The United States Department of Labor (DOL) recently announced a number of changes to the disclosure obligations of union officials and union employees and the officials’ and employees’ spouses/minor children under the Labor Management Reporting and Disclosure Act (LMRDA).
The United States Department of Labor (DOL) recently announced a number of changes to the disclosure obligations of union officials and union employees and the officials’ and employees’ spouses/minor children under the Labor Management Reporting and Disclosure Act (LMRDA). This Legal Alert focuses on two of the major changes.
The LMRDA requires, among other things, the disclosure of certain transactions between employers and union officials or union employees where money or other “things of value” change hands. (For ease of reference, the terms “union officials” and “union employees” also include their spouses and minor children.) When these transactions are entered into, employers must complete a Form LM-10 and file it with the DOL within 90 days of the close of the employer’s financial year during which the transaction occurred. Union officials/employees must complete a Form LM-30 and likewise file it with the DOL within 90 days of the close of their fiscal year, which for most individuals is the calendar year. While the announced changes currently apply only to union officials and union employees, the DOL has indicated that similar changes may be in store for employers.
The changes are effective only for transactions occurring in fiscal years that begin on or after August 16, 2007. For union officials/employees whose fiscal year corresponds with the calendar year, the announced changes would apply to transactions occurring on or after January 1, 2008.
Changes To the No-Docking/Union Leave Reporting Requirements
Prior to the announced changes, the DOL took the position that union officials/employees who are also employed by an employer are not required to report payments received from their employer pursuant to a union leave or no-docking clause whereby the official/employee was paid by the employer for time spent on union business. With the DOL’s changes, however, union officials/employees no longer have a blanket reprieve from the reporting requirements for such payments, although they will still be free of the reporting requirements to an extent.
With the change, payments need not be reported if: (1) such payments were for 250 hours or less during the course of the year; and (2) the payments were made pursuant to a clause in a collective bargaining agreement. If both elements are not met, the payments are reportable. So, if the union official/employee was paid for over 250 hours of union work, the official/employee must report the payments. Likewise, if the collective bargaining agreement does not contain union leave or no-docking language, the union official/employee must report the payment even if it is for less than 250 hours.
Changes To The De Minimis Exception
The DOL has excepted de minimis transactions from the reporting requirements of the LMRDA so long as the total dollar amount of such transactions is $250 or less. For example, if an employer gives $250 worth of money or gifts to a union official/employee over the course of a year, the transaction is not reportable. The DOL has changed the de minimis exception by stating that payments or gifts of $20 or less do not need to be included in determining whether the $250 has been met. Consider the example of an employer who gave a union official/employee a $200 watch, and also bought the official eight dinners at $20 each over the course of the year. In sum, the employer spent $360 on the union official/employee, but the official/employee is not required to report the transactions because the eight lunches do not need to be included in computing the threshold. The DOL has specifically noted, however, that multiple gifts or payments of $20 or less must be reported if it appears the arrangement was designed to avoid the disclosure requirements.
Employers' Bottom Line:
The purpose of the LMRDA is to add transparency to transactions between employers and unions or union officials/employees that could cause a conflict of interest. While the change to the de minimis exception will result in union officials/employees reporting fewer transactions, the overall trend has been one of increasing disclosure, as evidenced by the change to payments under no-docking and union leave policies.
As noted above, the changes in this Legal Alert apply only to disclosures required by union officials/employees; however, the DOL may make similar changes to employers' disclosure requirements. Because the LMRDA has criminal and monetary penalties, it is extremely important for employers to ensure that they file a Form LM-10 for reportable transactions. Employers should also be aware that another federal law, the Labor Management Relations Act, prohibits certain payments from employers to unions or union officials/employees, regardless of whether such payments are reported. Like the LMRDA, the Labor Management Relations Act carries criminal and monetary penalties.
Any payments from an employer to a union or union official/employee should raise a red flag. Some payments are lawful; however, many are not. There are numerous cases in which well-meaning employers have been found to be in violation of the law. If you have any doubt about the legality of such payments, or whether they are reportable, you should consult with experienced labor counsel.
For additional information regarding unions and handbooks, please contact the author of this Alert, Don Lee, an attorney in Ford & Harrison’s Atlanta office, 404-888-3861, or the Ford & Harrison attorney with whom you usually work.