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Unions, Business Groups Clash Over DOL Financial Disclosure Rule

Dec. 15, 2020, 10:27 PM

Unions and business groups locked horns over a regulatory proposal that would strengthen financial reporting requirements for labor groups, setting the stage for what could be one of the Trump administration’s last policy moves aimed at organized labor.

In dueling sets of comments submitted in advance of a Tuesday deadline, the groups sparred over whether the proposal from the Labor Department’s Office of Labor-Management Standards would provide more transparency into union finances—or create costly new requirements for unions while giving rank-and-file members little useful information.

The proposed rule, issued in September, would increase the amount of financial information the wealthiest unions must submit annually to DOL, with a particular focus on ones that take in $8 million or more a year. The rule calls for more detailed reporting of separate strike funds, as well as payments made to a single officer from more than one union. It also would provide for a more detailed accounting of investments and asset sales, and require separate reporting of lobbying expenditures.

DOL has yet to submit a final rule to the White House for review, a necessary step before it can be published, and it wasn’t clear whether the agency will have the bandwidth to finalize the regulation before President Donald Trump leaves office Jan. 20.

In written comments submitted to DOL, unions and worker advocates said the rule would inflate compliance costs without achieving its stated transparency goals—which stem in part from the sprawling corruption scandal at the United Auto Workers.

Onerous, or Necessary, Disclosure?

The American Federation of State, County and Municipal Employees said the new “long-form” disclosure document, known as an LM-2, that the rule proposes creating, would distort the amount of money the union spends on representational activities by only listing payments to outside groups, minimizing the work of in-house staff.

The union said the new form would add a dozen reporting requirements to a disclosure filing that already exceeds 900 pages.

“Such a voluminous submission would defeat a significant purpose of the LM-2 to begin with, because it would become so voluminous it would overwhelm a member attempting to understand her union’s finances,” wrote Judith Rivlin, the AFSCME general counsel.

The left-leaning Economic Policy Institute criticized provisions to increase reporting requirements for strike funds, saying it would give an unfair advantage to employers during labor disputes and contract negotiations.

“The Department argues the change would allow union members to know the health of their union’s strike fund, which in turn would help members develop strategies for dealing with employers,” wrote Margaret Poydock, an EPI policy associate. “However, the same can be said about employers having knowledge of the amount of a union’s strike fund.”

Business groups said the proposal represents a deterrent to union corruption. The U.S. Chamber of Commerce wrote that the proposal builds on changes made during the George W. Bush administration that “cast light on troves of information that were cloaked in darkness for decades as unions became increasingly more complex.”

“That previously unseen information yielded myriad benefits including, among other things, the successful prosecution of union officials whose untoward deeds became subject to meaningful scrutiny for the first time,” the Chamber wrote.

The comments came as the United Auto Workers sought to resolve the federal government’s sprawling corruption probe, which led to the conviction of two former UAW presidents. The union’s agreement with the government, which includes the appointment of an independent monitor for a period of six years, must now be approved by a federal judge.

“While this is a promising start, the fact remains that insufficient reporting standards enabled the union to defraud its own members in the first place,” the Center for Union Facts, a business-backed watchdog group, wrote in its comments on the rule.

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; Jay-Anne B. Casuga at jcasuga@bloomberglaw.com