s question about whether this rule would compound the perils presented by Janus. But O’Brien’s statement did suggest that the rule’s timing wouldn’t be ideal.

“Given the strength of the pedigree of the current rule, any attempt by DOL to proceed with the proposed rule would be another attack on unions by this administration,” the NEA general counsel said.

To contact the reporter on this story: Ben Penn in Washington at

To contact the editor responsible for this story: Chris Opfer at