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Trump Proposes Rule Targeting Public-Sector Union Finances (1)

Dec. 16, 2019, 2:42 PM; Updated: Dec. 16, 2019, 9:31 PM

A new Labor Department proposal would make public-sector mid-level union chapters subject to financial reporting requirements for private-sector unions, setting up another Trump administration battle against the labor movement.

The proposed regulation, released Dec. 16, is the Trump administration’s attempt to restore a 2003 rule that applied to “intermediate bodies,” such as the state, regional, or district offices of public-sector unions. Just as in the 2003 version, the new rule would require intermediate bodies to file annual financial reporting forms when their parent organizations separately represent private-sector employees, thereby applying federal disclosure law to them.

The DOL Office of Labor-Management Standards in 2010 rescinded that George W. Bush-era regulation, reinstating the agency’s long-standing interpretation that the Labor-Management Reporting and Disclosure Act doesn’t apply to intermediary unions that lack private-sector members. As a result, such mid-level union bodies currently don’t need to file financial disclosures if they’re comprised of local unions that represent only public-sector workers.

“This proposed rulemaking would increase financial transparency and encourage responsible union democracy, and foster accountability of union officials,” Arthur Rosenfeld, director of the OLMS, said in a statement.

The proposal had previously languished on the Labor Department’s regulatory calendar for more than two years, but public-sector unions have been girding for a legal fight.

Union supporters have expressed concern the regulation would impose onerous and costly compliance tasks on public-sector unions that already are under significant financial pressure following the U.S. Supreme Court’s landmark 2018 Janus decision, which blocked them from collecting fees from nonmembers.

But conservatives and members of the business lobby view the proposal as a sign the Trump DOL is committed to having the Office of Labor-Management Standards adopt the more expansive enforcement posture it assumed in the previous Republican administration.

Business groups such as the U.S. Chamber of Commerce argue that giving union members and the public access to how dues are spent will ensure that unions operate more democratically. Organized labor, however, believes that would be an invitation to union harassment.

The DOL is poised to finalize the regulation following a public comment period that is scheduled to conclude 60 days after the proposal is published in the Federal Register on Dec. 17.

Public-Sector Impact

The department identified four public-sector international unions that disburse funds to intermediate bodies that are currently not covered by the Labor-Management Reporting and Disclosure Act but would be after the rule is finalized: the National Education Association, American Federation of Teachers, Fraternal Order of Police, and International Association of Firefighters.

An estimated maximum of $2.8 million per year in dues from private-sector members of those four public-sector unions may be used by their international headquarters to finance subordinate intermediate bodies, the DOL said. If finalized, the rule would give those members transparency into how their dues are being spent to support public-sector activities. The disclosure forms are made available to the public on the OLMS website.

The NEA and the AFL-CIO had challenged the 2003 regulation in court before it was rescinded under the Obama administration. The NEA, which has 2.6 million members and is the largest public-sector union in the country, previously vowed to mount a new challenge.

“Any attempt by DOL to proceed with the proposed rule would be another attack on unions by this administration,” Alice O’Brien, general counsel of the NEA, said last year when the proposal was still kicking around the department’s regulatory calendar.

The NEA didn’t immediately respond to requests for comment after the Trump DOL released the proposal. The AFT, FOP, and IAFF also didn’t immediately comment.

(Updated with additional reporting)

To contact the reporter on this story: Ben Penn in Washington at bpenn@bloomberglaw.com

To contact the editors responsible for this story: John Lauinger at jlauinger@bloomberglaw.com; Martha Mueller Neff at mmuellerneff@bloomberglaw.com

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