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DOL Moves to Force Greater Financial Transparency for Unions (1)

Sept. 30, 2020, 6:44 PMUpdated: Sept. 30, 2020, 8:30 PM

The Labor Department has proposed a rule to require certain unions to list more financial information in annual disclosure forms.

The proposal, the latest in a series of Trump administration moves aimed at bolstering union oversight, would increase disclosure requirements for the wealthiest unions, with a particular focus on those that take in $8 million or more a year. It aims to increase transparency in labor organization financial reporting to make it harder for improper or illegal spending to take place.

The rule, released Wednesday, directly cites as motivation the largest union scandal in decades—the widespread corruption ring involving the United Auto Workers, in which more than a dozen officials have been convicted as part of a sweeping federal investigation.

“The proposed changes are designed to provide members of labor organizations with additional and more detailed information about the financial activities of their labor organization than is available through the current reporting,” the regulation said.

Specific Changes

The rule would mandate reporting specific to the separate strike funds that unions maintain and to payments made to a single officer from more than one union. It would provide for more detailed accounting of investment and asset sales, including the names of financial firms unions use to make investments.

Greater detail in accounting of political spending would also be required, including separate reporting of lobbying expenditures. And some unions would be mandated to report new organizing and collective bargaining efforts separately rather than following the existing practice of lumping them under the umbrella of “representational services.”

Unions subject to the new rule would also have to report retired members separately from active members, a change that would underscore the diminishing power of unions in struggling economic sectors such as manufacturing and mining.

The changes would “increase financial transparency and better enable workers to make decisions regarding their union,” Andrew Auerbach, acting director of DOL’s Office of Labor-Management Standards, said in a written statement.

Long Form

The primary form many unions must file with OLMS is known as the LM-2 form. The closely watched disclosure, which is mandatory for unions with at least $250,000 in annual receipts, requires a detailed breakdown of expenses, including salaries for top officers and itemized receipts over the prior year.

In the proposed rule, DOL said it’s considering hiking the LM-2 threshold, last updated in 2003, to $300,000 to adjust for inflation.

The proposal would revise the LM-2 form and create a new “long-form” LM-2, requiring unions with revenues of $8 million or more to disclose more detailed financial information.

The public will have 60 days to file comments on the proposal once it’s published in the Federal Register.

Earlier OLMS initiatives during the Trump administration designed to increase financial oversight of organized labor provoked sharp criticism from congressional Democrats, who argued the policies sought to divert union resources from organizing and advocating on workers’ behalf against management interests.

The DOL subagency previously issued a proposed rule to expand the types of unions subject to annual reporting requirements, and finalized a rule to establish a new filing mandate to cover union trusts, such as strike funds and apprenticeship programs.

It has also scrutinized whether nonprofit worker centers are actually labor organizations that have been unlawfully skirting the financial reporting process outlined under the Labor-Management Reporting and Disclosure Act.

(Updated with additional reporting.)

To contact the reporter on this story: Ian Kullgren in Washington at ikullgren@bloombergindustry.com

To contact the editors responsible for this story: John Lauinger at jlauinger@bloomberglaw.com; Andrew Harris at aharris@bloomberglaw.com

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