[Federal Register Volume 75, Number 153 (Tuesday, August 10, 2010)]
[Proposed Rules]
[Pages 48416-48455]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-19250]
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Part II
Department of Labor
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Office of Labor-Management Standards
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29 CFR Part 404
Labor Organization Officer and Employee Reports; Proposed Rule
Federal Register / Vol. 75 , No. 153 / Tuesday, August 10, 2010 /
Proposed Rules
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DEPARTMENT OF LABOR
Office of Labor-Management Standards
29 CFR Part 404
RIN 1215-AB74
RIN 1245-AA01
Labor Organization Officer and Employee Reports
AGENCY: Office of Labor-Management Standards, Department of Labor.
ACTION: Notice of proposed rulemaking; request for comments.
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SUMMARY: The Office of Labor-Management Standards of the Department of
Labor (Department) is proposing to revise the Form LM-30 and its
instructions. The Form LM-30 implements section 202 of the Labor-
Management Reporting and Disclosure Act of 1959 (LMRDA or Act), 29
U.S.C. 432, the purpose of which is to require officers and employees
of labor organizations to publicly disclose possible conflicts between
their personal financial interests and their duty to the labor union
and its members. The proposed rule would revise the Form LM-30 and its
instructions, based on an examination of the policy and legal
justifications for, and utility of, changes enacted in the Form LM-30
Final Rule (2007 rule), published on July 2, 2007. 72 FR 36105.
Following promulgation of the 2007 rule, fundamental questions remain
regarding the complexity of the form and its instructions, as well as
the scope and extent of the LM-30 reporting obligations. These
questions include the coverage of union stewards and others
representing the union in similar positions; the reporting of certain
loans and union leave and ``no docking'' payments; the reporting of
payments from certain trusts, unions, and employers in competition with
employers whose employees are represented by an official's union; and
the reporting of certain interests held and payments received by higher
level union officials. The Department proposes revisions to the 2007
form, its instructions, and the regulatory text concerning such
reporting obligations. The Department invites general and specific
comment on any aspect of this proposed rule.
DATES: Comments must be received on or before October 12, 2010.
ADDRESSES: You may submit comments, identified by RIN 1215-AB74 or RIN
1245-AA01. (The Regulatory Information Number (RIN) identified for this
rulemaking changed with publication of the Spring Regulatory Agenda due
to an organizational restructuring. The old RIN (1215-AB74) was
assigned to the Employment Standards Administration, which no longer
exists; a new RIN (1245-AB01) has been assigned to the Office of Labor-
Management Standards.) The comments can be submitted only by the
following methods:
Internet: Federal eRulemaking Portal. Electronic comments may be
submitted through http://www.regulations.gov. To locate the proposed
rule, use the RIN numbers shown above. Follow the instructions for
submitting comments.
Delivery: Comments should be sent to: Denise M. Boucher, Director
of the Office of Policy, Reports and Disclosure, Office of Labor-
Management Standards, U.S. Department of Labor, 200 Constitution
Avenue, NW., Room N-5609, Washington, DC 20210. Because of security
precautions the Department continues to experience delays in U.S. mail
delivery. You should take this into consideration when preparing to
meet the deadline for submitting comments.
The Office of Labor-Management Standards (OLMS) recommends that you
confirm receipt of your delivered comments by contacting (202) 693-0123
(this is not a toll-free number). Individuals with hearing impairments
may call (800) 877-8339 (TTY/TDD). Only those comments submitted
through http://www.regulations.gov, hand-delivered, or mailed will be
accepted. Comments will be available for public inspection at http://www.regulations.gov and during normal business hours at the above
address.
The Department will post all comments received on http://www.regulations.gov without making any change to the comments,
including any personal information provided. The http://www.regulations.gov Web site is the Federal e-rulemaking portal and all
comments posted there are available and accessible to the public. The
Department cautions commenters not to include their personal
information such as Social Security numbers, personal addresses,
telephone numbers, and e-mail addresses in their comments as such
submitted information will become viewable by the public via the http://www.regulations.gov Web site. It is the responsibility of the
commenter to safeguard his or her information. Comments submitted
through http://www.regulations.gov will not include the commenter's e-
mail address unless the commenter chooses to include that information
as part of his or her comment.
FOR FURTHER INFORMATION CONTACT: Denise M. Boucher, Director of the
Office of Policy, Reports and Disclosure, Office of Labor-Management
Standards, U.S. Department of Labor, 200 Constitution Avenue, NW., Room
N-5609, Washington, DC 20210, [email protected], (202) 693-0123 (this
is not a toll-free number), (800) 877-8339 (TTY/TDD).
SUPPLEMENTARY INFORMATION:
I. Background
A. Introduction
The proposal to revise the Form LM-30 and its instructions is part
of the Department's continuing effort to effectively administer the
reporting requirements of the LMRDA. The LMRDA's various reporting
provisions are designed to empower labor organizations, their members,
and the public by providing certain information about the finances of
labor organizations and union officers and employees. A fair and
transparent government regulatory regime must consider and balance the
interests of labor organizations, their members, and the public,
including the benefits served by disclosure, the burden placed on
reporting entities, and preserving the independence of unions and their
officials from unnecessary government regulation.
The Form LM-30 implements section 202 of the LMRDA, 29 U.S.C. 432.
Under section 202,\1\ union officers and employees are required to file
reports if they, or their spouses or minor children, engage in certain
transactions, or have financial holdings, which may constitute a
conflict of interest with their union responsibilities. The Act
requires public disclosure of certain financial interests held,
transactions engaged in, and income received. Subject to certain
exclusions, these interests, transactions, and incomes include:
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\1\ Unless otherwise stated all references to statutory
provisions, e.g., ``section 202,'' are to provisions in the LMRDA.
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1. Payments or benefits with monetary value from, or interests in,
an employer whose employees the filer's union represents or is actively
seeking to represent;
2. Transactions involving any stock, bond, security or loan to or
from, or other interest in, an employer whose employees the filer's
union represents or is actively seeking to represent;
3. Business transactions or arrangements with an employer whose
employees the filer's union represents or is actively seeking to
represent;
[[Page 48417]]
4. Income or any other benefit with monetary value from, or other
interest in, a business a substantial part of which consists of buying
from, selling or leasing to, or otherwise dealing with an employer
whose employees the filer's union represents or is actively seeking to
represent;
5. Income or any other benefit with monetary value from, or other
interest in, a business any part of which consists of buying from, or
selling or leasing directly or indirectly to, or otherwise dealing with
the filer's union or a trust in which the filer's union is interested;
and
6. Payment of money or other thing of value from any employer not
covered under the above categories, or payment of money or other thing
of value from a person who acts as a labor relations consultant to an
employer.
The Form LM-30 had remained essentially unchanged from 1963 until
2007. In 2005 the Department published a Notice of Proposed Rulemaking
(NPRM) that proposed far-reaching changes to the form. 70 FR 51165
(Aug. 29, 2005). After a notice and comment period, the Department
issued the 2007 final rule. 72 FR 36105 (July 2, 2007). The 2007 rule
brought significant changes to the LM-30 and its instructions and
represented, in some instances, a sharp departure from the Department's
previous interpretations of section 202. The rule completely revised
the layout and overall structure of the Form LM-30, lengthening the
form from two to nine pages with the creation of five schedules,
continuation pages, and various sections consisting of instructions and
examples. (The 2007 form and instructions are available at http://www.dol.gov/olms.) Upon review of the 2007 rule, and input from the
regulated community, the Department believes that many of the
objectives sought to be met by the 2007 rule--including simplification
of the reporting requirements and adherence to the reporting scheme
intended by Congress--were not accomplished. The 2007 rule left
unresolved fundamental questions about the reporting obligations of
union officials, questions raising policy and legal issues warranting
reexamination by the Department. These fundamental questions regarding
the Form LM-30 reporting requirements include--the coverage of stewards
and other union representatives serving in similar positions; the
reporting of certain loans and union leave and ``no docking'' payments;
the reporting of payments from certain trusts and unions; the reporting
of payments from businesses that compete with an employer whose
employees are represented by an official's union or whose employees the
union is actively seeking to represent; and reporting by higher level
union officials about relationships with businesses and employers that
pose conflicts concerning subordinate affiliates of their union. In
addition, there are questions as to whether the layout of the 2007 Form
LM-30 and instructions provides useful and adequate assistance to
filers.
As further discussed in later sections of this notice, these
questions prompted the Department, on March 19, 2009, to issue a non-
enforcement policy regarding the 2007 Form LM-30 reporting
requirements, allowing filers to use either the pre-2007 or 2007 Form
LM-30 report. Further, the Department held a stakeholder meeting on
July 21, 2009 to solicit comments regarding the 2007 Form LM-30 and
potential revisions to the Form LM-30. The Department invites comment
on the proposed changes with respect to their benefits, the ease or
difficulty with which labor organization officers and employees will be
able to comply with these changes, and whether the changes would better
implement the LMRDA. Information about specific union provisions
relating to conflict of interest standards for union officials is also
invited. Interested parties and the public are invited to draw upon
their experience with similar conflict and disclosure standards in
other settings such as government employment, accounting, corporate
governance, legal and judicial practice, medicine, and journalism. The
Department invites general and specific comments on any aspect of this
proposal; it also invites comment on specific points, as noted
throughout the text of this notice.
B. History of the LMRDA's Reporting Requirements
In enacting the LMRDA in 1959, a bipartisan Congress expressed the
conclusion that in the labor and management fields ``there have been a
number of instances of breach of trust, corruption, disregard of the
rights of individual employees, and other failures to observe high
standards of responsibility and ethical conduct which require further
and supplementary legislation that will afford necessary protection of
the rights and interests of employees and the public generally as they
relate to the activities of labor organizations, employers, labor
relations consultants, and their officers and representatives.''
Section 2(b), 29 U.S.C. 401(b).
The LMRDA was the direct outgrowth of a Congressional investigation
conducted by the Select Committee on Improper Activities in the Labor
or Management Field, commonly known as the McClellan Committee. The
LMRDA addressed various ills through a set of integrated provisions
aimed at labor-management relations governance and management. These
provisions include financial reporting and disclosure requirements for
labor organizations, their officers and employees, employers, labor
relations consultants, and surety companies. See 29 U.S.C. 431-36, 441.
To highlight the potential conflicts of interest to which union
officers and employees could be susceptible, the Senate Committee
Report presented the following illumination of section 202:
[This section] requires a union officer or employee to disclose
any securities or other interest which he has in a business whose
employees his labor union represents or ``seeks to represent'' in
collective bargaining. When a prominent union official has an
interest in the business with which the union is bargaining, he sits
on both sides of the table. He is under temptation to negotiate a
soft contract or to refrain from enforcing working rules so as to
increase the company's profits. This is unfair to both union members
and competing businesses.
Senate Report No. 187 (1959) (Senate Report) at 15, reprinted in NLRB
Legislative History of the Labor-Management Reporting and Disclosure
Act of 1959 (2 volumes) (Leg. History), 1 Leg. History, at 411.
In explaining the purpose of the disclosure rules for union
officers and employees, the Senate Report presented ``three reasons for
relying upon the milder sanction of reporting and disclosure [relative
to establishing criminal penalties] to eliminate improper conflicts of
interest,'' which can be summarized as follows:
Disclosure discourages questionable practices. ``The searchlight
of publicity is a strong deterrent.'' Disclosure rules should be
tried before more severe methods are employed.
Disclosure aids union governance. Reporting and publication will
enable unions ``to better regulate their own affairs. The members
may vote out of office any individual whose personal financial
interests conflict with his duties to the members,'' and reporting
and disclosure would facilitate legal action by members against
``officers who violate their duty of loyalty to the members.''
Disclosure creates a record. The reports will furnish a ``sound
factual basis for further action in the event that other legislation
is required.''
Senate Report, at 16, reprinted in 1 Leg. History, at 412.
The Report further stated:
The committee bill attacks the problem [of conflicts of
interest] by requiring union officers and employees to file reports
with
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the Secretary of Labor disclosing to union members and the general
public any investments or transactions in which their personal
financial interests may conflict with their duties to the members.
The bill requires only the disclosure of conflicts of interest as
defined therein. The other investments of union officials and their
other sources of income are left private because they are not
matters of public concern. No union officer or employee is obliged
to file a report unless he holds a questionable interest in or has
engaged in a questionable transaction. The bill is drawn broadly
enough, however, to require disclosure of any personal gain which an
officer or employee may be securing at the expense of the union
members.
Senate Report, at 14-15, reprinted in 1 Leg. History, at 410-11.
Both the Senate and House Reports recognize that a reportable
interest is not necessarily an illegal practice. As the House Report
stated:
In some instances matters to be reported are not illegal and may
not be improper but may serve to disclose conflicts of interest.
Even in such instances disclosure will enable the persons whose
rights are affected, the public, and the Government, to determine
whether the arrangements or activities are justifiable, ethical, and
legal.
House Report No. 741 (House Report), at 4, reprinted in 1 Leg. History,
at 762. See Senate Report, at 38, reprinted in 1 Leg. History, at 434
(``By requiring reports * * *, the committee is not to be construed as
necessarily condemning the matters to be reported if they are not
specifically declared to be improper or made illegal under other
provisions of the bill or other laws'').
Conflict of interest standards, including disclosure obligations of
individuals and entities occupying positions of trust, are well
grounded in U.S. law. As stated in the House Report, repeating almost
verbatim the same point in the Senate Report:
For centuries the law of fiduciaries has forbidden any person in
a position of trust subject to such law to hold interests or enter
into transactions in which self-interest may conflict with complete
loyalty to those whom he serves. * * * The same principle * * *
should be equally applicable to union officers and employees
[quoting the AFL-CIO's ethical practices code]: ``[A] basic ethical
principle in the conduct of union affairs is that no responsible
trade union official should have a personal financial interest which
conflicts with the full performance of his fiduciary duties as a
worker's representative.''
House Report, at 10-11, reprinted at 1 Leg. History, at 768-69. Senate
Report, at 14, reprinted in 1 Leg. History, at 410. See generally
Restatement (Second) of Trusts (1959) Sec. Sec. 170, 173; Restatement
(Second) of Agency (1958) Sec. Sec. 381, 387-98.
The reporting provisions of the Act represent, in part, an effort
to codify various requirements contained in an extensive code of ethics
voluntarily adopted by the AFL-CIO in 1957 and applied to its
affiliated unions and officials. See Senate Report, at 12-16, reprinted
in 1 Leg. History, at 408-12; House Report, at 9-12, reprinted in 1
Leg. History, at 767-70. See also Archibald Cox, Internal Affairs of
Labor Unions Under the Labor Reform Act of 1959, 58 Mich. L. Rev. 819,
824-29 (1960). The following excerpts from this code demonstrate the
similarities between a union official's fiduciary duty and the
disclosure requirements of section 202.
[A] basic ethical principle in the conduct of union affairs is
that no responsible trade union official should have a personal
financial interest which conflicts with the full performance of his
fiduciary duties as a workers' representative.
[U]nion officers and agents should not be prohibited from
investing their personal funds in their own way in the American free
enterprise system so long as they are scrupulously careful to avoid
any actual or potential conflict of interest.
In a sense, a trade union official holds a position comparable
to that of a public servant. Like a public servant, he has a high
fiduciary duty not only to serve the members of his union honestly
and faithfully, but also to avoid personal economic interest which
may conflict or appear to conflict with the full performance of his
responsibility to those whom he serves.
There is nothing in the essential ethical principles of the
trade union movement which should prevent a trade union official, at
any level, from investing personal funds in the publicly traded
securities of corporate enterprises unrelated to the industry or
area in which the official has a particular trade union
responsibility.
[These principles] apply not only where the investments are made
by union officials, but also where third persons are used as blinds
or covers to conceal the financial interests of union officials.
Ethical Practices Code IV: Investments and Business Interests of Union,
105 Cong. Rec.*16379 (daily ed. Sept. 3, 1959), reprinted in 2 Leg.
History, at 1407-08. See also Ethical Practices Code II: Health and
Welfare Funds, id., 2 Leg. History, at 1406-07.
The Act was crafted with particular regard for the unique function
and status of labor unions. Then Senator John F. Kennedy, who was the
chief sponsor of the Senate bill, S. 505, which served as the
foundation for the LMRDA, stated that the legislation was ``designed to
permit responsible unionism to operate without being undermined by
either racketeering tactics or bureaucratic controls. It is designed to
strike a balance between the dangers of to [sic] much and too little
legislation in this field.'' 105 Cong. Rec. S816 (daily ed. Jan. 20,
1959), reprinted in 1 Leg. History, at 969.
As noted by Senator Kennedy above, a balance of these interests was
central to the bipartisan enactment of the LMRDA. Congress sought to
address legitimate concerns about illegal and undemocratic behaviors
without permitting that concern to be used as an excuse for undermining
organized labor. Further, Congress sought to address the importance of
balancing necessary disclosure and regulation with undue intrusion on
union operations and the protection of union officer's privacy
interests. As stated in the Senate Report, ``[t]he committee recognized
the desirability of minimum interference by Government in the internal
affairs of any private organization * * * in establishing and enforcing
statutory standards great care should be taken not to undermine union
self-government or weaken unions in their role as collective-bargaining
agents.'' Senate Report, at p. 7, reprinted in 2 Leg. History, at 403.
Professor Archibald Cox played a pivotal role in drafting the
legislation that ultimately became the LMRDA. His testimony before the
Senate subcommittee that was considering this legislation presaged the
language in the Senate Report, describing the reporting obligation as a
limited one. He testified: ``The bill is narrowly drawn to meet a
specific evil. It requires only the disclosure of conflicts of
interest. The other investments of union officials and their other
sources of income are left private because they are not matters of
public concern.'' Hearings on S. 505 before the Subcommittee on Labor
of the Senate Committee on Labor and Public Welfare (1959) (Senate
Hearings), at 123; see Senate Report, at 15, reprinted in 1 Leg.
History, at 411. Professor Cox additionally noted that because the
reporting requirements were based, in part, upon the Ethical Practices
Code formulated by the AFL-CIO, union officials who adhered to this
code would have ``virtually nothing to disclose in his report to the
public.'' Senate Hearings, at 123.
C. Statutory Language
Section 202 provides in its entirety:
SEC. 202. (a) Every officer of a labor organization and every
employee of a labor organization (other than an employee performing
exclusively clerical or custodial services) shall file with the
Secretary a signed report listing and describing for his preceding
fiscal year--
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(1) Any stock, bond, security, or other interest, legal or
equitable, which he or his spouse or minor child directly or
indirectly held in, and any income or any other benefit with
monetary value (including reimbursed expenses) which he or his
spouse or minor child derived directly or indirectly from, an
employer whose employees such labor organization represents or is
actively seeking to represent, except payments and other benefits
received as a bona fide employee of such employer;
(2) Any transaction in which he or his spouse or minor child
engaged, directly or indirectly, involving any stock, bond,
security, or loan to or from, or other legal or equitable interest
in the business of an employer whose employees such labor
organization represents or is actively seeking to represent;
(3) Any stock, bond, security, or other interest, legal or
equitable, which he or his spouse or minor child directly or
indirectly held in, and any income or any other benefit with
monetary value (including reimbursed expenses) which he or his
spouse or minor child directly or indirectly derived from, any
business a substantial part of which consists of buying from,
selling or leasing to, or otherwise dealing with, the business of an
employer whose employees such labor organization represents or is
actively seeking to represent;
(4) Any stock, bond, security, or other interest, legal or
equitable, which he or his spouse or minor child directly or
indirectly held in, and any income or any other benefit with
monetary value (including reimbursed expenses) which he or his
spouse or minor child directly or indirectly derived from, a
business any part of which consists of buying from, or selling or
leasing directly or indirectly to, or otherwise dealing with such
labor organization;
(5) Any direct or indirect business transaction or arrangement
between him or his spouse or minor child and any employer whose
employees his organization represents or is actively seeking to
represent, except work performed and payments and benefits received
as a bona fide employee of such employer and except purchases and
sales of goods or services in the regular course of business at
prices generally available to any employee of such employer; and
(6) Any payment of money or other thing of value (including
reimbursed expenses) which he or his spouse or minor child received
directly or indirectly from any employer or any person who acts as a
labor relations consultant to an employer, except payments of the
kinds referred to in section 302(c) of the Labor Management
Relations Act, 1947, as amended.
(b) The provisions of paragraphs (1), (2), (3), (4), and (5) of
subsection (a) shall not be construed to require any such officer or
employee to report his bona fide investments in securities traded on a
securities exchange registered as a national securities exchange under
the Securities Exchange Act of 1934, in shares in an investment company
registered under the Investment Company Act or in securities of a
public utility holding company registered under the Public Utility
Holding Company Act of 1935, or to report any income derived therefrom.
(c) Nothing contained in this section shall be construed to require
any officer or employee of a labor organization to file a report under
subsection (a) unless he or his spouse or minor child holds or has held
an interest, has received income or any other benefit with monetary
value or a loan, or has engaged in a transaction described therein. 29
U.S.C. 432.
D. Rationale for Proposing Rulemaking on Form LM-30
The Department is proposing modifications to the Form LM-30 for the
following reasons:
(1) The 2007 Form LM-30 rule continues to create uncertainty for
the regulated community, which continues to have questions regarding
the rule's reporting requirements and has raised strong objections to
key aspects of the rule, such as the reporting of certain loans,
including mortgages and student loans, the reporting of union leave and
``no docking'' payments (i.e., payments made by a represented employer
to employees engaged in union representational or other activities),
and reporting by individuals serving as union stewards or in similar
positions representing the union.
(2) Upon review, we now believe that the revisions we are proposing
better balance the disclosure of information and the burden imposed on
union officials.
(3) Upon review, we now believe that the revisions we are proposing
better clarify the form and instructions, and organize the information
in a useful format.
The Department fully recognizes and supports the importance of
union officer and employee reporting and the disclosure of pertinent
financial information to union members and the public. However, the
LMRDA requires a balancing of transparency with the need to maintain
union autonomy and to avoid overburdening unions and their officials
with unnecessary reporting requirements. Because the 2007 rule did not
adequately consider this balance, it did not succeed in properly
implementing the LMRDA.
Following promulgation of the 2007 Form LM-30, the Department
received numerous comments from the regulated public regarding the
difficulty entailed in reading and understanding the 2007 form and
instructions. Many commenters asserted that the 2007 rule was legally
flawed and some aspects of the rule have been challenged in a lawsuit,
AFL-CIO v. Chao, No. 1:08-cv-0069 (CKK) (D.D.C.) (stayed on March 26,
2009). In the Department's view, the following issues warranted
particular attention: the reporting of union leave and ``no docking''
payments, the coverage of union stewards as officials required to file
the Form LM-30, and the reporting of loans. In an effort to clarify the
reporting requirements associated with the 2007 Form LM-30, the
Department created a Frequently Asked Questions (FAQs) section on its
Web site (http://www.dol.gov/olms/regs/compliance/RevisedLM30_FAQ.htm). The confusion about the new reporting requirements also
prompted the Department to issue written guidance on its Web site, on
March 19, 2009, announcing a non-enforcement policy under which it will
accept either the pre-2007 Form LM-30 or the 2007 Form LM-30 (http://www.dol.gov/olms/regs/compliance/GPEA_Forms/blanklmforms.htm). The
Department there announced its intention to revise the Form LM-30 in
order to review questions of policy and law surrounding these reporting
requirements. The Department explained that the 2007 rule left
unanswered fundamental questions regarding the scope and extent of the
reporting obligations and that litigation challenging some aspects of
the form remained pending. Given these considerations, the Department
determined that it would not be a good use of resources to bring
enforcement actions based upon a failure to use a specific form to
comply with the statutory reporting obligation. Accordingly, the
Department has refrained from initiating enforcement actions against
union officers and union employees based solely on the failure to file
the report prescribed by the 2007 rule, as long as individuals meet
their statutorily-required filing obligation in some manner. This non-
enforcement posture remains in effect.
On July 21, 2009, OLMS held a stakeholder meeting to solicit
comments regarding the 2007 rule. OLMS received a number of comments on
several significant issues. These comments included the following --
The Department should revert to the old (pre-2007) Form
LM-30 and instructions because they were less confusing than the new
(2007) form and instructions, which are ``overwhelmingly complicated.''
The current interpretations of ``labor organization
employee'' and the ``bona fide employee exception,'' which require
reporting by union stewards and others of ``no docking'' and union
leave payments, are beyond the Department's
[[Page 48420]]
statutory authority, are overly burdensome, and capture transactions
that do not pose conflicts of interest; they also discourage union
members from serving as union stewards.
The reporting of bona fide loans is not beneficial to the
public and requiring the reporting of home mortgages is invasive.
While the reporting of extra-market loans from businesses
is defensible, the reporting of market-term loans is unreasonable and
overbearing.
The Department should not have required union officials to
report payments and interests from employers or businesses with
relationships to other levels of the union hierarchy other than the
official's own. If there is any ``look down'' reporting, it should be
restricted to officials with oversight authority.
The Department should retain the $250 de minimis threshold
for reporting, as well as the related $20 threshold for recordkeeping
and the ``widely-attended gathering'' exception.
The Department should not have required officials to
report payments by trusts, unions, and others; reports should have been
limited to payments by entities that are organizing targets of the
official's union.
The Department has considered the comments received at the
stakeholder meeting in reviewing the 2007 rule and proposing changes to
that rule.
II. Authority
A. Legal Authority
The legal authority for the notice of proposed rulemaking is set
forth in sections 202 and 208 of the LMRDA, 29 U.S.C. 432, 438. Section
208 of the LMRDA provides that the Secretary of Labor shall have
authority to issue, amend, and rescind rules and regulations
prescribing the form and publication of reports required to be filed
under Title II of the Act and such other reasonable rules and
regulations as she may find necessary to prevent the circumvention or
evasion of the reporting requirements. 29 U.S.C. 438.
B. Departmental Authorization
Secretary's Order 08-2009, issued November 6, 2009, contains the
delegation of authority and assignment of responsibility for the
Secretary's functions under the LMRDA to the Director of the Office of
Labor-Management Standards and permits re-delegation of such authority.
See 74 FR 58835 (Nov. 13, 2009).
III. Reasons for Proposed Revisions to the 2007 Form LM-30 Reporting
Requirements
The Department proposes changes to five areas of the Form LM-30
reporting requirements: (1) The reporting of union leave and ``no
docking'' payments, and, more broadly, the bona fide employee
exception; (2) the coverage of individuals serving as union stewards or
in similar positions representing the union, such as a member of a
safety committee or a bargaining committee; (3) the reporting of bona
fide loans; (4) the reporting of payments from employers competitive to
the represented employer, certain trusts, and unions; and (5) the
reporting by national, international, and intermediate union officers
and employees.
First, the Department proposes to return to the historical practice
whereby union officers and employees were not required to report
compensation they received under union leave and ``no docking''
policies established under collective bargaining agreements or by
custom and practice of the workplace. The requirement in the 2007 rule
that union officials must report ``no docking'' and union leave
payments has been strongly criticized as unduly burdensome. The
Department agrees that this reporting requirement imposes undue burden
and may impede individuals from running for union office and otherwise
serving in important union roles. The 2007 rule was based on the
premise that such payments are for work performed on the union's
behalf, rather than the employer's, and thus not payments made under
the ``bona fide employee'' exception of section 202 of the LMRDA. The
Department now believes that the term ``bona fide employee,'' as used
in that section, is most naturally read to distinguish between, on the
one hand, payments that are made to a union official by virtue of his
or her employment by the company making the payment, and, on the other
hand, payments that are made to union officials without regard to such
employment. This interpretation better accords with the purposes of the
statute than the interpretation embodied in the 2007 rule that focuses
on whether the union or the employer making the payment exercises
primary control over an individual's discrete, temporal activities as a
union official.
Second, the Department proposes to return to the historical
practice of excluding union stewards and similar union representatives
from Form LM-30 reporting. The Department believes that this practice
comports with the language of section 202 and better effectuates labor-
management relations than the interpretation embodied in the 2007 rule.
Third, the Department also proposes an administrative exemption
whereby union officials generally need only report loans from bona fide
credit institutions if the terms of such loans are on terms more
favorable than those available to the public. The 2007 rule required
more extensive reporting and made distinctions among various
relationships and credit institutions that were difficult to understand
and apply. The proposed rule also incorporates the Department's
clarification, as set forth in Frequently Asked Questions (FAQs), that
union officials as a general rule are not required to report on savings
accounts, CD, credit cards, etc. where such instruments contain the
same terms offered to other customers without regard to an individual's
status as a union official.
Fourth, the Department also proposes to limit the reporting
obligation with respect to interests in and payments from employers
that compete against employers represented by the official's union or
that the union actively seeks to represent. It is the Department's view
that disclosure of such payments is important, but only where an
official is involved with the organizing, collective bargaining, or
contract administration activities related to a particular represented
employer or possesses significant authority or influence over such
activities. This ensures that meaningful information will be provided
to union members without imposing undue burden on officials who do not
occupy positions of influence over the union's organizing, collective
bargaining, or contract administration activities related to the
represented employer. Similarly, the Department proposes to modify the
scope of reporting insofar as payments from certain trusts and unions
are concerned. The Department proposes to return to its historical
practice of not requiring officials to report on payments they receive
from trusts or, as a general rule, from unions. The Department,
however, will continue to require officials of a staff union to report
any payments they receive from the union-employer whose employees the
staff union represents.
Finally, the Department is proposing to revise and clarify the
scope of reporting for officials of international, national, and
intermediate unions. The proposed rule states that officers and
employees of these higher level unions must look at payments they
receive from employers and businesses with
[[Page 48421]]
relationships with lower levels of the official's union (e.g., a local
or other subordinate body), as well as with the official's own level of
the union, when applying the Form LM-30 reporting requirements. The
2007 rule excepted employees, as distinct from officers, from this
``top-down'' reporting obligation. In the Department's view, the LMRDA
does not support that distinction for LM-30 reporting purposes.
Officers and employees of the union are held to the same reporting
obligations under the Act. The 2007 rule also established confusing
exceptions to the ``top-down'' reporting obligations for officers.
Payments from businesses that dealt with represented employers were
exempt, while the instructions did not specify the reportability of
payments from businesses that dealt with lower level unions. Further,
union officers were not required to report any payments or other
financial benefits received by their spouses and minor children from
employers and businesses involved with a lower level union. The
Department is proposing to remove these exceptions.
In developing the proposed changes, the Department has reviewed the
reporting examples utilized in the 2007 rule and the substantial
guidance issued after the rule's publication as answers to FAQs in
order to identify the extent to which, if at all, reporting will be
changed under the Department's proposals if adopted in a final rule. A
final rule will supersede any inconsistent interpretation or other
guidance. The Department identifies in the margin those instances where
the proposed rule, if adopted, would not change the reporting
obligations under the examples and FAQs.\2\ As discussed later in the
text, examples will generally not be included in the proposed
instructions.
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\2\ Most of the examples in the 2007 instructions will continue
to accurately reflect reporting requirements if the Department's
proposal is adopted in a final rule. Thus, the following will
continue to accurately reflect reporting requirements: examples 2-
15, at pp. 3-4 of the instructions; examples 1-5, at p. 6 of the
instructions; examples 1 and 2, at p. 7 of the instructions; and
examples 1, 3-15, and 17, at pp. 8-9 of the instructions. Several of
the FAQs are based on requirements that the Department proposes to
change. The following FAQs, however, will continue to accurately
reflect reporting requirements if the Department's proposal is
adopted in a final rule: 2-10, 12-26, 28, 30-37, 39, 44, 47, 49-50,
54, 56-69, 72-76, and 79-88. It should be noted, however, that some
of the comments and FAQs, such as FAQs 49 and 73, while remaining
accurate, were intended to illustrate issues that are less likely to
arise under the proposed rule. Others, such as FAQs 1 and 77, while
largely accurate, contain some statements that are based on or refer
to interpretations that will be superseded if the Department's
proposal is adopted in a final rule.
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A. The Bona Fide Employee Reporting Exception Under Section 202
Sections 202(a)(1) and (5) of the LMRDA require a labor
organization officer or employee to report payments that the official,
his or her spouse, or minor children receive from an employer whose
employees the labor organization represents or is actively seeking to
represent, ``except payments and other benefits received as a bona fide
employee of such employer.'' 29 U.S.C. 432(a)(1) & (5) (Emphasis
added).
The 2007 revisions to the Form LM-30 narrowed the Department's
longstanding reading of this ``bona fide employee'' exception,
significantly extending the reporting requirements of section 202
beyond union officers and employees to union stewards and others. The
2007 rule required them to report compensation paid to them by their
employers for time spent representing the union on labor-management
relations matters in accordance with a union leave or ``no docking''
policy. Under a union leave policy, the employer continues the pay and
benefits of an individual who works full time on such matters. Under a
``no docking'' policy, the employer permits individuals to devote
portions of their work day or work week to labor-management relations
business, such as processing grievances, with no loss of pay.
Until regulatory changes to the Form LM-30 were adopted in 2007,
the Department's policy, as established in 1963 to implement Form LM-30
reporting (28 FR 14384 (Dec. 27, 1963)), excepted from reporting
payments and other benefits received for certain activities other than
productive work directed by the employer making the payment.
Specifically, the instructions to the 1963 Form LM-30 stated that the
following payments and benefits were exempt from Form LM-30 reporting:
[p]ayments and benefits received as a bona fide employee of the
employer for past or present services, including wages, payments or
benefits received under a bona fide health, welfare, pension,
vacation, training or other benefit plan; and payments for periods
in which such employee engaged in activities other than productive
work, if the payments for such period of time are: (a) Required by
law or a bona-fide collective bargaining agreement, or (b) made
pursuant to a custom or practice under such collective bargaining
agreement, or (c) made pursuant to a policy, custom or practice
which the employer has adopted without regard to any holding by such
employee of a position with a labor organization.
Pre-2007 Form LM-30 Instructions, Part A (Items 6 and 7) at (iv).
Thus, before the 2007 rule, persons receiving payments for service
under a union leave or ``no docking'' policy were not required to
report such payments. For example, where a union officer was excused
from his regular work to handle grievances and was paid his regular
wages while doing so, the payments were exempted from reporting.
Similarly, union officers or employees who continued to participate in
employer group insurance and pension plans while they served the union
were not required to report such benefits. The Department explained the
basis of the policy in the LMRDA Interpretive Manual: ``the employee
officer is being paid for work performed of value to the employer who
is interested in seeing to it that grievances are immediately
adjusted.'' LMRDA Interpretative Manual, section 248.005. This
reporting exception was based on the presumption that union leave and
``no docking'' arrangements operating either pursuant to a collective
bargaining agreement or in accordance with custom or practice are
ordinary and transparent, not requiring their reporting under section
202.
Based largely on the policy choice, evident in the 2007 rule, to
promote fuller disclosure to union members and the public, even where
there might be considerable burden associated with such reporting, the
Department determined to require union officials, including stewards,
to report ``no docking'' and union leave payments. As stated in the
preamble to the rule:
Payments received by union officials from employers for work
done on the union's behalf are reportable because such payments are
not received as a bona fide employee of the employer making the
payment. The Department explained in its proposal that union
officials must report any payments for other than ``productive
work'' for the employer, including union leave and ``no docking''
payments.
72 FR at 36109. To achieve this result, the Department utilized a new
definition of ``bona fide employee,'' a term not defined in the pre-
2007 Form LM-30 or its instructions. This new definition is
incorporated in the 2007 Form LM-30 Instructions (Definition D4, page
10).\3\ 72 FR at 36125.
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\3\ The instructions provide:
Bona fide employee is an individual who performs work for, and
subject to the control of, the employer.
Note: A payment received as a bona fide employee includes wages
and employment benefits received for work performed for, and subject
to the control of, the employer making the payment, as well as
compensation for work previously performed, such as earned or
accrued wages, payments or benefits received under a bona fide
health, welfare, pension, vacation, training or other benefit plan,
leave for jury duty, and all payments required by law.
Compensation received under a ``union-leave,'' or ``no-docking''
policy is not received as a bona fide employee of the employer
making the payment. Under a union-leave policy, the employer
continues the pay and benefits of an individual who works full time
for a union. Under a no-docking policy, the employer permits
individuals to devote portions of their day or workweek to union
business, such as processing grievances, with no loss of pay. Such
payments are received as an employee of the union and thus, such
payment must be reported by the union officer or employee unless
they (1) totaled 250 or fewer hours during the filer's fiscal year
and (2) were paid pursuant to a bona fide collective bargaining
agreement. If a filer must report payments for union-leave or no-
docking arrangements, the filer must enter the actual amount of
compensation received for each hour of union work. If union-leave/
no-docking payments are received from multiple employers, each such
payment is to be considered separately to determine if the 250 hour
threshold has been met. For purposes of Form LM-30, stewards
receiving union-leave/no-docking payments from an employer or lost
time payments from a labor organization are considered employees of
the labor organization.
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[[Page 48422]]
The Department justified this new reporting requirement upon its
reading of section 202(a)(1). 72 FR at 36126. This section establishes
a general obligation to report payments received by a union officer or
employee whose employees are represented by the official's union or the
union actively seeks to represent. This section, however, also excepts
from this requirement ``payments received as a bona fide employee of
such employer.'' In the 2007 rule, the Department interpreted this
exception to apply only where the payment was made for time expended
solely on the employer's behalf. 72 FR at 36109, 36124, 36126. Thus,
under the reasoning of the 2007 rule, where a union official serving as
an officer or as a steward was performing work on behalf of the union,
he or she was not being paid for services rendered as a ``bona fide
employee'' of the employer making the payment. Because the individual
was acting on behalf of the union and thus subject to its control while
performing these union-related activities, the Department reasoned that
the official was not a bona fide employee of the employer during the
time for which such remuneration was paid. See 72 FR at 36126; see also
70 FR at 51183 (proposed rule).
The Department proposes to return to its longstanding
interpretation of the ``bona fide employee'' reporting exception. Under
this prior interpretation, payments made by an employer under a union
leave or ``no docking'' policy to a union official are payments
received as a ``bona fide employee'' of the employer and, as such, not
required to be reported on Form LM-30. We are proposing this change for
several reasons. First, the approach taken in the 2007 rule does not
comport with what the Department considers to be the best reading of
the language of section 202. Second, it creates substantial burden for
union officials on matters unlikely to pose conflicts of interest, thus
unduly interfering with the internal workings of labor unions and
labor-management relations. Third, as a matter of policy, there is no
persuasive reason why union officials must report such payments, while
employers making such payments are under no similar obligation.
Section 202 applies to ``every officer * * * and every employee of
a labor organization,'' requiring as a general rule the reporting of
any payments received from a represented employer ``except payments and
other benefits received as a bona fide employee of such employer,''
emphasis added. An individual's status as an employee is based on the
various factors articulated in the common law. See Nationwide Mutual
Ins. v. Darden, 503 U.S. 318 (1992). ``Bona fide'' is synonymous with
``good faith'' or ``genuine,'' i.e., without fraud or deceit.\4\ Thus,
section 202(a)(1) is most naturally read to except from reporting
payments to a current or former employee of the company making the
payment unless made under the guise of employment, such as where
payment was for a no show job with the company, in an amount that
unreasonably exceeds the value or amount of the work performed, or the
payment is made on terms inconsistent with the parties' negotiated
agreement or the workplace custom and practice. Where a payment made to
an individual working on behalf of the union by his current or past
employer is sanctioned by a collective bargaining agreement or custom
or practice of the workplace, the legitimacy or ``bona fides'' of the
payment is established.
---------------------------------------------------------------------------
\4\ See Black's Law Dictionary (8th ed. 2004), which defines the
term as: ``1. Made in good faith; without fraud or deceit. 2.
sincere; genuine''; The Random House Dictionary of the English
Language, Unabridged (2d ed. 1987), which defines the term as: ``1.
made, presented, etc. in good faith; without deception or fraud. * *
* 2. genuine.--syn. 1. honest, sincere, lawful, legal. 2. genuine.--
ant. spurious, deceitful, false.'' See also Black's ``bona fide
operation,'' defined as ``[a] real, ongoing business''; and ``bona
fides,'' defined as ``1. Good faith. 2. Roman law. The standard of
conduct expected of a reasonable person, esp. in making contracts
ands similar actions; acting without fraudulent intent or malice.''
---------------------------------------------------------------------------
Further, as noted in the 2007 rule, union leave and ``no docking''
payments were common at the time the LMRDA was enacted. 72 FR at 36126.
Yet, the Department is unaware of any concerns about conflicts of
interest presented by such payments, unlike other payments such as for
no show work, featherbedding, or similar practices, raised in the
hearings before the McClellan Committee or in any of the legislative
materials relating to the LMRDA. As noted in the 2007 rule, the
legislative history does not shed light on whether Congress had a
specific intention to require or not the reporting of such payments by
union officials. See 72 FR at 36126. While, as noted in the 2007 rule,
legislative silence is not generally a conclusive guide to interpreting
statutory text, it is notable that Congress did not identify union
leave or ``no docking'' payments as requiring disclosure to union
members and the public as a matter of course. See 72 FR at 36126.
Equally significant, such payments were not in any way proscribed by
the AFL-CIO codes of ethics that strongly influenced the reporting
provisions of the LMRDA. See 72 FR at 36112-13. Employers have
historically agreed to compensate stewards, safety and health committee
representatives and others for such work because they see it as adding
value to their organization. A number of States such as Oregon and
Washington require the establishment of joint labor-management safety
and health committees. See http://www.cbs.state.or.us/external/osha/pdf/rules/division_1/437-001-0765.pdf; http://www.lni.wa.gov/wisha/rules/corerules/HTML/296-800-130.htm. See also Emily A. Spieler,
Perpetuating Risk? Workers' Compensation and the Persistence of
Occupational Injuries, 31 Hous. L. Rev. 119, n. 505, 514, 518, 520
(1994) (identifying States requiring such committees). Having employees
serve on employee assistance programs and wellness committees is also
seen as a cost effective business decision by many employers. See
Edward Cohen-Rosenthal and Cynthia E. Burton, Mutual Gains: A Guide to
Union-Management Cooperation 80-83 (1993) (Mutual Gains).
Moreover, such payments, where established by a collective
bargaining agreement or custom or practice of the workplace, do not
present the sort of conflict of interests presented by other payments
to union officers and employees. Rather, they serve the mutual goals of
employers and unions. They help ensure that individuals with first-hand
knowledge of an employer's workplace will be able to take a position
with the union, a benefit not only to the union and employer but also
the represented employees. Such payments are voluntary; without the
assent of both
[[Page 48423]]
management and labor, the payments cannot be made. They are not kept
secret from employees; they must be in writing or reflect the custom
and practices in the workplace. Additionally, these payments are
usually made under the terms of a collective bargaining agreement and
tied to the same rate of pay that the union official would have
received under the agreement for time worked at his or her trade.
Further, a potential consequence of requiring the reporting of payments
received under union leave or ``no docking'' policies is that union
members will be discouraged from running for union office and others
from serving as stewards or in other voluntary positions--an
unnecessary yet significant increase in burden. As a matter of policy,
the Department believes that its historical position to except union
leave and ``no docking'' payments from reporting promotes the purposes
of the LMRDA and is consistent with the Congressional plan that the
government avoid unnecessary intrusion into internal union affairs. Cf.
Wirtz v. Local 153, Glass Bottle Blowers Assn., 389 U.S. 463, 470-71
(1968).
Finally, the Department proposes to modify the interpretation of
``bona fide employee'' with respect to its application to union leave
and ``no docking'' payments because it creates a significant
inconsistency between the application of reporting exceptions and the
reporting burden on union officers and employees compared with the
corresponding exceptions and burden on employers through the Form LM-
10, which effectuates the reporting requirements under section 203.
Section 203(a)(1) requires the reporting of certain payments,
transactions, arrangements, and agreements with officers, agents, shop
stewards, other representatives, and employees of labor organizations.
This section exempts from employer reporting, ``payments of the kind
referred to in section 302(c) of the Labor Management Relations Act
[LMRA],'' which includes any payment of money or other thing of value
from an employer to, ``any representative of his employees, or to any
officer or employee of a labor organization, who is also an employee or
former employee of such employer, as compensation for, or by reason of,
his service as an employee of such employer.'' LMRA Section 302(c)(1),
29 U.S.C. 186(c)(1).
Courts have held that ``no docking'' and union leave payments meet
the requirements of the section 302(c)(1) exemption.\5\ Thus, the
Department has historically exempted such payments from Form LM-10
reporting. See Exception (c) to Item 8.a. of the Form LM-10
Instructions; LMRDA Interpretative Manual, at sections 253.305,
253.320, 253.321, 253.322, and 253.323. The 2007 rule requires union
officials to report union leave and ``no docking'' payments on the Form
LM-30, but employers are not similarly required to report such payments
to their employees on a corresponding Form LM-10 report. The Department
has reexamined the policy underlying the current requirement and has
concluded it is unreasonable to impose these reporting requirements on
union officers and employees, while employers, due to a statutory
exemption (by reference to LMRA section 302), are not required to
report such payments on the Form LM-10.\6\
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\5\ See Caterpillar v. UAW, 107 F.3d 1052, 1055 (3d Cir. 1997),
citing NLRB v. BASF Wyandotte Corp., 798 F.2d 849, 854-56 (5th Cir.
1986); BASF Wyandotte Corp. v. Local 227, 791 F.2d 1046 (2d Cir.
1986); Herrera v. International Union, UAW, 73 F.3d 1056 (10th Cir.
1996), aff'g 858 F.Supp. 1529, 1546 (D. Kan. 1994); Communications
Workers v. Bell Atlantic Network Servs., Inc., 670 F.Supp. 416, 423-
24 (D.D.C. 1987); Employees' Independent Union v. Wyman Gordon Co.,
314 F.Supp. 458, 461 (N.D. Ill. 1970).
\6\ See LMRDA Interpretative Manual, at section 241.600. This
section states that the reporting exceptions in section 203 do not
affect the reporting by union officers and employees in section 202,
``where the applicable provision of section 202 does not provide a
pertinent exception.'' (Emphasis added.) Section 202, however,
contains a pertinent exception: the bona fide employee exception,
which, as noted in the text, has historically been interpreted as
applying the regular wage exception of LMRA section 302(c) to
various subsections of section 202. See LMRDA Interpretative Manual,
section 248.005.
---------------------------------------------------------------------------
For the foregoing reasons, the Department proposes to rescind the
2007 requirement to report union leave and ``no docking'' payments on
the Form LM-30 and invites comment on this proposal.
B. Form LM-30 Reporting by Union Stewards
The 2007 rule extended the union officer and employee reporting
obligation to union stewards, treating them as employees of the union
by virtue of their receipt of ``no docking,'' union leave, or ``lost
time'' payments. The Department now proposes to return to its
longstanding position that union stewards are not covered by the Form
LM-30 reporting requirements. The Department articulated this position
in the Form LM-30 instructions issued in 1963, and this position had
remained essentially unchanged for over 40 years. The 1963 regulation,
28 FR 14384 (Dec. 27, 1963), establishing the pre-2007 form and
instructions did not anywhere suggest that union stewards were union
employees.\7\ See pre-2007 Form LM-30 Instructions.
---------------------------------------------------------------------------
\7\ In the unusual situations where the position of steward is a
constitutional office in the union, or an individual, although
serving as a steward, is an employee of the union under
circumstances distinct from his or her status as steward, or is an
employee of the union because the steward position is a paid union
position, such individuals, both historically and under the
Department's proposal, are subject to the reporting requirements of
the Form LM-30.
---------------------------------------------------------------------------
In extending the union officer and employee reporting obligation to
union stewards in the 2007 rule, the Department determined that a union
steward receiving ``no docking,'' union leave or ``lost time'' payments
would be considered to be a labor organization employee within the
meaning of the Form LM-30. As stated in the preamble to that rule: ``An
individual who is paid by an employer to perform union work is an
employee of the union if he or she is under the control of the union,
while so engaged.'' 72 FR at 36109. Stewards were deemed to be ``labor
organization employees'' by virtue of their receiving either ``lost
time payments'' from the union or union leave or ``no docking''
payments from an employer. (See the definition of ``bona fide
employee'' and ``labor organization employee'' in sections D4 and D11,
respectively, of the LM-30 instructions, see 72 FR at 36178, 36180.)
Generally, a union steward is responsible for informing employees
of their rights under the collective bargaining agreement and
applicable law, investigating grievances filed by union members,
representing union members in presenting those grievances to
management, and otherwise enforcing the collective bargaining
agreement. See generally Herman Erickson, The Steward's Role in the
Union 29-54 (1971). Often, these individuals continue to receive pay
from their employers while performing these functions for the union, in
the form of union leave or ``no docking'' pay. In other instances, the
stewards perform these functions on their own time (e.g., breaks, meal
periods, and before or after working hours). As a general rule,
stewards continue to perform their regular jobs for an employer while
serving in this role. As a need arises, consistent with a collective
bargaining agreement or custom and practice, they will temporarily
interrupt their work at their trade to help resolve grievances that
arise in the workplace. Union members who volunteer on safety
committees and the like engage in similar functions, often receiving
payments from their employer while
[[Page 48424]]
they are engaged in such duties. These individuals likewise interrupt
their usual jobs on an as needed basis to perform tasks that advance
the mutual interests of labor and management.
Upon review, the Department believes that the 2007 rulemaking did
not satisfactorily address or adequately support the expansion of the
Form LM-30 reporting requirements to include stewards. Rather, the rule
focused on the ``bona fide employee'' exception of section 202, which,
as mentioned, was revised to require the reporting of ``no docking''
and union leave payments.\8\ (See the discussion above concerning this
change to the ``bona fide employee exception.'') The rule also
provided, almost in passing, that stewards as well as union officers
and employees needed to report such payments. The Department justified
this new requirement by stating that the ``correct issue'' is whether
or not the official is a bona fide employee of the payer-employer
during the time for which payment was made. 72 FR 36124. (Emphasis
added). Having so defined the question, the Department answered it in
the negative. Thus, the Department reasoned that stewards who received
their regular compensation from the employer during time spent on union
work did not receive this compensation as a ``bona fide employee of the
employer,'' and the compensation was therefore reportable. As stated in
the preamble to the 2007 rule: ``In general, where a union steward
receives union-leave/no-docking payments from an employer or lost time
payments from the union, the steward will be regarded as an employee of
the labor organization as the individual has received compensation for
performances of services for the union.'' 72 FR 36144.\9\
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\8\ Definition 11 of the 2007 Form LM-30 instructions reads:
Labor organization employee means any individual (other than an
individual performing exclusively custodial or clerical services)
employed by a labor organization within the meaning of any law of
the United States relating to the employment of employees.
Note: An individual who is paid by the employer to perform union
work, either under a ``union-leave'' or ``no-docking'' policy, is an
employee of the union for reporting purposes if the individual
performs services for, and under the control of, the union.
For purposes of Form LM-30, stewards receiving union-leave/no-
docking payments from an employer or lost time payments from a labor
organization are considered employees of the labor organization.
72 FR at 36180.
\9\ The estimates in the 2007 rule do not appear to reflect
fully the burden imposed on stewards by its new reporting
requirements. See 72 FR at 36155. The baseline burden estimates were
derived from the number of LM-30 forms that had been filed by union
officials, a number that necessarily failed to account for stewards
because they had never been required to file such reports. In the
final rule, the Department added to the baseline by estimating the
number of stewards and others receiving ``no docking'' and union
leave payments based on a 1980 study of collective bargaining
agreements. Id. Because the study was limited to provisions in
selected collective bargaining agreements, it contained no estimate
of the number of stewards who received union leave or ``no docking''
payments by virtue of custom or practice in their workplace.
Moreover, although only a few unions attempted to quantify the
number of stewards in their comments on the 2005 NPRM, the number is
obviously greater than the total number of filers (6,916; union
officers, stewards, and non-steward union employees) estimated by
the Department in the 2007 rule. See 72 FR at 36153. Although the
Department attempted to take into account that some stewards would
be filing reports, it is unclear from the burden analysis how it
derived this estimate. It appears that the Department assumed,
without so stating, that most stewards would not have to report ``no
docking'' or union leave payments because of the 250-hour threshold
and further assumed, even though it is not apparent from the rule,
that this would exempt stewards that did not meet the threshold from
having to report other interests or payments covered by section 202.
See 72 FR at 36154-55.
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Upon review, the Department believes that the Form LM-30 reporting
requirements should not be expanded to include stewards. The issue as
to whether union stewards may be regarded as employees of a labor
organization required to file reports under section 202 of the LMRDA,
solely on the basis of having received union leave, ``no docking,'' or
``lost time'' payments, raises legal and practical concerns. An
examination of the text of the relevant provisions of Title II of the
LMRDA suggests that Congress did not intend that stewards be considered
to be union employees. Section 202 of the LMRDA requires reporting from
``every officer of a labor organization and every employee of a labor
organization (other than an employee performing exclusively clerical or
custodial services).'' Separately, Congress, in section 203, mandated
that employers report certain payments to unions and certain categories
of individuals with a relationship to unions. Section 203(a)(1)
requires an employer to report direct or indirect payments or loans
``to any labor organization or officer, agent, shop steward, or other
representative of a labor organization, or employee of any labor
organization.'' (Emphasis added). Section 203 thus refers to
``officer'' and ``employee'' as well as ``agent, shop steward, or other
representative of a labor organization.'' The absence of similar
language in section 202 is a strong indication of Congressional intent
to exclude agents, stewards, and similar representatives from the
prescribed reporting requirements. Additional support for this position
can be gleaned from the LMRDA's legislative history. An early version
of the bill that became the LMRDA, H.R. 4473, included a section 208,
``Individual Reports of Officers, Agents, Shop Stewards, and
Representatives of a Labor Organization.'' 1 Leg. History 166, 227-30.
As evidenced by the title of that section, the bill would have imposed
a plain reporting requirement on union officers, employees, and
stewards and representatives. However, the final language of section
202 includes only union officers and employees.
The foregoing demonstrates the reasonableness of the Department's
view that Congress made deliberate decisions as to when it would and
would not include shop stewards within a regulated class. Congress,
revealingly, did not include the term ``stewards'' in describing the
regulated class established by section 202, despite inserting the term
in other LMRDA sections, thus indicating that those members who serve
as ``shop stewards'' are of a different category than ``labor
organization employees.'' When Congress wanted financial payments made
to stewards to be reported, it knew how to do so. Section 203 requires
employers to report payments made to stewards. Had Congress wanted
stewards to be covered under section 202, it could have likewise
inserted the phrase ``shop stewards'' in that section.
Additionally, the 2007 rule created uncertainty regarding the
reporting obligation of union members, other than stewards, who
volunteer to serve on various committees in the workplace, e.g., those
who serve on health and safety committees. As discussed above,
employers have historically agreed to compensate stewards and union
members who work on these committees because they see it as adding
value to their company and several States require the establishment of
joint labor-management safety and health committees. The Department
believes that union members who perform functions similar to those
performed by stewards should not be required to file a Form LM-30. As
support for this proposition, the Department notes, as discussed above,
that section 202, in addition to not including the term ``steward,''
does not reference ``representative'' of a union.
Imposing obligations on union stewards and other volunteers may
also intrude in internal union affairs. Union stewards and other
representatives perform valuable tasks and extending onerous reporting
requirements to them would ``chill'' future offers to serve. Imposing
reporting burdens on such individuals clearly will temper the
willingness of individuals to volunteer
[[Page 48425]]
to serve in such positions--a loss to the union, the employer, and
these individuals' fellow employees. Discouraging union representatives
from taking time during the workday to attend to such matters can only
have a deleterious effect on the labor relations system's capacity to
resolve disputes at the workplace fairly and expeditiously. This could
impede labor-management relations in the workplace as members are
deterred from volunteering to serve in such important roles.
The practical problems faced by stewards and other representatives
in maintaining records necessary to meet the reporting burden placed on
them were not fully considered in the 2007 rule. Unless the employer
has a payroll reporting system that allows the union stewards to clock
in and out every time they have to perform union work, the stewards
would have to keep their own records. A member's work on behalf of the
union is not always performed during a series of discrete intervals
where it is easy to determine when union work begins and ends.
Sometimes, such representatives will briefly engage in union work when
a co-worker comes and speaks to the on-duty steward. Sometimes the
conversation occurs when the representative is on the way to the break
room or at lunch. Sometimes union work occurs during a work-related
conversation with a supervisor or manager and a grievance question
comes up. Thus, the amount of time required to perform steward and
similar functions may vary significantly from day-to-day and week-to-
week and is therefore not easy to predict. For example, in the building
and construction trades, with its very mobile workforce and short-term
employment on construction projects, stewards will change from job to
job, not just from week to week.
For the foregoing reasons, the Department proposes to rescind the
definition of ``labor organization employee'' in the 2007 Form LM-30
and to insert the following language in the revised Form LM-30
Instructions in Section II, Who Must File:
For purposes of the Form LM-30, an individual who serves the
union exclusively as a union steward or as a similar union
representative, such as a member of a safety committee or a
bargaining committee, is not considered to be an employee of the
union.
The Department seeks comment on the definition of ``labor
organization employee,'' and the addition of the above language in
Section II of the revised Form LM-30 Instructions, including its
treatment of shop stewards and others in similar positions voluntarily
serving on behalf of the union.
C. Reporting of Loans Under Sections 202(a)(3) and (4)
The Department proposes to amend the Form LM-30 to exempt from
reporting under sections 202(a)(3) and (4) of the LMRDA marketplace
transactions with bona fide credit institutions, including loans,
interest, dividends, and payments and credit extended through credit
card transactions, provided that they are arms length transactions in
accordance with usual business practice. In so doing, the Department
establishes the balance between privacy and disclosure intended under
the LMRDA--to disclose only an official's actual or potential conflicts
of interests, while keeping private his or her bona fide investments
``because they are not matters of public concern.'' Senate Report, at
15, reprinted in 1 Leg. History, at 411.
The Act requires union officers and employees to disclose ``any
stock, bond, security, or other interest, legal or equitable, which he
or his spouse or minor child directly or indirectly held in, and any
income or any other benefit with monetary value (including reimbursed
expenses) which [they] directly or indirectly derived from, any
business a substantial part of which consists of buying from, selling
or leasing to, or otherwise dealing with, the business of an employer
whose employees the official's labor organization represents or is
actively seeking to represent'' (section 202(a)(3)) and ``a business
any part of which consists of buying from, or selling or leasing
directly or indirectly to, or otherwise dealing with such labor
organization'' (section 202(a)(4)).
The 2007 rule established the general requirement that union
officials report the details of any loan received from any employer,
business, or trust with which the official's union had dealings or any
employer whose employees are represented by the official's union (or
whose employees the union actively seeks to represent). 72 FR at 36133-
38.
Under the proposal, union officials as a general rule will not be
required to report loans or other marketplace transactions with bona
fide credit institutions, such as interest, dividends, and payments and
credit extended through credit card transactions, provided that they
are arms length transactions in accordance with usual business
practice. The 2007 rule engendered strong protests from union
officials, and some segments of the financial services industry, as
intrusive and complicated. Shortly after the rule was published, the
Department had to issue guidance, identifying several kinds of payments
from credit institutions that did not need to be reported, such as
savings and checking accounts, and certificates of deposit, but also
explaining that credit card arrangements would not have to be reported
by union officials.\10\
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\10\ The Department issued a series of Form LM-30 FAQs
pertaining to the 2007 form, of which FAQs 70-73 deal with issues
surrounding payments from credit institutions. In particular, FAQ 70
stated, in part, that union officials do not need to report ``credit
card transactions (including unpaid balances) and interest and
dividends paid on savings accounts, checking accounts or
certificates of deposit if the payments and transactions are based
upon the credit institution's own criteria and are made on terms
unrelated to the official's status in the labor organization.'' FAQs
71 and 72 outlined the obligations of union officials regarding home
loans, which clarified that such loans must be reported if received
from a trust in which the official's union is interested, a business
that deals with the official's union or a trust in which the union
has an interest, or a business, a substantial part of which deals
with an employer the official's union represents or is actively
seeking to represent. Finally, FAQ 73 affirmed that the de minimis
exemption applies to transactions, interests, and dividends from a
financial institution, even if it had dealings with the official's
union.
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Upon review of this issue, the Department notes that the 2007 rule
reflected a basic policy choice that the disclosure of information,
even where the risks of a conflict of interest were not apparent, was a
paramount interest that generally outweighed the privacy interests of
union officials and the reporting burden on union officials. In making
this choice, the Department, as evidenced by its treatment of loans,
may not have given sufficient weight to Congress's concern that the
LMRDA should not unnecessarily regulate unions and their officials. The
Department now believes that the better policy is to require the
reporting of loans from a credit institution, as a general rule, only
where the loan is on other than market terms. Loans made on market
terms are of little or no interest to union members, yet they disclose
to members and the general public matters about which union officials,
no less than other individuals, have a legitimate expectation of
privacy.
Furthermore, by establishing a routine business transaction
exemption to loan reporting under sections 202(a)(3) and (a)(4), the
Department would prevent the submission of superfluous reports that
would overwhelm the public with unnecessary information, thus
inhibiting the discovery of true conflict of interest payments. At the
same time, the Department would prevent unnecessary burdens on union
officers and employees and avoid interference with the privacy of such
officials.
[[Page 48426]]
Without such exception, a union official would have to report each
mortgage or other bank loan received from any credit institution that
deals with his union, section 3(l) trust, or, in substantial part, with
his or her represented employer. In the Department's view, the burden
would outweigh the value of the additional information disclosed. The
Department concurs with its reasoning in the 2007 rule to except from
reporting under section 202(a)(6) loans, interest, and dividends earned
during the regular course of business with a bona fide credit
institution, because of the burden associated with reporting what ``are
among the most common financial transactions undertaken by
individuals.'' 72 FR 36118. The Department believes that this reasoning
applies as well to bona fide loans received from a credit institution
covered under sections 202(a)(3) and (4).
As such, the Department proposes the following exemption for income
and other benefits of monetary value received from a business and
otherwise reportable by the union official on Part B of the proposed
LM-30:
Bona fide loans. Do not report bona fide loans, including
mortgages, received from national or State banks, credit unions,
savings or loan associations, insurance companies, or other bona
fide credit institutions, if the loans are based upon the credit
institution's own criteria and made on terms unrelated to the
official's status in the labor organization. Additionally, do not
report other marketplace transactions with such bona fide credit
institutions, such as credit card transactions (including unpaid
balances) and interest and dividends paid on savings accounts,
checking accounts or certificates of deposit if the payments and
transactions are based upon the credit institution's own criteria
and are made on terms unrelated to the official's status in the
labor organization.
This exemption is limited to bona fide loans from legitimate
financial institutions. The Department does not propose to alter other
longstanding interpretations of section 202 that require union officers
and employees to report other payments from vendors, service providers,
financial institutions, and other businesses, that deal in substantial
part with the represented employer or in any part with either the
official's union or any trust in which the official's union is
interested.
The Department does not believe arms length loan transactions with
a bona fide credit institution (other than where its employees are
represented by an official's union or whose employees the union
actively seeks to represent) present an actual or potential conflict of
interest with the official's duties to his or her labor organization,
because these loans, particularly mortgage loans, are usual
transactions. The monetary value of bona fide loans obtained at market
rates from credit institutions does not create the conflict of interest
that arises with respect to other kinds of income from or interest in a
business that deals with a represented employer, union, or section 3(l)
trust. In contrast, a non-bona fide loan, gift, or other benefit
derived from a transaction other than at arms length provides the union
official with a net monetary gain, and consequently a potential desire
to deal with a business in some way contrary to the interests of the
union.\11\
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\11\ The proposed modification does not relax the obligation to
report on loans or other financial transactions (including credit
card arrangements and interest bearing accounts) where a union
official receives terms more favorable than the market allows, or
payments on the loan are extended or forgiven because of
preferential treatment as a union official.
However, loans received from employers or businesses that are
not financial institutions will have to be reported as will any
loans on other than market terms from employers or businesses that
have a relationship with the official's union, and, pursuant to
section 202(a)(1) and (a)(2), any loans from an employer represented
by the official's union (or whose employees it actively seeks to
represent).
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Therefore, for the foregoing reasons, the Department proposes an
administrative exemption under section 202(a)(3) and (4) for reporting
bona fide loans made on market terms.
D. Scope of Reporting Requirements Under Section 202(a)(6)
Sections 202(a)(1)-(5) of the LMRDA establish conflict of interest
reporting requirements concerning payments received by union officers
and employees from two sets of entities: (1) Employers that a union
represents or is actively seeking to represent; and (2) businesses,
such as vendors and service providers, that buy or sell to the
represented and potentially represented employers, the union official's
union, or trusts in which the official's union is interested. In each
case, the reporting obligation is triggered by the particular
relationship that exists between an official's union and the entity
from which the official holds an interest in or receives a payment.
By contrast, section 202(a)(6) does not specify any relationship
between an entity and an official's union, nor does it enunciate when
payments must be reported. Rather, it more broadly requires union
officials to report any payment of money or other thing of value from
``any employer or any person who acts as a labor relations consultant
to an employer'' (except payments of the kinds referred to in section
302(c) of the LMRA).
In addressing the scope of reporting required under section
202(a)(6) of the LMRDA, the Department, in its 2007 rule, attempted to
clarify that section 202(a)(6) covers payments not captured in section
202(a)(1)-(5) that otherwise would create or pose a potential conflict
between the financial interests of the union official and the interests
of his or her union. 72 FR at 36128-29. As cited in the 2007 rule, the
Department has long accepted this position, as LMRDA Interpretative
Manual section 248.005 states, in part: ``[Section] 202(a)(6) is
designed for those situations which pose conflict of interest problems
which are not covered in the previous five sections of 202.'' 72 FR at
36129. Further, the 2007 rule made clear that section 202(a)(6) is not
restricted to matters that directly involve labor-management
activities, but can be read to encompass any employer who makes a
payment that could present a financial conflict of interest for the
union official. Id.
The Department retains the view that section 202(a)(6) was intended
to be a ``catch-all'' provision, requiring reporting under
circumstances that were not set forth in the first five provision of
section 202(a). Although it would be impractical to delineate all
possible circumstances that would trigger a reporting obligation under
section 202(a)(6), the Department proposes a return to the guiding
principles of the LMRDA Interpretative Manual. Only payments that
present a conflict of interest or the reasonable potential for a
conflict of interest should be reported. Those that do not present an
actual or potential conflict of interest should not be reported. See
LMRDA Interpretative Manual section 248.005.
In applying this principle, the Department proposes to retain, in
Part C of the proposed form, the requirement to report five types of
payments outlined in the 2007 rule, regardless of the relationship the
employer has with the filer's union. These payments to a union official
(or the official's spouse or minor child) from any employer or labor
relations consultant to an employer, are for the following purposes:
(1) Not to organize employees; (2) to influence employees in any way
with respect to their rights to organize; (3) to take any action with
respect to the status of employees or others as members of a labor
organization; (4) to take any action with respect to bargaining or
dealing with employer whose employees the filer's organization
represents or whose employees the union is actively seeking to
represent; and (5) to influence the
[[Page 48427]]
outcome of an internal union election. 72 FR at 36128, 36173. These
payments create an actual or potential conflict between the filer's
financial interests and his or her duties to the labor organization.
The Department also proposes to retain the general requirement that
officials report payments from employers and labor relations
consultants, from whom a payment would create an actual or potential
conflict between the filer's personal financial interests and the
interests of the filer's labor organization (or duties to the labor
organization). The instructions for the proposed Form LM-30 list
examples of such actual or potential conflicts of interest; however,
the list should not be considered exhaustive. The examples include, as
did the 2007 rule, payments from business competitors to the employer
whose employees the union official's union represents or whose
employees the union is actively seeking to represent, although, as
explained below, a qualification has been added to this example to
ensure that only actual or potential conflict of interest payments are
reported; and payments from an employer that is a not-for-profit
organization that receives or is actively and directly soliciting
(other than by mass mail, telephone bank, or mass media) money,
donations, or contributions, from the official's labor organization.
As discussed below, the Department proposes to narrow the scope of
reporting required under section 202(a)(6) with respect to (1) payments
from business competitors to the employer whose employees the union
official's union represents or whose employees the union actively seeks
to represent; (2) payments received from trusts; and (3) payments from
unions.
1. Obligation To Report Payments From Business Competitors to the
Employer Whose Employees the Union Official's Union Represents or Whose
Employees the Union Is Actively Seeking To Represent
The 2007 rule requires a union official to report payments from an
employer or a labor relations consultant to an employer that ``is in
competition with an employer whose employees your labor organization
represents or is actively seeking to represent.'' 72 FR at 36173. On
review, the Department proposes to modify this requirement to avoid
undue burden on union officials by requiring reporting only of actual
or potential conflict of interest payments.
Under the 2007 rule, all union officers and employees were required
to report all payments from all competitors to the represented
employer. To do so, they are required to undertake research in order to
discover whether they, their spouses, or their minor children, hold any
interests in or received any payments from competitors to their union's
represented employers. Union officials must track each gift, loan, or
payment received. Union officials with a side business, such as
catering, IT services, printing, or landscaping, would have to review
each business receipt. They would then have to review the source of
each gift, loan or payment, and determine which of these individuals or
entities constitute ``competitors'' to the employer of the union
members. Then they would have to perform the same analysis for their
spouses and minor children. Only then could they make the determination
of whether a report was owed.
In contrast, the reporting requirement in the proposed rule focuses
on payments that represent an actual or potential conflict of interest.
Such payments would include those from an employer in competition with
an employer whose employee's the official's labor organization
represents or is actively seeking to represent if the official is
involved with the organizing, collective bargaining, or contract
administration or is actively engaged in the organizing activities
related to a particular represented employer or possesses significant
authority or influence over such activities. The proposed instructions
state:
Complete Part C if you, your spouse, or your minor child
received, directly or indirectly, any payment of money or other
thing of value (including reimbursed expenses) from any employer
(other than a Represented Employer under Part A or Business covered
under Part B above) from whom a payment would create an actual or
potential conflict between your financial interests and the interest
of your labor organization or your duties to your labor
organization. Such employers include, but are not limited to, an
employer in competition with an employer whose employees your labor
organization represents or whose employees your union is actively
seeking to represent, if you are involved with the organizing,
collective bargaining, or contract administration activities or
possess significant authority or influence over such activities. You
are deemed to have such authority and influence if you possess
authority by virtue of your position, even if you did not become
involved in these activities.
Examples may help illustrate the difference between the existing
Form LM-30 and the narrower reporting requirement proposed here. An
individual employed part-time by a union to handle computer problems
works full time for a technology company that is a competitor to a
company whose employees are represented by the union. Under the 2007
rule, the individual would have to file a Form LM-30 to report the
payments he receives from his full-time job. Under the proposed rule,
he would not have to report these payments. In a contrasting example,
an individual employed by a union as an organizer also works part-time
for a technology company that is a competitor to a company whose
employees the union is actively attempting to organize. Under the
proposed rule and the 2007 rule, the individual would have to file a
Form LM-30 to report payments he receives from the technology company.
Restricting this reporting requirement to those officials involved
with organizing, collective bargaining, or contract administration
activities related to a particular represented employer or who
possesses significant authority or influence over such activities, will
relieve unnecessary burden on filers and ensure that Form LM-30 reports
contain useful information for the employees of the represented
employer, the employees of the competitor, and the public. Individuals
elected to a union's governing body and employees of a union, such as a
director of organizing, who possess such authority by virtue of their
positions, would be required to report interests held in and payments
received from competitors with a represented employer.
2. Obligation To Report Payments Received From Trusts
The Department believes that the Department's historical position
that union officials were not required to file reports from ``an
employer that is a trust in which your labor organization is interested
as defined in section 3(l) of the LMRDA'' reflects a better policy
choice than the position taken in the 2007 rule to require such
reporting. See Form LM-30 Instructions, p. 5. Such a trust is defined
as a ``trust or other fund or organization (1) which was created or
established by a labor organization, or one or more of the trustees or
one or more members of the governing body of which is selected or
appointed by a labor organization, and (2) a primary purpose of which
is to provide benefits for the members of such labor organization or
their beneficiaries.'' See Form LM-30 Instructions, p. 13.
In the preamble to the 2007 rule, the Department explained its view
that loans and other payments from a section 3(l) trust to a union
official pose a conflict of interest between the official's
[[Page 48428]]
personal financial interests and his or her duty to the union. The
Department took the position that the interests of the trust and the
union are not always congruent. 72 FR at 36136. It stated that the
money that ``a participating union pays into a trust'' is money that
otherwise ``would be maintained in the union's own account.'' Id. The
union's own money would be reported on its Form LM-2 annual financial
disclosure report. ``[W]ithout requiring a union official to report
payments he or she receives from a trust, an official would be able to
circumvent and evade the disclosure that would have occurred if the
funds had remained in the union's coffer.'' Id. In other words, trust
money was deemed to be union money. After further consideration of this
issue, the Department believes that the position taken in the 2007 rule
was not well founded.
Prior to the 2007 rule, payments from trusts to union officers and
employees were not reportable by union officials. The Department's
longstanding view is reflected in an opinion, which is dated December
20, 1967 and signed by the head of OLMS's predecessor agency, Frank M.
Kleiler, and the Department's Solicitor, Charles Donahue. Indeed, for
40 years, this was written policy. The opinion letter responds to an
inquiry from several union officials concerning whether reporting is
required of union officers who receive payments from the union and from
employer-established pension and welfare plans. The letter concluded
that no report was required because none of the trusts were businesses
or employers and because the information sought was obtainable under a
statute that predated ERISA. Kleiler-Donahue Ltr., p. 2. The letter
also determined that trusts were not businesses, because they were not
engaged in commercial activities. Id., p. 3. The letter also concluded
that there was no conflict of interest between the union officer's
loyalty to the union and his service to the trust. Id., p. 4. In
addition, the letter considered whether trust funds constituted
employers under the LMRDA. The letter stated: ``Even assuming that such
trust funds may be recognized as `employers' for some purposes, we must
reject the notion that Congress intended to treat such employers as
employers under'' the LMRDA's union officer and employee reporting
provisions. Id. As there stated:
Congress was concerned with arrangements with the primary
employer, that is, the one whose employees the union represents or
seeks to represent, which might impair the union officer's loyalty
as a representative of that organization [vis-[agrave]-vis] the
employer. Even assuming that a trust fund could successfully be
characterized as a primary employer, which we doubt, we fail to
perceive the existence of a conflict where a union official received
payments from a trust fund for which he also works, even if this
arrangement is approved by employer representatives on the trust.
The employer representatives are acting in their role as trustees
and thus no conflict of interest situation with which Congress was
concerned arises.
Id., p. 4-5. The opinion letter noted that even under the provision
of the LMRDA that requires reporting from employers other than the
``primary employer,'' the absence of a conflict of interest indicates
that the payments are not reportable. The letter noted that ``most, if
not all'' of these payments would be exempted as ordinary compensation,
and would not be reportable under the LMRDA, anyway. Id. Finally, the
letter noted that the transactions involved were already required to be
reported under a statute predating ERISA. Id., p. 5. The Kleiler-
Donahue opinion letter was simply noted without any substantive
discussion in the 2007 rulemaking. 72 FR at 36154.
The Department has now reconsidered its basis for the policy shift.
Upon review of the policy enunciated in the Kleiler-Donahue letter, the
Department is convinced of its significance and its persuasive value.
As the letter notes, payments from trusts to union officers and
employees--wages to employees or reimbursed expenses--are payments
reported elsewhere and, more importantly, pose ``no conflict with which
Congress was concerned.'' Kleiler-Donahue Ltr., p. 5.
On these foregoing bases, the Department proposes to return to the
40-year understanding of the Form LM-30, and exempt from reporting
payments from trusts to union officers and employees.
3. Obligation To Report Payments From Unions
The Department has reconsidered the general requirement in the 2007
rule that union officials report must payments received from a labor
union. The Department's position was based on the conclusion that
payments from a labor union (to the extent it has any employees and
thus is an employer) should not be treated differently from payments
from any other employer in situations that arguably pose the
possibility of a conflict of interest. 72 FR at 36140-41. The
Department believes that its proposed approach better takes into
account the LMRDA's distinctions between labor organizations and
employers. For this reason, the Department proposes to modify this
reporting requirement.
The 2007 rule requires union officials to report payments where the
employer is a labor union that:
a. Has employees the official's union represents or is actively
seeking to represent;
b. Has employees in the same occupation as those represented by
the official's union;
c. Claims jurisdiction over work that is also claimed by the
official's union;
d. Is a party to or will be affected by any proceeding in which
the official has voting authority or other ability to influence the
outcome of the proceeding; or
e. Has made a payment to the official for the purpose of
influencing the outcome of an internal union election.
Item A.5 on Schedule 3 of the 2007 Form, 72 FR at 36163. The
Department proposes to remove this provision. However, this proposal
will not affect a staff union official's obligation to report payments
he or she receives from a union-employer whose employees the official's
union represents. Any such payments would be reportable under Part A of
the proposed form and previously had been reportable under Part A of
the pre-2007 form as payments from an employer whose employees the
official's labor organization represents (or actively seeks to
represent). There is no need to require their reporting under section
202(a)(6). Compare 29 U.S.C. 432(a)(1), (a)(2), and (a)(5) to 29 U.S.C.
432(a)(6). This ``staff union'' scenario represents an obvious
archetypal conflict of interest: a non-wage payment from an employer to
a union officer. In this instance, the labor union is acting in the
capacity of an employer in a labor-management situation and making a
payment that poses an obvious conflict. However, the Department
believes that Congress simply did not intend labor unions, apart from
this instance, to be treated as employers for purposes of Form LM-30
reporting.
As the statutory analysis, below, explains, Title II of the LMRDA
provides a reticulated reporting regime, setting forth distinct but
interrelated reporting requirements. Section 201 contains reporting
rules for labor organizations, section 202 requires reports from union
officers and employees, and section 203 requires reports from employers
and labor consultants. Under section 201, the assets, liabilities,
receipts and disbursement of labor unions are reported on the
Department's Form LM-2, Form LM-3, and Form LM-4. These forms require
all covered labor organizations to account for disbursements, including
those to officers and employees of other unions. Depending on the
dollar amount, some of the payments may be individually
[[Page 48429]]
itemized on the Form LM-2, and some may be aggregated with other
information. But, in either case, they are incorporated in the Form LM-
2. Pursuant to section 201(c), moreover, labor organization members can
view the union's underlying records to learn the exact amount and
recipient of each disbursement. Consequently, additional reporting on
Form LM-30 would be inconsistent with the statutory scheme, unduly
burdensome, and unnecessarily duplicative of other reporting
requirement.
Moreover, the Department, in reconsidering this question, has
concluded that a preferred reading of the LMRDA would not consider
labor unions or trusts as employers, as each of these entities is
treated separately under the Act. In drafting the LMRDA reporting and
disclosure requirements, Congress mandated separate requirements for
the discrete statutory actors: ``labor organizations,'' ``labor
organization officers'' and ``labor organization employees,''
``employers,'' ``labor relations consultants,'' and ``trusts in which a
labor organization is interested.'' (While there are no reporting
requirements for section 3(l) trusts, section 208 authorizes the
Secretary to establish such requirements for labor organizations
concerning such entities.) Further, the statute separately defined five
of these six terms. See sections 3(e), 3(i), 3(l), 3(m), and 3(n) of
the LMRDA. The 2007 rule, in contrast, characterized ``labor
organizations'' as employers, pursuant to section 202(a)(6).
Section 201 requires ``labor organizations'' to disclose, among
other financial transactions and information, disbursements to many
individuals and entities, including employers, businesses, their own
officers and employees and, potentially, those of other labor
organizations. Section 203 requires ``employers'' to file certain
reports. As applied to section 202, ``labor organization'' officers and
employees must report payments from ``employers'' and ``businesses''
that have certain relationships to the official's ``labor
organization.'' The statute thus sets out employers and labor
organizations as distinct and separate entities. There is nothing in
the statute that indicates that Congress intended that the category of
employers also would include labor organizations, or that Congress
meant for officers and employees to report transactions with labor
organizations. It seems apparent that, if Congress had intended that
transactions with labor organizations be included in reporting under
section 202, it would have explicitly included labor organizations in
that section.\12\
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\12\ This reasoning is consistent with LMRDA Interpretative
Manual section 260.005. This section provides that no report is
required for activities performed by an attorney on behalf of a
union (distinct from activities performed for an employer), even
though the attorney meets the definition of ``labor relations
consultants'' under section 3(m), because the only section of the
Act which requires reports from labor relations consultants is
section 203(b), which provides for reports from every person who has
an agreement with an employer for certain purposes.
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Additionally, the Department believes that this reading of the
statute better implements the labor union and labor-management
reporting requirements of the LMRDA. First, as stated previously,
conflict of interest payments from labor organization-employers
represented by staff unions are reportable on Form LM-30 pursuant to
sections 202(a)(1), (2), and (5). Second, the Form LM-2, LM-3, and LM-4
Labor Organization Annual Disclosure Reports require all covered labor
organizations to disclose any disbursement, including those to officers
and employees of other unions, pursuant to section 201. Such
disbursements include those addressed in provisions 5(b)-(e), quoted
above, all of which constitute payments from labor organizations in
their capacity as the representative of employees, not as an employer
of employees. A member or other viewer of LM reports would naturally
look to the labor organization's annual financial disclosure report,
and not the Form LM-30 reports, to view disbursements from their labor
organization. Further, pursuant to section 201(c), union members can
view the underlying records of their union's reports to ascertain
further information related to the payments to third party union
officials.
E. Scope of Form LM-30 Reporting by National, International, and
Intermediate Body Union Officials
The Department proposes to remove the definition of ``labor
organization'' (Part III, D10, of the 2007 instructions), which
addresses the reporting obligation of national, international and
intermediate body officials under section 202 of the LMRDA. In its
place, the Department will rely on the statutory definition of ``labor
organization'' under section 3(i) and (j) of the LMRDA, and proposes
the inclusion of the following language to clarify the top-down
reporting obligation of national, international, and intermediate body
officials:
When applying the Form LM-30 reporting requirements, a national,
international, or intermediate union officer or employee must look
at employers and businesses with requisite relationships with lower
levels of the official's union (e.g., a local or other subordinate
body), as well as the official's own level of the union.
The Department's proposal will require union employees to report
the same interests and payments that union officers are required to
report. Further, the Department proposes to restore the obligation that
these officers and employees report any interests in or payments
received from businesses that deal with employers whose employees are
represented by subordinate affiliates of their union (and any employers
such affiliates are actively seeking to represent), as well as
businesses that deal with the official's union or such subordinate
affiliates of their union, including their section 3(l) trusts, and to
require that union officials report interest and payments or other
financial benefits received by their spouses and minor children from
such employers. The 2007 rule removed the obligation to report on these
interests and payments.
Section 202 requires union officers and employees to report certain
payments and interests from employers and businesses that have
specified relationships with the official's labor organization in order
to disclose potential conflicts of interest. The Department has long
recognized that such potential conflicts could be related to a national
or international union official's responsibility to either the
immediate union that he or she serves or some other union within the
labor organization's hierarchy. For example, in section 241.100 of the
LMRDA Interpretative Manual, the Department addressed the reporting
standards for international union officers, as follows:
Section 202(a)(3) of the Act requires reports from ``every
officer of a labor organization'' of income derived from ``any
business a substantial part of which consists of buying from,
selling or leasing to, or otherwise dealing with, the business of an
employer whose employees such labor organization represents or is
actively seeking to represent.'' An international union officer must
report his income from such a business even though he is not an
officer of the local which represents the employees of the business,
and even though his duties as an international officer do not
include representation activities.
Recognizing that the pre-2007 Form LM-30 Instructions did not
expressly address this type of issue, and seeking to ensure proper
disclosure of conflict of interest payments under section 202 of the
Act, the 2007 rule defined ``labor organization'' in a way that reached
such payments. 72 FR at 36121-24. This definition of ``labor
organization'' and the related reporting instructions
[[Page 48430]]
prescribed a ``top-down'' approach to disclosure, which requires
national, international, and intermediate body officers to ``look-
down'' to lower levels of the union hierarchy in determining the full
scope of their section 202 reporting responsibilities. The reporting
standard is significantly narrower than that set forth in the 2005
NPRM, which had proposed to require officials to also report conflict
of interest payments and interests involving any higher-level affiliate
of the official's union--a ``look-up'' approach to complement the
``look-down'' approach. 70 FR at 51182-83. The 2007 rule also differs
from the 2005 proposal in that the rule narrowed the ``top-down ''
reporting obligation to union officers, excepting employees from this
obligation. 72 FR at 36123-24, emphasis added. Further, under the 2007
rule, the officers of intermediate, national, or international unions
are not required to report payments from or interests in businesses
that deal with employers represented by, or actively being organized
by, any lower level of the officer's labor organization. They also are
not required to report payments and other financial benefits received
by their spouses or minor children as bona fide employees of a business
or employer involved with a lower level of the officer's labor
organization.
Upon review, the Department believes that the approach taken in the
2007 Form LM-30 instructions, at Part III, D10, does not achieve the
policy choice that best comports with the purposes served by section
202. First, the 2007 rule requires only officers (and not employees) of
national, international, and intermediate unions to report payments
from and interests in entities that deal with lower levels of the
officers' labor organizations. 72 FR at 36123-24. As recognized under
the LMRDA statutory scheme, union employees, not solely union officers,
can hold positions of considerable authority and influence in all
levels of a union hierarchy. Such employees include key administrative
personnel such as business agents, heads of departments or major units,
attorneys, and organizers who exercise substantial independent
authority. See section 3(q), 29 U.S.C. 402(q). Moreover, union
employees, like union officers, may also have interests in or receive
payments from the same entities that pose the same actual or potential
conflict with the interests of their union or their duties to their
union. For example, an international union organizer may have a
business interest in an employer that a subordinate local is trying to
organize. Under the 2007 rule, this interest would not be reported.
Maintaining the same reporting rules for officers and employees
throughout all sections of the Form LM-30 increases the clarity and
consistency of the LM-30 reporting requirements.
Secondly, Part III, D10, of the 2007 Form LM-30 instructions exempt
the reporting of ``payments from or interests in businesses that deal
with employers represented by, or actively being organized by, any
lower level of the officer's labor organization.'' 72 FR at 36122. The
exception does not adequately consider longstanding policy of the
Department, cited above. It also creates the possibility of unreported
conflicts of interest. For example, an employee of an international
union may have a side business selling information technology services.
The business may contract with a grocery market organized by an
affiliated local union to maintain the market's payroll system. Under
the 2007 rule, the international union employee would not have to
report his or her IT business and its relationship with the employer
represented by the affiliated local.
Further under the 2007 rule, a national/international or
intermediate officer is not required to report payments and other
financial benefits received by the spouse or by a minor child as a bona
fide employee of a business or employer involved with a lower level of
the officer's organization. For example, the Secretary Treasurer of an
international union has a spouse that is the head of purchasing for an
auto parts manufacturer that deals with an employer of the union
members. Under the 2007 rule, the Secretary Treasurer would not have to
report the position and income of the spouse. Such payments must be
reported under the proposed rule, as they were prior to the 2007 rule.
Additionally, the existing instructions, at Part III, D10, are
potentially confusing to Form LM-30 filers because of these
inconsistencies with the overall LM-30 reporting scheme. In addition,
the Department finds, on review, that the instructions explaining the
``top-down'' reporting requirements are vague and often difficult to
follow. For example, the 2007 LM-30 Instructions list various
exceptions noting what is not required to be reported (with respect to
top-down reporting), yet fail to clearly delineate what top-down
scenarios must be reported. See 2007 LM-30 Instructions, D10 at p. 11-
12.
For the foregoing reasons, the Department has determined to apply
the principles of longstanding policy articulated in section 241.100 of
the LMRDA Interpretative Manual to officers and employees of national,
international, and intermediate unions. When applying the Form LM-30
reporting requirements, a national, international, or intermediate
union officer or employee must look at employers and businesses with
requisite relationships with lower levels of the official's union
(e.g., a local or other subordinate body), as well as the official's
own level of the union.
IV. Proposed Revisions to the Regulations, Form, and Instructions
The Department is proposing changes to the Form LM-30 to simplify
its use by filers, chiefly by reducing the length of the form (from
nine pages to two pages) and its instructions (from 22 pages to 13
pages) and eliminating or modifying some burdensome and unnecessarily
intrusive reporting requirements. The 2007 rule established a lengthy,
complicated form and instructions. Although the length of these
documents was due, in part, to the inclusion of numerous examples, many
of these examples provided little practical assistance to filers and,
in their entirety, the examples created a perception among filers that
they were required to make extensive and complex legal and accounting
determinations. The proposed instructions contain only a few examples.
While particular filers may have questions about whether certain
matters should be reported, the Department believes that these
questions are better addressed through compliance assistance than by
imposing a burden on all filers to read about complex issues that
concern a very small number of filers. The Department also is proposing
to revise the format of the instructions to define key terms as they
first appear in the instructions, rather than to collect the
definitions in the middle of the instructions, the approach taken in
the 2007 rule.
The discussion that follows describes the Department's proposal to
revise its regulations implementing section 202(a) of the LMRDA, 29 CFR
404.4, and the Form LM-30 and its accompanying instructions, which are
incorporated into the regulations by reference. 29 CFR 404.3.
A. Regulations
Only one proposed change involves the regulatory text. 29 CFR
404.1(f). In section 404.1(f), the Department proposes to remove the
definition of ``labor organization,'' which had been added in the 2007
rule to establish the scope of reporting required of higher level union
officers. Paragraphs (g) through (j) of section 404.1 also will be
[[Page 48431]]
re-designated as (f) through (i), respectively. As discussed below, the
term ``labor organization'' is separately defined in the LMRDA, and
language regarding the scope of reporting for national, international,
and intermediate union officers and employees has been added to the
proposed instructions.
B. Proposed Form
In this notice, the Department proposes the implementation of a new
Form LM-30, entitled ``Labor Organization Officer and Employee Annual
Report,'' which will feature a revised, simplified format. The
Department believes its proposed form will better facilitate filers'
compliance with LM-30 reporting requirements than earlier forms and
increase the form's utility to the public.
With respect to layout, the proposed form more closely resembles
the pre-2007 form than the lengthier 2007 form. The proposed form,
which is two pages in length, contains four sections: a section that
contains basic identifying information on the filer and labor
organization, and Parts A through C. Parts A, B, and C are designed to
capture reportable transactions with a represented employer, a business
that has dealings with the official's union, a trust in which the union
has an interest, or has substantial dealings with a represented
employer, and other employers or labor relations consultant,
respectively. The form has been simplified by removing numerous
schedules, checklists, and examples. While the inclusion of this
information in the 2007 form was intended to assist filers, it is the
Department's present view that these additions made the form more
confusing and difficult to complete.
The proposed form does not contain the summary schedule that was on
the first page (Item 5) of the 2007 form. The Department doubts the
utility of the summary schedule. The Department does not believe that
requiring the reporting of ``total reported income or other payments''
and ``total reported assets'' is useful information, by itself, and may
be misleading. Without knowing the context to the reportable
transaction or transactions, a viewer does not have a basis to assess
the actual or potential conflict of interest and the impact such a
conflict would have on the official's duties to the labor organization.
For a filer with multiple payments, a summed total on the front page of
the form is misleading, even if the totals are separated by assets and
other payments, since a viewer of the form can only judge a conflict of
interest by looking at the monetary value of the payment or interest
along with its source and other pertinent circumstances. A sum of money
or other payment or asset, in of itself, has no meaning, and can lead
to confusion for the viewer and reflect unfairly on the filer. Further,
presenting a figure for ``total reported income or other payments''
gives the impression that this total represents income and payments
received by the filer, when in fact, this figure might also include
items such as interest in personal or real property, insurance, or
share holdings.
The proposed form does not contain sections on Employer and
Business Relationships (Items 6 and 7, respectively, on the 2007 form).
The Department does not believe that this general information adds to
the usefulness of the form, because this information is reported on
each schedule. A bulleted checklist for the relationships has also been
eliminated.
The proposed form's contact information sections in Parts A, B, and
C generally collect the same information requested in Schedule 1 of the
2007 form, except that the proposed form will not ask whether the
filer, filer's spouse, or minor child had a relationship with the
employer, business, or labor relations consultant at the end of the
reporting period, as this information does not aid the viewer of the
form in assessing any conflict of interest for the fiscal year in
question. The proposed form also eliminates the requirement that a
filer provide the Web site address of the employer, business, or labor
relations consultant in which the filer holds an interest or receives a
payment. The Department does not believe that the Web site address is
necessary, since viewers of the form can independently locate this
information.
In place of the separate Additional Information Schedule, which was
included in the 2007 form, the proposed instructions simply provide
guidance on how to provide additional information. Filers who choose to
file a paper copy of the form are instructed to attach a separate
letter-size page, with identifying information. Filers who choose to
file electronically will be able to add additional information as
needed.
A section-by-section discussion of the proposed form follows:
First Section--Basic Identifying Information (Items 1-5)
The first section of the proposed form gathers basic information
about the filer and his or her labor organization. Item 1 requests the
LM-30 file number, and Item 2 calls for the fiscal year covered in the
report. Item 3 provides a box to identify the form as an amended
report. Filers must provide their contact information in Item 4, which
includes lines for their name and street address (both required), and
an e-mail address (optional). In Item 5, they must provide identifying
information about their labor organization, indicate whether they are
an officer or employee, and note their officer position or job title.
If the filer serves as an officer or employee in more than one labor
organization, this information is captured on an Item 5 Continuation
Page.
Below the first section, the proposed form states, ``Complete Part
A, B, or C if, during the past fiscal year, you or your spouse or minor
child directly or indirectly had a reportable interest in, transaction
or arrangement with, or received income, payment, or benefit from the
entities described below.''
Part A--Represented Employer (Items 6 and 7)
In the proposed form, ``Represented Employer'' is defined as ``an
employer whose employees your labor organization represents or whose
employees it is actively seeking to represent.'' If the filer had a
reportable interest, transaction, benefit, arrangement, income, or loan
from his/her ``Represented Employer,'' he or she must provide in Item 6
the employer's contact information, including the name and telephone
number of a contact person. In Item 7a, the filer must provide the
nature of the interest, transaction, benefit, arrangement, income, or
loan, and in Item 7b, he or she must provide the amount or value. As
stated above, the Department has removed the requirement that filers
report the Web site address for the employer.
As will be explained in the Proposed Instructions section below,
the filer must complete a separate Part A for each ``Represented
Employer'' or transaction reported. A Continuation Button is located
below Part A if the filer needs to complete one or more additional Part
As.
Part B--Business (Items 8-12)
The proposed form provides that the filer must complete Part B if
he or she had a reportable interest in, transaction or arrangement
with, or received income, payment, or benefit from ``[a] business, such
as a vendor or service provider, (1) a substantial part of which
consists of buying from, selling or leasing to, or otherwise dealing
with the business of a Represented Employer described in Part A or (2)
any part of which consists of buying from or selling or leasing
directly or indirectly to, or
[[Page 48432]]
otherwise dealing with your labor organization or with a trust in which
your labor organization is interested.''
If the filer has reportable activity with such a business, he or
she must provide in Item 8 the contact information for the business,
including the name and telephone number of a contact person. In Item 9,
the filer must indicate the entity the business deals with by checking
the box for (a) labor organization, (b) trust, or (c) employer. If the
filer checks the box for trust or employer, he or she must provide the
trust or employer's name and contact information in Item 10. The filer
must provide the nature of the dealings in Item 11a, and the value of
the dealings in Item 11b. Additionally, the filer must provide in Item
12a the nature of the interest, benefit, arrangement, or income. Item
12b calls for the amount or value of the interest, benefit,
arrangement, or income. As stated above, the Department has removed the
requirement that filers report the Web site address for the business.
As will be explained in the Proposed Instructions section below, the
filer must complete a separate Part B for each business or transaction
reported. A Continuation Button is located below Part B if the filer
needs to complete one or more additional Part Bs.
Part C--Other Employer or Labor Relations Consultant (Items 13 and 14)
The proposed form provides that the filer must complete Part C if
he or she had a reportable interest in, transaction or arrangement
with, or received income, payment, or benefit from ``an employer (other
than a Represented Employer or Business covered under Parts A and B
above) from whom a payment would create an actual or potential conflict
between your personal financial interests and the interests of your
labor organization (or your duties to your labor organization); or a
labor relations consultant to such an employer or to the Represented
Employer listed in Part A.''
If the filer has reportable activity with such an employer or labor
relations consultant, he or she must provide in Item 13a the contact
information for the employer or labor relations consultant. In Item
13b, the filer must indicate whether the entity is an employer or
consultant. The filer must provide the nature of the payment in Item
14a, and the amount or value of the payment in Item 14b. As stated
above, the Department has removed the requirement that filers report
the Web site address for the employer or labor relations consultant.
As will be explained in the Proposed Instructions section below,
the filer must complete a separate Part C if reporting more than one
employer, labor relations consultant, or transaction. A Continuation
Button is located below Part C if the filer needs to complete one or
more additional Part Cs.
Signature and Verification (Item 15)
The filer must provide his or her signature, date, and telephone
number in Item 15, which is located on the bottom of the first page. As
explained in the instructions, filers are instructed to view the OLMS
Web site for further information on how to electronically sign and
submit the Form LM-30. The signature line on the proposed form is
identical to that on the 2007 form, except for the fact that the
proposed form assigns the heading ``Signature and Verification'' to
Item 15. The signature line on the 2007 form did not include a heading.
C. Proposed Instructions
1. General
The proposed instructions reflect significant changes in both
layout and content from the 2007 form. The content has been changed to
reflect the specific changes discussed in the preceding sections of the
notice. Other changes have been made to add clarity and eliminate
unnecessary repetition. The discussion immediately below highlights
significant changes between the proposed and 2007 instructions.
As noted above, the proposed form and instructions reinstate the
general ``Parts A, B, and C'' format featured in the pre-2007 form and
instructions instead of the multiple-schedule format introduced in the
2007 form and instructions. The Department believes that the proposed
format is clearer and more streamlined and will make the form much
easier for filers to understand and complete, without affecting the
usefulness of the information disclosed.
The proposed instructions do not include a separate ``Definitions''
section, which was included in the 2007 instructions. The proposed
instructions instead present definitions and clarifications of key
terms in the context of the sections in which they appear in the
document. When a definition follows a section of the instructions, the
term to be defined is italicized. Further, if a defined term is used in
multiple places, the later references refer back to the section in
which the term is first used and defined. The Department believes that
this approach will help filers understand key terms as they read
through the instructions, and will eliminate the need for filers to
frequently refer to a separate ``Definitions'' section to determine
what must be reported and how it must be reported.
The Department also proposes to remove the examples that are
dispersed throughout the 2007 instructions. The numerous examples in
the 2007 instructions, many of which involved situations confronted by
a very small number of filers, made the form unnecessarily complex and
difficult to complete, without meeting the intended goal of providing
helpful guidance. Following the publication of a revised Form LM-30,
the Department intends to provide compliance assistance support to Form
LM-30 filers.
Additionally, the Department proposes to modify the definitions of
some key terms that are found in the 2007 Form LM-30 Instructions.
First, the Department proposes to remove the definition of ``bona fide
employee'' as used in the 2007 rule and add the bona fide employee
exemption found in the instructions for the pre-2007 form. The language
to be added reads:
Payments and benefits received as a bona fide employee of the
employer for past or present services, including wages, payments or
benefits received under a bona fide health, welfare, pension,
vacation, training or other benefit plan; and payments for periods
in which such employee engaged in activities other than productive
work, if the payments for such period of time are: (a) Required by
law or a bona-fide collective bargaining agreement, or (b) made
pursuant to a custom or practice under such collective bargaining
agreement, or (c) made pursuant to a policy, custom or practice
which the employer has adopted without regard to any holding by such
employee of a position with a labor organization.
Emphasis added. Second, the Department proposes to modify the
definition of ``labor organization employee.'' As a result, the
Department proposes the following language for insertion into the
revised Form LM-30 Instructions in Section II, Who Must File: ``For
purposes of the Form LM-30, an individual who serves the union
exclusively as a union steward or as a similar union representative,
such as a member of a safety committee or a bargaining committee, is
not considered to be an employee of the union.''
Third, the Department proposes to remove the definition of ``labor
organization'' (Part III, D10), which had been added to the 2007 rule
in order to describe the reporting obligation of national,
international and intermediate body officers under section 202 of the
LMRDA. As explained earlier in the notice, the term ``labor
organization'' is
[[Page 48433]]
separately defined in the LMRDA, and language regarding the scope of
reporting for national, international, and intermediate union officers
and employees has been added to the proposed instructions. The proposed
text removes language that excepted employees of international,
national, and intermediate unions from reporting about conflicts of
interest involving subordinate affiliates of their union.
The reasons for these changes are discussed in detail in section
III, parts A and B, of this notice.
2. Particular Sections and Parts
Section I, Why File: This section presents general information
about the reporting requirements of section 202. This information is
identical to that presented in the 2007 instructions, except that it
has been simplified to refer to the individual completing the form as
``you,'' instead of ``filer.''
Section II, Who Must File: The 2007 instructions presented a
lengthy Section II, Who Must File and What Must Be Reported (located on
pages 1-9). The proposed instructions have divided this into two
separate, concise sections, Section II, Who Must File and Section III,
What Must Be Reported. The Department believes that this change will
enable filers to more easily understand this basic information. This
section states that ``(a)ny officer or employee of a labor organization
(other than an employee performing clerical or custodial services
exclusively), as defined by the LMRDA, must file Form LM-30 if, during
the past fiscal year, the officer or employee, or his/her spouse, or
minor child, either directly or indirectly, held any legal or equitable
interest, received any payments, or engaged in any transactions
(including loans) of the types described in these instructions.''
``Labor organization employee'' is defined as ``any individual (other
than an individual performing exclusively clerical or custodial
services) employed by a labor organization within the meaning of any
law of the United States relating to the employment of employees.'' It
also provides: ``For purposes of the Form LM-30, an individual who
serves the union exclusively as a union steward or as a similar union
representative, such as a member of a safety committee or bargaining
committee, is not considered to be an employee of the union.'' The term
``minor child'' is also defined as someone younger than 21 years of
age.
The reporting exceptions for insubstantial payments and gifts,
including attendance at widely attended gatherings, are unchanged from
the 2007 instructions, but their discussion has been moved to Section
X, Completing Form LM-30.
Section III, What Must Be Reported: This proposed section simply
refers filers to Parts A, B, and C of the instructions for information
about financial transactions and interests that must be reported.
Section IV, Who Must Sign the Report: This section specifies that
the labor organization officer or employee is required to sign the
completed Form LM-30.
Section V, When to File: The information in this section is
substantively identical to the information in Section IV, When to File
in the 2007 instructions.
Section VI, How to File: The proposal provides for submission of
the For LM-30 in paper format or electronically. Filers will be able to
choose between the two options. Proposed Section VI provides
information regarding these filing options, including how to obtain the
form, and instructions on submitting it, from the OLMS Web site.
The Department plans significant improvements to electronic
submission processes that will simplify the electronic signature
procedure and eliminate the associated costs to filers. Specifically,
the Department will implement a simplified electronic signature that
only requires the filer to acquire a Personal Identification Number
(PIN) and password, which the Department will provide at no cost to the
filer. The Department believes that electronic reporting is, generally,
easier for filers, and that it will enable the Department to better
incorporate submitted forms into its Electronic Labor Organization
Reporting System (e.LORS), ensuring easy access to information for the
public.
Section VII, Public Disclosure: With the exception of a slight
change in wording, this section is unchanged from the Public Disclosure
section in the 2007 instructions.
Section VIII, Officer and Employee Responsibilities and Penalties:
With the exception of a slight change in wording in the first sentence
(changed ``required to file'' to ``required to sign''), this section of
the proposed instructions is identical to the information in the
Section VII, Officer or Employee Responsibilities and Penalties in the
2007 instructions.
Section IX, Recordkeeping: This section contains information
identical to that in the Recordkeeping section of the 2007
instructions.
Section X, Completing Form LM-30: This section presents detailed
instructions on completing all of the information items in the Form LM-
30. The Department believes that the placement of this section on page
3 of the proposed instructions represents a significant improvement
over the 2007 instructions, which does not begin to instruct filers on
completing the form until page 14.
This section begins with an introduction that includes information
on electronic completion of the form. The 2007 instructions did not
provide this information. The Department believes that most filers will
submit the form electronically, which justifies instructions geared
towards this method. Additionally, the Department will provide
compliance assistance support for both paper format and electronic
filing.
This section provides information on completing Information Items 1
through 5, which gather basic identifying information about the filer
and his or her labor organization. With the exception of minor changes
in wording, these ``basic identifying'' information items are the same
as in the 2007 instructions.
Next, the proposed instructions feature the heading, ``Information
Items--Parts A, B, and C.'' The proposed form features the simpler
``Parts A through C'' approach, as opposed to the multiple-schedule
format introduced in the 2007 form, the proposed instructions differ
from the 2007 instructions, especially in format, but also in content.
First, the subsection ``General Instructions for Reportable
Transactions and Interests'' begins with: ``You must report only if,
during the past fiscal year he/she, or his/her spouse or minor child,
directly or indirectly: (1) Held an interest; (2) engaged in a
transaction; or (3) received income, payment or other economic benefit
with monetary value covered by the Act.''
Next, the instructions provide information on the scope of filing
for national, international, and intermediate union officers and
employees, which (as explained above in section III, part E, of this
notice) operates to require union employees, to report the same top-
down information now required of union officers. This change is
discussed in greater detail in section III, part E, of this notice.
The definition of ``directly or indirectly'' is presented directly
below this introductory language. This definition, including its two
examples, is unchanged from the 2007 rule.
The proposed subsection, General Exclusions, describes the general
reporting exemptions, ``insubstantial payments and gifts'' and
``widely-attended gatherings,'' both of which are
[[Page 48434]]
unchanged from the 2007 rule. Next, the definition for ``trust in which
a labor organization is interested'' is provided. This definition is
unchanged from the 2007 rule.
Filers are also instructed to complete a separate Part A, B, and/or
C if they are reporting more than one entity or transaction. The
instructions explain that additional Parts A, B, and C are available by
clicking the Continuation Button on the electronic form or attaching a
separate Part A, B, or C, if using a paper format.
Part A (Items 6 and 7): Represented Employer
The proposed instructions for Part A present information on how to
complete Items 6 and 7, which pertain to the Represented Employer.
Specifically, the instructions state: ``Complete Part A if you (1) held
an interest in, (2) engaged in transactions (including loans) or
arrangements with, or (3) derived income or other economic benefit of
monetary value from, an employer whose employees your labor
organization represents or is actively seeking to represent.'' The
instructions state that payments received as ``director's fees'' must
be reported. This requirement was contained in the 2007 instructions.
Next, the definition for ``actively seeking to represent'' is
provided. This definition is unchanged from the 2007 rule.
The subsection Part A Exclusions lists items that do not need to be
reported in Part A. The first three exclusions--(i), (ii), and (iii)--
are substantively unchanged from the 2007 instructions These relate,
respectively, to de minimis payments or other financial benefits;
holdings, transactions and income from bona fide investments in
securities traded on a national securities exchange and other
designated securities; and holdings--of $1,000 or less--or income of
$1,000 or less--from bona fide investments in other securities. The
fourth exclusion, ``Payments and benefits received as a bona fide
employee,'' emphasis added, has been modified to incorporate the
historical interpretation given payments received by union officials
under union leave and ``no docking'' policies established by collective
bargaining agreements or workplace custom or practice.
Since the first Part A Exclusion refers to ``bona fide
investments,'' this term is defined in this section. The definition for
``bona fide investment'' is unchanged from the 2007 rule.
The instructions here advise that filers should not report on the
form bank account numbers, policy numbers, social security numbers, or
similar information.
In the proposed instructions, the following definitions are
presented in connection with Information Item 7: ``arrangement,''
``benefit with monetary value,'' ``income,'' and ``legal or equitable
interest.'' All of these definitions are unchanged from the 2007 rule.
The note to item 7 has been revised to eliminate an example which does
not appear helpful. Additionally, specific instructions are provided on
how to complete Items 6 and 7, which are described in the above
subsection, Proposed Form.
Part B (Items 8-12): Business
In the proposed instructions, the filer is instructed:
Complete Part B if you held an interest in or derived income or
other benefit with monetary value, including reimbursed expenses,
from a business (1) a substantial part of which consists of buying
from, selling or leasing to, or otherwise dealing with the business
of an employer whose employees your labor organization represents or
is actively seeking to represent, or (2) any part of which consists
of buying from or selling or leasing directly or indirectly to, or
otherwise dealing with your labor organization or with a trust in
which your labor organization is interested. Report payments
received as director's fees, including reimbursed expenses. Complete
a separate Part B for each such business and for each such interest
or item of income connected with that business.
Definitions for ``substantial part'' and ``dealing'' are provided.
These definitions are unchanged from the 2007 rule.
The subsection Part B Exclusions lists items that do not need to be
reported in Part B. Two of the Part B exclusions are retained from the
2007 rule (relating to holdings, transactions and income from bona fide
investments in securities traded on a national securities exchange and
other designated securities; and holdings--of $1,000 or less--or income
of $1,000 or less--from bona fide investments in other securities).
These two Part B exclusions are the same as the exclusions set forth in
(i) and (ii) in Part A. However, the proposed rule proposes to provide
an exception regarding market place transactions from bona fide credit
institutions, as explained in greater detail in section III, part C, of
this notice.
The Department also proposes to exempt union officials from
reporting certain interests in or payments received from businesses,
``a substantial part of which * * * deals with the business of an
employer whose employees the labor organization represents or is
actively seeking to represent,'' section 202(a)(3), or ``from a
business * * * dealing with [the official's] labor organization,''
section 202(a)(4). Specifically, the proposed instructions read:
Bona fide loans. Do not report bona fide loans, including
mortgages, received from national or State banks, credit unions,
savings or loan associations, insurance companies, or other bona
fide credit institutions, if the loans are based upon the credit
institution's own criteria and made on terms unrelated to the
official's status in the labor organization. Additionally, do not
report other marketplace transactions with such bona fide credit
institutions, such as credit card transactions (including unpaid
balances) and interest and dividends paid on savings accounts,
checking accounts or certificates of deposit if the payments and
transactions are based upon the credit institution's own criteria
and are made on terms unrelated to the official's status in the
labor organization.
Additionally, specific instructions are provided on how to complete
Items 8 through 12, which are described in the above subsection,
Proposed Form.
Part C (Items 13 and 14): Other Employer or Labor Relations Consultant
In the proposed instructions, the filer is instructed:
Complete Part C if you, your spouse, or your minor child
received, directly or indirectly, any payment of money or other
thing of value (including reimbursed expenses), from any employer
(other than a Represented Employer under Part A or Business covered
under Part B above), from whom a payment would create an actual or
potential conflict between your financial interests and the interest
of your labor organization or your duties to your labor
organization. Such employers include, but are not limited to, an
employer in competition with an employer whose employee's your labor
organization represents or whose employees your union is actively
seeking to represent, if you are involved with the organizing,
collective bargaining, or contract administration or is actively
engaged in the organizing activities related to a particular
represented employer or possesses significant authority or influence
over such activities. You are deemed to have such authority and
influence if you possess authority by virtue of your position, even
if you did not become involved in these activities. Additionally,
complete Part C if you received a payment of money or other thing of
value from a labor relations consultant to a Represented Employer or
Part C employer.
The italicized portion represents a change from the 2007
instructions, as explained in section III, part D, of this notice. The
Department removed ``labor organizations'' and ``trusts in which your
labor organization is interested'' from the scope of section 202(a)(6)
and Part C, as explained in section III, part D, of this notice.
[[Page 48435]]
The subsection Part C Exclusions lists items that do not need to be
reported in Part C. The first administrative exemption in Part C--
relating to payments of the kind referred to in section 302(c) of the
Labor Management Relations Act, 1947, as Amended (LMRA)--remains
substantially the same as that in the 2007 instructions; the only
change is that LMRA section 302(c) is not quoted in the instructions
(instead, the reader is directed to a later part of the instructions
where this section is set forth in full).
The second administrative exemption in Part C--relating to bona
fide loans interests or dividends from a bona fide credit institution--
is modified slightly from the 2007 rule; specifically, the following
sentence, present in the 2007 instructions, is not included in the
proposed instructions: ``This exception does not apply to national or
State banks, credit unions, savings or loan associations, insurance
companies, or other bona fide credit institutions that constitute a
`trust in which your labor organization is interested.' '' Accordingly,
the proposed rule excepts from reporting under Part C:
(ii) Bona fide loans (including mortgages), interest or
dividends from national or State banks, credit unions, savings or
loan associations, insurance companies, or other bona fide credit
institutions, if such loans, interest or dividends are based upon
the credit institution's own criteria and made on terms unrelated to
your status in a labor organization. Additionally, do not report
other marketplace transactions with such bona fide credit
institutions, such as credit card transactions (including unpaid
balances) and interest and dividends paid on savings accounts,
checking accounts or certificates of deposit if the payments and
transactions are based upon the credit institution's own criteria
and are made on terms unrelated to your status in the labor
organization.
The third administrative exemption in Part C returns to the
Department's historical interpretation, exempting:
(iii) Interest on bonds or dividends on stock, provided such
interest or dividends are received, and such bonds or stock have
been acquired, under circumstances and terms unrelated to your
status in a labor organization and the issuer of such securities is
not an enterprise in competition with the employer whose employees
your labor organization represents or actively seeks to represent.
The Department believes that the 2007 rule did not adequately
justify the removal of this exemption. Further, interest on bonds or
dividends on stock are routine business transactions, which do not
ordinarily raise conflict of interest questions. Their inclusion would
increase the burden on union officials, without any apparent benefit to
the public. Indeed, the reporting of non-conflict of interest payments
could hide from scrutiny those payments that are in need of
transparency. Finally, in order to ensure that actual or potential
conflict of interest payments are reported, the Department has provided
two qualifications on this exemption: the payments must be received
under circumstances and terms unrelated to the recipient's status in a
labor organization and the issuer of such securities is not an
enterprise in competition with the represented employer.
Additionally, specific instructions are provided on how to complete
Items 13 and 14, which are described in the above subsection, Proposed
Form.
The Department has also retained the section 202(a)(6) requirements
that an official report:
Any payment of money or other thing of value from a
labor relations consultant to a Part C employer;
Payments from an employer that is a not-for-profit
organization that receives or is actively and directly soliciting
(other than by mass mail, telephone bank, or mass media) money,
donations, or contributions, from the official's union; and
Any payments from an employer (not covered by Parts A
or B), or from any labor relations consultant to an employer, for
the following purposes:
(1) Not to organize employees;
(2) To influence employees in any way with respect to their
rights to organize;
(3) To take any action with respect to the status of employees
or others as members of a labor organization;
(4) To take any action with respect to bargaining or dealing
with employers whose employees your organization represents or seeks
to represent; and
(5) To influence the outcome of an internal union election.
See 72 FR at 36128, 36130, 36173.
Remainder of Instructions
The instruction for Item 15, Signature and Verification, states
that the completed Form LM-30 must be signed by the officer or employee
and that forms submitted electronically must use digital signatures.
The instructions indicate that the filer must enter the telephone
number used by the filer to conduct official business, and note that
the filer does not need to report a private, unlisted telephone number.
The proposed instructions then feature: ``Selected Definitions from
the Labor-Management Reporting and Disclosure Act of 1959, as Amended
(LMRDA)'' [LMRDA section 3]; ``Related Provisions of the Labor-
Management Reporting and Disclosure Act of 1959, as Amended (LMRDA)--
Report of Officers and Employees of Labor Organizations'' [LMRDA
section 202]; Section 302(c) of the Labor Management Relations Act,
1947, as Amended [Sec. 8(c) of the National Labor Relations Act, as
Amended]; and an ``If You Need Assistance'' section, which includes a
list of OLMS field offices and explains the information available on
the OLMS Web site. This information is only slightly changed from the
2007 instructions.
V. Regulatory Procedures
Executive Order 12866
This proposed rule has been drafted and reviewed in accordance with
Executive Order 12866, section 1(b), Principles of Regulation. This
rule is a ``significant regulatory action'' under Executive Order
12866, section 3(f), Regulatory Planning and Review. It is not
``economically significant'' as defined in section 3(f)(1) of Executive
Order 12866. Specifically, in the Paperwork Reduction Act (PRA)
analysis below, the Department estimates that the proposed rule will
result in a total burden on labor union officers and employees of
$138,621, which is significantly less than the $100,000,000 threshold
that triggers an economic analysis.
Unfunded Mandates Reform
This proposed rule will not include any Federal mandate that may
result in increased expenditures by State, local, and Tribal
governments, in the aggregate, of $100 million or more, or in increased
expenditures by the private sector of $100 million or more.
Small Business Regulatory Enforcement Fairness Act of 1996
This proposed rule is not a major rule as defined by section 804 of
the Small Business Regulatory Enforcement Fairness Act of 1996. This
rule will not result in an annual effect on the economy of $100,000,000
or more; a major increase in costs or prices; or significant adverse
effects on competition, employment, investment, productivity,
innovation, or on the ability of the United States-based companies to
compete with foreign-based companies in domestic and export markets.
Executive Order 13132 (Federalism)
The Department has reviewed this proposed rule in accordance with
Executive Order 13132 regarding federalism and has determined that the
proposed rule does not have federalism implications. Because the
economic effects under the rule will not be substantial for the reasons
noted above and because the rule has no direct effect
[[Page 48436]]
on States or their relationship to the Federal government, the rule
does not have ``substantial direct effects on the States, on the
relationship between the national government and the States, or on the
distribution of power and responsibilities among the various levels of
government.''
Regulatory Flexibility Act
The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, requires
agencies to prepare regulatory flexibility analyses, and to develop
alternatives wherever possible, in drafting regulations that will have
a significant impact on a substantial number of small entities,
including ``small businesses,'' ``small organizations,'' and ``small
governmental jurisdictions.'' Today's proposed rule revises the
reporting obligations of union officers and employees, who, as
individuals, do not constitute small business entities. Accordingly,
the final rule will not have a significant economic impact on a
substantial number of small business entities. Therefore, under the
Regulatory Flexibility Act, 5 U.S.C. 605(b), a regulatory flexibility
analysis is not required.
Paperwork Reduction Act
This statement is prepared in accordance with the Paperwork
Reduction Act of 1995 (PRA), 44 U.S.C. 3501. As part of its continuing
effort to reduce paperwork and respondent burden, the Department
conducts a preclearance consultation program to provide the general
public and Federal agencies with an opportunity to comment on proposed,
continuing, and revised collections of information in accordance with
the Paperwork PRA (44 U.S.C. 3506(c)(2)(A)). This helps to ensure that
the public understands the Department's collection instructions;
respondents can provide the requested data in the desired format,
reporting burden (time and financial resources) is minimized,
collection instruments are clearly understood, and the Department can
properly assess the impact of collection requirements on respondents.
A. Summary of the Proposed Rule: Need and Economic Impact
The following is a summary of the need for and objectives of the
proposed rule. A more complete discussion of various aspects of the
proposal is found in the notice.
The Labor-Management Reporting and Disclosure Act (LMRDA or Act)
was enacted to protect the rights and interests of employees, labor
organizations and the public generally as they relate to the activities
of labor organizations, employers, labor relations consultants, and
labor organization officers, employees, and representatives. Provisions
of the LMRDA include financial reporting and disclosure requirements
for labor organizations and others as set forth in Title II of the Act.
See 29 U.S.C. 431-36, 441. The Department has developed several forms
to implement the union annual reporting requirements of the LMRDA.
Under section 202 of the Act, 29 U.S.C. 432, union officers and
employees are required to file reports if they, or their spouses or
minor children, engage in certain transactions or have financial
holdings that may constitute a conflict of interest. The Department has
developed the Form LM-30, Labor Organization Officer and Employee
Report, to implement section 202.
This proposed rule modifies the financial disclosure report that
section 202 requires to be filed by labor organization officers and
employees. The revised paperwork requirements are necessary, because
the proposed rule reduces the burden associated with completing the
form. As discussed above, the form, as proposed, has been simplified
and will no longer have to be filed by certain individuals, notably
stewards, and certain interests and transactions, including most bona
fide loans, will not have to be reported. The proposed rule also
signals the Department's efforts to achieve the goals of greater
transparency and disclosure, while mitigating burden on labor
organization officers and employees by eliminating reporting on matters
without demonstrated utility.
The proposed Form LM-30 will provide transparency of the financial
practices of union officers and employees, which the Act requires to be
public information. These reports will allow union members to view the
information needed by them to monitor their union's affairs and to make
informed choices about the leadership of their union and its direction.
Accurate disclosure and increased transparency promote the unions' own
interests as democratic institutions and the interests of the public
and the government. Financial disclosure deters fraud and self-dealing,
and facilitates the discovery of such misconduct when it does occur.
The proposed financial disclosure form will promote increased
compliance with the statute by clarifying the form and instructions,
organizing the information in a more useful format, and modifying it to
better meet the requirements of the LMRDA and the Department's policy
judgments consistent with its discretion under the Act.
Published at the end of this notice are the proposed Form LM-30 and
instructions. Electronic versions of the pre-2007 and 2007 Form LM-30s
and instructions are available for download from the Department's Web
site at http://www.olms.dol.gov. The proposed Form LM-30 and
instructions also will be made available via the Internet. The
information collection requirements contained in this Notice of
Proposed Rulemaking have been submitted to OMB for approval.
B. Overview of the Proposed Form LM-30 and Its Instructions
The proposed Form LM-30 largely returns to the format of the pre-
2007 Form, which has two pages and four parts: (1) An introductory
section (Items 1-5); (2) Part A; (3) Part B; and (4) Part C. The layout
of the forms (pre-2007 and proposed) are largely identical, with
several minor changes, the most important of which are highlighted
below. One modification relates to the introductory section (Items 1-5)
and the descriptions of Part A, B, and C, which were made more user-
friendly by the use of descriptions that paraphrase the statutory
language rather than repeating it verbatim. (All of the changes
described below are addressed in greater detail in previous sections in
this notice.)
Items 1-5 require reporting of basic information, including the
filer's LM number and fiscal year, an indication of whether or not the
form is amended, as well as contact information for the filer and
union, the latter of which will have a continuation page for a filer
with an affiliation with more than one union.
Part A (Items 6, 7a, and 7b) requires reporting of the interest,
income, benefit, transaction or arrangement from an employer whose
employees the filer's labor organization represents or is actively
seeking to represent. Item 6 requires reporting of the contact
information for such an employer.
Part B comprises Items 8, 9, 10, 11a, 11b, 12a, and 12b, which
requires reporting of income and other benefits derived from a business
that deals in substantial part with an employer described in Part B,
the filer's union, or a trust in which the filer's union is interested.
Item 8 requires reporting of the contact information for such business,
and Items 9-11 require the filer to identify the entity with which such
business deals, and the nature and value of the dealings. In Item 12,
the filer is to report the nature and value of the income or other
benefit derived from such business.
[[Page 48437]]
Part C comprises Items 13a, 13b, 14a, and 14b, and requires
reporting of payments from an employer (other than one required to be
included in the Part A or B report) from whom a payment would
constitute a conflict between the filer's financial interest and the
interests of his or her labor organization or duties to such
organization. It also requires reporting of payments from a labor
relations consultant to a represented employer or a Part C employer.
Item 13 requires reporting of the contact information for such employer
or labor relations consultant, and in Item 14 the filer is to detail
the nature and amount or value of the payment(s) from the employer or
labor relations consultant.
Item 15 captures the signature and verification information for the
form. The filer must sign the form, include date and telephone number,
and verify its authenticity.
The instructions to the proposed Form LM-30 are a hybrid between
the pre-2007 and 2007 versions. Several changes are proposed to make
them more user-friendly. Like the pre-2007 form, the instructions
consist of ten sections, with the first nine consisting of: Section I,
Why File; Section II, Who Must File; Section III, What Must be
Reported; Section IV, Who Must Sign the Report; Section V, When to
File; Section VI, How to File; Section VII, Public Disclosure; Section
VIII, Officer and Employee Responsibilities; and Section IX,
Recordkeeping. Section X, Completing Form LM-30, provides most of the
information assisting filers on how to complete each item in the form,
and what data must be included in each part.
As a general matter, the definitions in the 2007 instructions were
largely retained, although they were distributed to the appropriate
section of the proposed instructions. The definition of ``labor
organization employee'' has been retained; however, the addition of a
note exempts from the reporting requirements those individuals who
serve as stewards or as representatives of the union in similar
positions. Additionally, the Department proposes to remove the
regulatory definition of ``labor organization'' as confusing and
unnecessary in light of other changes and proposes the inclusion of
language to clarify the top-down reporting obligation of national,
intermediate, and intermediate body officials. The examples from the
2007 version were not retained, as the Department believes they added
unnecessary length and complexity to the form without providing
practical assistance to most filers.
The instructions also include an excerpt of statutory sections,
including section 3 of the LMRDA, which includes definitions of the key
terms used in the Act, section 202 of the LMRDA, and section 302 of the
Labor Management Relations Act.
Further description of the proposed Form LM-30 and instructions can
be found in section IV (Proposed Revisions to the Regulations, Form,
and Instructions) of this notice.
C. Methodology for the Burden Estimates
The Department first estimated the number of Form LM-30 filers that
will submit the revised form. Then, it proposed the estimated number of
minutes that each filer will need to meet the reporting and
recordkeeping burden imposed by the proposed form, as well as the total
burden hours. The Department then estimated the cost to each filer for
meeting those burden hours, as well as the total cost to filers. The
Department has also estimated the Federal costs associated with the
proposed rule. Please note that some of the burden numbers included in
this PRA analysis will not add perfectly due to rounding.
1. Number of Proposed Form LM-30 Filers
The Department estimates that 1,932 union officers and employees
will submit the proposed Form LM-30. This figure represents the total
pre-2007 and 2007 Form LM-30 reports submitted during Fiscal Year (FY)
2009. (In FY 2009 the Department established an enforcement policy that
enabled union officers and employees to use either the pre-2007 form or
the more complex 2007 version in satisfying their reporting obligation
under section 202 of the LMRDA.)
2. Hours To Complete and File Proposed Form LM-30: Reporting and
Recordkeeping
The Department has estimated the number of minutes that each Form
LM-30 filer will need for completing and filing the proposed form
(reporting burden), as well as the minutes needed to track and maintain
records necessary to complete the form (recordkeeping burden). The
estimates are included in Table 1, which describes the information
sought by the proposed form and instructions, where on each form the
particular information is to be reported, if applicable, and the amount
of time estimated for completion of each item of information. The
proposed reporting regime more closely resembles the pre-2007 Form LM-
30, in both form and content, than the 2007 form.
In proposing these estimates, the Department is aware that not all
union officers and employees will be required to file the Form LM-30,
as well as the fact that not all of those who file will need to
complete each Part of the form. However, for purposes of assessing an
average burden per filer, the Department assumes that the average filer
serves as an officer or employee for one labor organization, and that
the filer receives reportable payments or interests for a single entity
on Parts A, B, and C, respectively.
Additionally, the below estimates are for all filers, including
first-time filers and subsequent filers. While the Department
considered separately estimating burdens for first-time and subsequent
filers, the nature of Form LM-30 reporting militates against such a
decision. Union officers may serve for relatively short periods of time
and reportable transactions may not go on into subsequent years for a
variety of reasons. Where the Department has reduced burden estimates
for subsequent year filings, it generally did so with regard to annual
reports, specifically labor organization annual reports, Forms LM-2,
LM-3, and LM-4. In contrast, the Form LM-30 is only required for union
officers and employees in years that they engage in reportable
transactions. Further, these officials do not have the same benefit of
the ``institutional memory,'' particularly those officials only
recently elected or hired. See 72 FR at 36157, n. 4. As such, the
burden estimates assume that the union officer or employee has never
before filed a Form LM-30.
Recordkeeping Burden. The recordkeeping estimate of 15 minutes per
filer represents a 5-minute change from the 20-minute estimate for the
2007 Form LM-30. 72 FR at 36157. This estimate reflects new exemptions
to reporting of union leave and ``no docking'' payments, and mortgages
and other loans, as well as the decision to eliminate reporting from
trusts and unions under section 202(a)(6), which reduces the complexity
of the recordkeeping requirements. Additionally, most of the financial
books and records needed to complete the form are maintained in the
filer's normal course of business, both union and personal. Finally,
the 15 minutes accounts for the 5-year retention period required by
statute. See section 206, 29 U.S.C. 436.
Reporting Burden. The reporting burden of 75 minutes addressed in
Table 1 reflects the time required to read the Form LM-30 instructions
to
[[Page 48438]]
discover whether or not a report is owed and determine the correct
manner to report the necessary information. The Department estimates
that the average filer will need 30 minutes to read the instructions,
which is substantially less than the 55 minutes estimated in the 2007
Form LM-30. 72 FR at 36157.\13\ This reduction is due in part to the
reduced scope of required reporting. In particular, the Department
proposes to eliminate the requirement to report union leave and ``no
docking'' payments, bona fide loans, and payments from trusts and
unions pursuant to section 202(a)(6). Further, the creation of a more
concise and consolidated form and instructions, with definitions and
other explanations placed in a more readily accessible format, will
enable filers to more quickly ascertain the necessary reporting
requirements.
---------------------------------------------------------------------------
\13\ Additionally, the Department estimates that those union
officers and employees who are not required to file will spend ten
minutes reading the instructions. This burden is not included in the
total reporting burden, since these officials do not file and are
thus not respondents.
---------------------------------------------------------------------------
The Department believes that the simple data entry required by
Items 1-3 will only require 30 seconds each. The Department believes
that a filer will be able to enter his or her own contact information
in only two minutes, in Item 4. Generally, filers will only need three
minutes to enter contact information, such as for their labor
organization in Item 5, as well as the contact information for the
trust or employer with which the business deals, in Item 10. The
Department believes, however, that filers will need five minutes,
respectively, to enter the contact information for the represented
employer in Item 6, the business that deals with a labor organization,
trust, or employer in Item 8, and the ``other employer'' or labor
relations consultant in Item 13. The Department believes that filers
will need one minute to complete Item 9, which asks filers to indicate
whether the business identified deals with a labor organization, trust,
or employer.
Additionally, the Department estimates that filers will need 3
minutes to enter the financial data required in Items 7, 12, and 14,
and 3.5 minutes to report the nature and value of the dealings in Item
11. Finally, the Department estimates that a filer will utilize five
minutes to check responses and review the completed report, and will
require two minutes to sign and verify the report in Item 15. The
Department will introduce in calendar year 2010 a cost-free and simple
electronic filing and signing protocol. For this reason, the burden
estimate remains constant whether the form is electronically signed, or
signed by hand.
As a result, the Department estimates that a filer of the proposed
revised Form LM-30 will incur 90 minutes in reporting and recordkeeping
burden to file a complete form. This compares with the 2007 estimate of
120 minutes per filer.
Table 1--Reporting and Recordkeeping Burden (In Minutes)
------------------------------------------------------------------------
Section of Recurring burden
Burden description proposed form hours
------------------------------------------------------------------------
Maintaining and gathering Recordkeeping 15 minutes.
records. Burden.
Reading of the instructions to Reporting Burden 30 minutes.
determine applicability of the
form and how to complete it.
Reporting LM-30 file number.... Item 1.......... 30 seconds.
Reporting covered fiscal year.. Item 2.......... 30 seconds.
Identifying if report is Item 3.......... 30 seconds.
amended.
Reporting filer's contact Item 4.......... 2 minutes.
information.
Reporting labor organization Item 5.......... 3 minutes.
contact information.
Part A: Reporting name and Item 6.......... 5 minutes.
contact information for
employer in Part A of form.
Part A: Reporting the nature of Items 7a and 7b. 3 minutes.
the interest, transaction,
arrangement, benefit, or
income, as well as the amount,
received from the employer
identified in Part A.
Part B: Reporting contact Item 8.......... 5 minutes.
information for business.
Part B: Identifying if the Item 9.......... 1 minute.
business deals with a labor
organization, trust, or
employer.
Part B: Reporting the contact Item 10......... 3 minutes.
information for the trust or
employer with which the
business deals.
Part B: Reporting the nature Items 11a and 3\1/2\ minutes.
and value of the dealings 11b.
between the business and
employer, union, or trust.
Part B: Reporting the nature Items 12a and 3 minutes.
and amount of interest held or 12b.
income received from the
business.
Part C: Reporting the contact Items 13a and 5 minutes.
information for the employer 13b.
or labor relations consultant,
and identifying the entity as
an employer or labor relations
consultant.
Part C: Reporting the nature Items 14a and 3 minutes.
and amount of payment from the 14b.
employer or labor relations
consultant.
Checking responses............. N/A............. 5 minutes.
Signature and verification..... Item 15......... 2 minutes.
Total Recordkeeping Burden Hour ................ 15 minutes.
Estimate per File.
Total Reporting Burden Hour ................ 75 minutes.
Estimate per File.
Total Burden Hour Estimate per ................ 90 minutes.
Filer.
------------------------------------------------------------------------
Total Reporting and Recordkeeping Burden. As stated, the Department
estimates that there are 1,932 union officers and employees that will
be annually filing the Form LM-30. Thus, the estimated recordkeeping
burden for all filers is 28,980 minutes (15 x 1,932 = 28,980 minutes)
or 483 hours (28,980/60 = 483). The total estimated reporting burden
for all filers is 144,900 minutes (75 x 1,932 = 144,900 minutes) or
approximately 2,415 hours (144,900/60 = 2,415 hours). The total
estimated burden for all filers is, therefore, 173,880 minutes or
approximately 2,898 hours. See Table 2 below.
Table 2--Total Reporting and Recordkeeping Burden for All 1,932
Estimated Filers
------------------------------------------------------------------------
Hours
------------------------------------------------------------------------
Total Recordkeeping Burden................................... 483
Total Reporting Burden....................................... 2,415
Total Burden................................................. 2,898
------------------------------------------------------------------------
[[Page 48439]]
3. Calculation of Total Costs for Labor Organization Officers and
Employees to Complete the Proposed Form LM-30
The Department estimates the dollar cost to filers to complete the
Form LM-30 by using fiscal year (FY) 2009 data derived from Form LM-2,
Labor Organization Annual Reports, filed with the Department pursuant
to section 201 of the LMRDA. The Form LM-2 is the annual financial
disclosure report filed by the largest labor organizations, those with
$250,000 or more in total annual receipts. The Department notes that
many Form LM-30 reports are filed by lower level labor organization
officers and employees, whose labor organizations file the less
detailed Form LM-3 and Form LM-4 Labor Organization Annual Reports, and
who are often part-time officials earning lower salaries than parent
body labor organizations that file the more comprehensive Form LM-2.
However, because only part-time annual salaries are reported by part-
time officers on the Form LM-3 (and individual salaries are not
reported on the LM-4), but not the hours upon which those part-time
annual salaries are based, it is impractical to calculate an average
hourly wage for union officers from the Form LM-3, whereas we can
assume that the annual salaries for officers of larger locals are
primarily for full-time employees, which makes it possible to determine
average hourly wages. Therefore, the Form LM-2 provides the Department
with more comprehensive data by which to ascertain a reasonable
estimate of union officer and employee salaries.
The Department also assumes, as it did for burden estimates under
the pre-2007 Form LM-30, that one-third of the forms will be filed by
union presidents, secretary-treasurers, and international
representatives (the last designation as a proxy for union employees),
respectively. The Department derived the average hourly wage for each
of these categories by utilizing data from FY 2009 Form LM-2 reports.
With respect to the international representatives analysis, the
salary data derived from the Department's Electronic Labor Organization
Reporting System (e.LORS) included only international or national
unions and only those employee titles and gross salary data from Form
LM-2, Schedule 12 of those international/national unions that included
words like ``national'' or ``international'' and ``representative. The
next step was to eliminate blank salary entries (either nothing was
listed in the Form LM-2 or a zero was listed). The inclusion of blank
entries in the calculation of the average would impact the average
calculation, and there are a variety of reasons why the salary can be
blank or zero. Finally, the Department calculated the average hourly
wage by dividing the average annual salary by 2080 hours (40 hours per
week times 52 weeks per year). Next, the Department increased these
figures by 43.0% to account for total compensation.\14\
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\14\ See Employer Costs for Employee Compensation Summary, from
the Bureau of Labor Statistics (BLS), at http://www.bls.gov/news.release/ecec.nr0.htm. The Department increased the average
hourly wage rate for employees ($20.49 in 2008) by the percentage
total of the average hourly compensation figure ($8.90 in 2008) over
the average hourly wage.
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The methodology and assumptions are somewhat similar for the
president and secretary-treasurers averages. Here, the Department had
data from FY 2009 for all Form LM-2 filers with $800,000 or more in
annual receipts. The $800,000 figure was selected because it represents
roughly the average of all Form LM-2 filers, and we hypothesized that
larger than average Form LM-2 filers are more likely to have presidents
and secretary-treasurers who file Form LM-30.
As a result, the Department estimates that union presidents earn an
average hourly wage of $34.65 ($49.55 after adjusting by 43.00% for
total compensation); union secretary-treasurers, $31.87 ($45.57 after
adjusting by 43.00% for total compensation); and international
representatives, $33.83 ($48.38 after adjusting by 43.00% for total
compensation). The Department also estimated that each of these
categories of union officials accounted for one-third of the Form LM-30
reports submitted and thus one-third of the total burden hours (2,898
hours divided by three equals 966). Therefore, the total cost was
$138,621 (966 x $49.55 = $47,865.30; 966 x $45.57 = $44,020.62; and 966
x $48.38 = $46,735.08). The estimated cost per filer is approximately
$71.75 ($47,865.30 + $44,020.62 + $46,735.08 = $13,621; $13,621/1932 =
$71.75).
Finally, in its recent submission for revision of OMB
1215-0188, which contains all LMRDA forms (except the pre-2007
Form LM-30, which was approved under OMB 1215-0205), the
Department estimates that its costs associated with the LMRDA forms are
$2,710,726 for the OLMS national office and $3,779,778 for the OLMS
field offices, for a total Federal cost of $6,490,504. Federal
estimated costs include costs for contractors and operational expenses
such as equipment, overhead, and printing as well as salaries and
benefits for the OLMS staff in the National Office and field offices
who are involved with reporting and disclosure activities. These
estimates include time devoted to: (a) Receipt and processing of
reports; (b) disclosing reports to the public; (c) obtaining delinquent
reports; (d) reviewing reports, (e) obtaining amended reports if
reports are determined to be deficient; and (f) providing compliance
assistance training on recordkeeping and reporting requirements.
Request for Public Comment
Currently, the Department is soliciting comments concerning the
information collection request (``ICR'') for the information collection
requirements included in this proposed regulation at section 403.2,
Annual financial report, of title 29, Code of Federal Regulations,
which, when implemented will revise the existing OMB control number
1245-0002 (formerly, OMB Control Number 1215-0205). A copy of this ICR,
with applicable supporting documentation; including among other things
a description of the likely respondents, proposed frequency of
response, and estimated total burden may be obtained from the
RegInfo.gov Web site at http://www.reginfo.gov/public/do/PRAMain or by
contacting Linda Watts-Thomas at (202) 693-4223 (this is not a toll-
free number)/e-mail: [email protected]. Please note that
comments submitted in response to this notice will be made a matter of
public record.
The Department hereby announces that it has submitted a copy of the
proposed regulation to OMB in accordance with 44 U.S.C. 3507(d) for
review of its information collections. The Department and OMB are
particularly interested in comments that:
Evaluate whether the proposed collection of information is
necessary for the proper performance of the functions of the agency,
including whether the information will have practical utility;
Evaluate the accuracy of the agency's estimate of the
burden of the collection of information, including the validity of the
methodology and assumptions used;
Enhance the quality, utility, and clarity of the
information to be collected; and
Minimize the burden of the collection of information on
those who are to respond, including through the use of appropriate
automated, electronic, mechanical, or other technological collection
techniques or
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other forms of information technology, e.g., by permitting electronic
submission of responses.
Comments on the ICR should be sent to the Office of Information and
Regulatory Affairs, Office of Management and Budget, Room 10235, New
Executive Office Building, Washington, DC 20503; Attention: Desk
Officer for the Office of Labor Management Standards. Comments on the
ICR may be submitted by using the Federal Rulemaking Portal at http://www.regulations.gov, or by e-mail to [email protected], or
by fax to (202) 395-5806. Comments may also be submitted by mail. To
ensure proper consideration, OMB requests that comments be received
within 30 days of publication of the Notice of Proposed Rulemaking and
that the OMB Control Number is referenced (see below). Please note that
comments submitted to OMB are a matter of public record.
Type of Review: Request for new information collection.
Agency: Office of Labor-Management Standards.
Title: Labor Organization Officer and Employee Report.
OMB Control Number: 1245-0New.
Affected Public: Private Sector: labor organization officers and
employees.
Estimated Number of Respondents: 1,932.
Estimated Number of Annual Responses: 1,932.
Frequency of Response: Annual.
Estimated Total Annual Burden Hours: 2,898 hours.
Estimated Total Annual Burden Cost: $138,621.
Potential respondents are hereby duly notified that,
notwithstanding any other provision of law, individuals are not
required to respond to a collection of information or revision thereof
unless approved by OMB under the PRA and it displays a currently valid
OMB control number. 35 U.S.C. 3506(c)(1)(B)(iii)(V). In accordance with
5 CFR 1320.11(k), the Department will publish a notice in the Federal
Register informing the public of OMB's decision with respect to the ICR
submitted thereto under the PRA.
List of Subjects in 29 CFR Part 404
Labor union officers and employees; Reporting and recordkeeping
requirements.
Text of Proposed Rule
Accordingly, the Department proposes to amend part 404 of 29 CFR
Chapter IV as set forth below:
PART 404--LABOR ORGANIZATION OFFICER AND EMPLOYEE REPORTS
1. The authority citation for part 404 is revised to read as
follows:
Authority: Labor-Management Reporting and Disclosure Act Secs.
202, 207, 208, 73 Stat. 525, 529 (29 U.S.C. 432, 437, 438);
Secretary's Order No. 08-2009, Nov. 6, 2009, 74 FR 58835 (Nov. 13,
2009).
2. In Sec. 404.1, paragraph (f) is removed and paragraphs (g)
through (j) are redesignated as (f) through (i), respectively.
Signed in Washington, DC this 29th day of July, 2010.
John Lund,
Director, Office of Labor-Management Standards.
Note: The following appendix will not appear in the Code of
Federal Regulations.
VI. Appendix: Proposed Form and Instructions
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[FR Doc. 2010-19250 Filed 8-9-10; 8:45 am]
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