U.S. Department of Labor
Office of Labor-Management Standards
Milwaukee District Office
310 West Wisconsin Avenue, Suite 1160W
Milwaukee, WI 53203
(414) 297-1501 Fax: (414) 297-1685
July 18, 2011
Mr. Bill Kilishek, President Case Number:
Steelworkers Local 2-1279 LM Number: 039025
P.O. Box 584
Neenah, WI 54957-0584
Dear Mr. Kilishek:
This office has recently completed an audit of Steelworkers Local 1279 under the Compliance
Audit Program (CAP) to determine your organization’s compliance with the provisions of the
Labor-Management Reporting and Disclosure Act of 1959 (LMRDA). As discussed during the
exit interview with you, Vice President George Schneider, Treasurer Michelle Krautkramer,
Recording Secretary Tim Hayward, and Trustee Kevin Londerville on June 16, 2011, the
following problems were disclosed during the CAP. The matters listed below are not an
exhaustive list of all possible problem areas since the audit conducted was limited in scope.
Recordkeeping Violations
Title II of the LMRDA establishes certain reporting and recordkeeping requirements. Section
206 requires, among other things, that labor organizations maintain adequate records for at least
five years by which each receipt and disbursement of funds, as well as all account balances, can
be verified, explained, and clarified. As a general rule, labor organizations must maintain all
records used or received in the course of union business.
For disbursements, this includes not only original bills, invoices, receipts, vouchers, and
applicable resolutions, but also documentation showing the nature of the union business
requiring the disbursement, the goods or services received, and the identity of the recipient(s) of
the goods or services. In most instances, this documentation requirement can be satisfied with a
sufficiently descriptive expense receipt or invoice. If an expense receipt is not sufficiently
descriptive, a union officer or employee should write a note on it providing the additional
information. For money it receives, the labor organization must keep at least one record showing
the date, amount, purpose, and source of that money. The labor organization must also retain
bank records for all accounts.
The audit of Local 1279’s 2009 records revealed the following recordkeeping violations:
Mr. Bill Kilishek
August 2, 2011
Page 2 of 6
1. Receipt Dates not Recorded
During 2009, Local 1279’s receipts consisted of initiation fees, t-shirt sales, ticket sales for
the annual holiday party, interest, and electronic funds transfers from the International
Union for dues. However, the dates that monies were received were not recorded in any
record. Financial Secretary Corry Sokel prepared bank deposit tickets on which he
recorded the source, amount, and purpose of each receipt as well as the deposit date. In
addition, the source, amount, and purpose of each receipt was routinely recorded in
QuickBooks accounting software. However, former Treasurer advised that
the dates of the deposits recorded in QuickBooks were neither the dates that funds were
deposited nor the dates that monies were received by the union, but rather the dates that he
received the deposit information from the financial secretary.
Receipts records must show the date of receipt. The date of receipt is required to verify,
explain, or clarify amounts required to be reported in Statement B (Receipts and
Disbursements) of the LM-2. The LM-3 instructions for Statement B state that receipts
must be recorded when money is actually received, and disbursements must be recorded
when money is actually paid out. Failure to record the date money was received could
result in reporting some receipts for a different year than the one in which they were
received.
2. Meal Expenses
Local 1279 did not require officers and employees to submit itemized receipts for meal
expenses totaling at least $1,000. Itemized receipts provided by restaurants to officers and
employees must be retained. These itemized receipts are necessary to determine if such
disbursements are for union business purposes and to sufficiently fulfill the recordkeeping
requirement of LMRDA Section 206
Local 1279 officers and employees routinely retained only the credit card “signature”
receipts for meal expenses. In addition, information identifying the business purpose of
each expense was also routinely retained. However, the records of meal expenses
maintained by Local 1279 failed to identify the names and titles of the persons incurring or
receiving the benefit of the restaurant charges. For example, Local 1279 disbursed several
checks totaling over $550 to the restaurant Lord Rumbottoms for what is identified on the
check stubs as for “lunch for executive board meeting;” however, neither the check stubs
nor the restaurant receipts specifically identified the names and titles of the executive board
members present for the meal expenses.
Records of meal expenses must include written explanations of the union business
conducted and the full names and titles of all persons who incurred the restaurant charges.
Also, the records retained must identify the names of the restaurants where the officers or
employees incurred meal expenses.
Mr. Bill Kilishek
August 2, 2011
Page 3 of 6
3. General Reimbursed and Credit Card Expenses
Local 1279 did not retain adequate documentation for reimbursed expenses and credit card
expenses incurred by union officers and employees totaling at least $6,000. For example,
purchased nearly $4,000 worth of door prizes for the Christmas party from
such vendors as Best Buy, Wal-Mart and Fleet Farm. The only supporting documentation
retained for these purchases included photocopies of receipts. Original bills, receipts, and
invoices must be retained. In addition, Local 1279 failed to retain any supporting
documentation other than the credit card statement for several lodging expenses totaling
more than $2,000 charged to the union credit card (including charges at the Marriott in
Washington DC).
4. Lost Wages
Local 1279 did not retain adequate documentation for lost wage reimbursement payments
to SCA Tissue on behalf of officers and employees totaling over $70,000.
The audit revealed that Local 1279 has an arrangement with the company by which the
company pays the wages of union officers and employees who are absent from their job to
attend to union business. On a regular basis, Local 1279 submits a form titled “USW Local
2-1279 Lost Wages” to SCA Tissue to identify the names of officers and employees who
will be absent from work to perform union business and the dates on which they will be
absent. SCA Tissue pays the wages for these individuals based on the information listed on
the forms and subsequently bills the union for those wages (and applicable employer taxes).
During the audit you also advised that Local 1279 allows officers and employees who
attend to union business on their days off to “bank” these days. In such instances, the
officer or employee is not initially compensated by the union or the company for the time
spent attending to union business during their off day. Instead, they are allowed to
accumulate the personal time they spend doing union business and redeem the time by
taking off an equivalent amount of union-paid time off from the company in the future
when they would normally be scheduled to work. When an officer or employee chooses to
redeem or use this “banked” time, their names are identified on the “lost wage” form
submitted to the company along with the number of claimed hours which are to be paid to
the officer or employee by the company. Local 1279 then reimburses SCA Tissue for
“banked” time used and for all other lost wages. However, there is no distinction on the
lost wage forms submitted to SCA Tissue by Local 1279 to identify the officers who are
truly losing wages from work to attend to union business on a particular day from an officer
or employee who is simply redeeming a banked day.
Local 1279 does not require officers or employees to identify the purpose of the lost wages
on the form submitted to the company. During the exit interview, you advised that no other
record is created or maintained by the local that identifies the purpose of individual lost
wage claims.
Mr. Bill Kilishek
August 2, 2011
Page 4 of 6
Records must be maintained in support of lost wage claims that identify each date lost
wages were incurred, the number of hours lost on each date, the applicable rate of pay, and
a description of the union business conducted. In the case of Local 2-1279, adequate
records of “banked” days must also be retained. You advised that Local 1279 will begin to
keep a separate record, apart from the lost wage form submitted to the company, that will
serve a dual purpose in that it will distinguish the dates officers and employees are truly
losing wages from dates when “banked” days are being redeemed, as well as identify the
union business conducted on each date when lost wages are incurred.
During the audit, you provided me with a document dated May 1, 2002 that describes the
practice of allowing officers and employees to “bank” personal days that are spent working
on union business and redeeming those days at a later date. You advised that the document
was used only to clarify certain aspects of the practice, such as allowing only two “banked”
days to be carried at any given time; however, the practice was never voted on by the
executive board or the membership. In November 2010, Local 1279 voted on and passed
an amendment to its current bylaw provision governing lost wage claims (Article VII,
Section 2) which allows an officer or employee to be compensated by the union for up to
eight hours of pay at their straight time hourly rate for union business that is conducted on a
scheduled day off, or allows the officer or employee the option to “bank” the time in order
to take a scheduled day off from the company and be paid for up to eight hours of straight
time on that later date.
Based on your assurance that Local 1279 will retain adequate documentation in the future,
OLMS will take no further enforcement action at this time regarding the above violations.
Reporting Violations
1. Acquire/Dispose of Property
Item 13 (During the reporting period did your organization acquire or dispose of any assets
in any manner other than by purchase or sale?) should have been answered, "Yes," because
Local 1279 gave away watches totaling at least $3,500 during the year. In addition, Local
1279 also gave away door prizes at the annual Christmas party, totaling more than $3,700.
The type and value of any property received or given away must be identified in the
additional information section of the LM report along with the identity of the recipient(s) or
donor(s) of such property. For reporting purposes, each recipient need not be itemized.
Recipients can be described by broad categories, if appropriate, such as “members” or “new
retirees.”
2. Officer Expenses
Local 1279 failed to report over $1,300 in meal expenses incurred by officers during
executive board meetings and contract negotiations in Item 24 (All Officers and
Disbursements to Officers). All of these expenses were paid directly to the restaurants by
Local 1279 checks. The check stubs retained in support of these payments show that the
Mr. Bill Kilishek
August 2, 2011
Page 5 of 6
meal expenses were categorized as “Office and Administrative” expenses, and Mr. Schueler
confirmed they were reported as such in Item 48 (Office and Administrative) of the LM-3
report.
Most direct disbursements to Local 1279 officers and some indirect disbursements made on
behalf of its officers must be reported in Item 24. A "direct disbursement" to an officer is a
payment made to an officer in the form of cash, property, goods, services, or other things of
value. See the instructions for Item 24 for a discussion of certain direct disbursements to
An "indirect disbursement" to an officer officers that do not have to be reported in Item 24.
is a payment to another party (including a credit card company) for cash, property, goods,
services, or other things of value received by or on behalf of an officer. However, indirect
disbursements for temporary lodging (such as a union check issued to a hotel) or for
transportation by a public carrier (such as an airline) for an officer traveling on union
business should be reported in Item 48 (Office and Administrative Expense).
3. Interest
Bank records and IRS Forms 1099 maintained by Local 1279 revealed that the local
received interest payments totaling $2,466.55 during 2009; however, Local 1279 reported
interest payments of $4,475 in Item 45 (Interest and Dividends). You indicated that former
Treasurer Schueler prepared the LM-3 report, and that you did not know why the interest
receipts were erroneously reported.
4. Lost Wage Payments
Local 1279 disbursed over $70,000 to SCA Tissue for the reimbursement of wages paid to
officers and employees who were absent from work to attend to union matters as well as for
the redemption of “banked” days of personal time, as described above. During the opening
interview, advised that disbursements to SCA Tissue for wage
reimbursements and applicable taxes on behalf of local union officers and employees were
included in the amount reported in Item 54 (Other Disbursements). However, these
disbursements are considered indirect disbursements to officers and employees which are
required to be reported in Item 24 and Item 46 (To Employees). In addition, payments to
SCA for the reimbursement of employer taxes related to the wages must be reported in Item
48 (Office and Administrative Expenses).
I am not requiring that Local 1279 file an amended LM report for 2009 to correct the deficient
items. During the audit, Treasurer Krautkramer received guidance from OLMS with respect to
the reporting of the payments to SCA Tissue on the LM report for 2010. The payments to SCA
Tissue for the reimbursement of wages to officers and employees have been correctly reported in
Items 24 and 46 of the LM report filed for 2010.
Mr. Bill Kilishek
August 2, 2011
Page 6 of 6
Other Issue
Duplicate Receipts
Members of Local 1279 pay initiation fees as well as fees for t-shirts and other union apparel
directly to the union. As mentioned above, Financial Secretary Corry Sokel records these
receipts on the deposit tickets, but he does not issue duplicate receipts to members when
payments are received. OLMS recommends that Local 1279 use a duplicate receipt system
where the union issues original pre-numbered receipts to all members who make payments
directly to the union and retains copies of those receipts. A duplicate receipt system is an
effective internal control because it ensures that a record is created of income which is not
otherwise easily verifiable. If more than one duplicate receipt book is in use, the union should
maintain a log to identify each book, the series of receipt numbers in each book, and to whom
each book is assigned.
I want to extend my personal appreciation to Steelworkers Local 2-1279 for the cooperation and
courtesy extended during this compliance audit. I strongly recommend that you make sure this
letter and the compliance assistance materials provided to you are passed on to future officers. If
we can provide any additional assistance, please do not hesitate to call.
Sincerely,
Investigator
cc:
Ms. Michelle Krautkramer, Treasurer
Mr. Corry Sokel, Financial Secretary