The U.S. Department of Labor announced on Oct. 3 its final rules to strengthen the financial integrity and transparency of labor unions by improving the annual financial disclosure forms filed by unions as required by the Labor-Management Reporting and Disclosure Act (LMRDA).
In May of last year, NLPC submitted a detailed petition asking the Labor Department to issue just such a rule. Many of the suggestions contained in NLPC’s petition are embodied in the new rule, especially the new categories of expenses by which union officials will have to report what they actually do with the dues of the workers they claim to represent. For the first time since the U.S. Supreme Court ruled in 1988 that unionized workers could not be forced to pay for union politics (Communications Wrkrs. v. Beck), all private sector unions will be required to report how much they spend on political and lobbying activities.
With the reforms also come an entirely new disclosure form for union-controlled trusts like “joint funds,” which are partially financed and managed by their unions. Some union-financed trusts control hundreds of millions of dollars of assets, yet they have no financial accountability or transparency to the union members on whose behalf they are managed. One of the most notorious of union-financed organizations is ULLICO, the union pension-owned company run by a host of current and retired union officials, many of whom engaged in profitable insider sales of the company’s stock as it plummeted from 2000-02.
Due to changes made in the final rule in response to criticism by union bosses, only the nation’s largest unions — those with $250,000 or more in annual receipts — will be required to itemize receipts and expenses of $5,000 or more on their annual LM-2 disclosure form. Unions already itemize their political action committee expenses of at least $200 to the Federal Election Commission. So, NLPC, in its comment on the proposed rule last March, recommended that union officials should itemize their expenses of less than the $5,000 threshold set by the Labor Department. Nonetheless, said David Kendrick, Director of NLPC’s Organized Labor Accountability Project, “we are glad to see our recommendation that unions itemize their spending accepted at least in part.”
The new rules will be effective for annual financial reports for fiscal years beginning on or after January 1, 2004, although no union will have to actually file a report under the new disclosure rule until March 2005, nearly 18 months from now. And by claiming that their organizing expenses are “trade secrets,” union officials won a last-minute concession from DOL, which removed organizing as a category to be accounted for in the new form.
“The millions of individual workers who have accessed the unreformed disclosure forms of unions on the Labor Department’s web site since June 2002 prove the public demand for this information,” Kendrick said. “Just as citizens have a right to know how political candidates are funded and shareholders have a right to honest financial disclosure from companies in which they invest, union members have a right to know how a union spends their money. Union funds do not belong to union officials, they belong to the union’s members.” [DOL, 10/3/03]