U.S. Department of Labor
Office of Labor-Management Standards
San Francisco District Office
90 7th Street, Suite 18100
San Francisco, CA 94103-6701
(415) 625-2661 Fax: (415) 625-2662
July 31, 2013
Mr. Frank Payan, President
AFGE Local 1546
PO Box 432
Lathrop, CA 95330
Case Number: 530-10511
LM Number: 503185
Dear Mr. Payan:
This office has recently completed an audit of AFGE Local 1546 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 and Treasurer Damiana Maggio on July 30, 2013, 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 of the LMRDA and Title 29 of the Code of Federal Regulations (C.F.R.) Section 403.7 require, among other things, that labor organizations maintain adequate records for at least five years after reports are filed by which the information on the reports can be verified, explained and clarified. Pursuant to 29 C.F.R. Section 458.3, this recordkeeping provision of the LMRDA applies to labor organizations subject to the requirements of the Civil Service Reform Act of 1978 (CSRA) as well. Therefore, as a general rule, labor organization must retain 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 1546’s 2012 records revealed the following recordkeeping violations:
1. General Reimbursed and Credit Card Expenses
Local 1546 did not retain adequate documentation for reimbursed expenses and credit card expenses incurred by union officers and employees totaling at least $1,768.67, For example, reimbursement was made in the amount of $51 for airport parking without any supporting documentation, the $75 President’s Fund was paid each trip without any supporting documentation, cab fare was paid at a flat rate of $50 per person per trip regardless of missing receipts, and there was no supporting documentation for a $667.67 trip on or around February 7, 2012.
As noted above, labor organizations must retain original receipts, bills, and vouchers for all disbursements. The president and treasurer (or corresponding principal officers) of your union, who are required to sign your union’s LM report, are responsible for properly maintaining union records.
2. Meal Expenses
Local 1546 did not require officers and employees to submit itemized receipts for meal expenses totaling at least $1,264.90. The union must maintain itemized receipts provided by restaurants to officers and employees. 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 1546 records of meal expenses did not always include written explanations of union business conducted or the names and titles of the persons incurring the restaurant charges. For example, not all attendees were listed on the receipt for Bud’s Seafood Restaurant on January 27, 2012, attendees were not listed on the receipt for Denny’s on May 15, 2012, attendees were not listed on the receipt for Four Corners Restaurant on August 30, 2012, attendees were missing from the receipt at Casa Mendoza on December 1, 2012, and were missing from the Perkos Café receipt on November 15, 2012. Union 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.
Based on your assurance that Local 1546 will retain adequate documentation in the future, OLMS will take no further enforcement action at this time regarding the above violations.
Reporting Violations
Pursuant to 29 C.F.R., Section 458.3, the reporting requirement under 29 C.F.R. Section 403.2 (see Section 201(b) of the Labor-Management Reporting and Disclosure Act (LMRDA)) is made applicable to labor organizations subject to the requirements of the CSRA. This provision requires labor organizations to file annual financial reports that accurately disclose their financial condition and operations. The audit disclosed a violation of this requirement. The Labor Organization Annual Report Form LM-2 filed by Local 1546 for the fiscal year ended December 31, 2012, was deficient in the following area:
1. Disbursements to Officers and Employees (LM-2)
Local 1546 did not include some payments to officers and employees totaling at least $1,714.90 in Column G (Other Disbursements) of Schedule 11 (All Officers and Disbursements to Officers) and Schedule 12 (Disbursements to Employees). It appears that the local erroneously reported these payments in Schedules 15 through 19.
The union must report in Column F of Schedules 11 and 12 (Disbursements for Official Business) direct disbursements to officers and employees for reimbursement of expenses they incurred while conducting union business. In addition, the union must report in Column F of Schedules 11 and 12 indirect disbursements made to another party (such as a credit card company) for business expenses union personnel incur. However, the union must report in Schedules 15 through 19 indirect disbursements for business expenses union personnel incur for transportation by public carrier (such as an airline) and for temporary lodging expenses while traveling on union business. The union must report in Column G (Other Disbursements) of Schedules 11 and 12 any direct or indirect disbursements to union personnel for expenses not necessary for conducting union business.
I am not requiring that Local 1546 file an amended LM report for 2012 to correct the deficient items, but Local 1546 has agreed to properly report the deficient items on all future reports it files with OLMS.
Other Violations
1. Inadequate Bonding
Pursuant to 29 C.F.R. Section 458.35, officers and employees of any labor organization subject to the CSRA are required to be bonded in accordance with Section 502(a) of the LMRDA. This provision requires that union officers and employees be bonded for no less than 10% of the total funds those individuals or their predecessors handled during the preceding fiscal year.
Local 1546’s officers and employees are currently bonded for $50,000, but they must be bonded for at least $51,000. Local 1546 should obtain adequate bonding coverage for its officers and employees immediately. Please provide proof of bonding coverage to this office as soon as possible, but not later than August 30, 2013.
I want to extend my personal appreciation to AFGE Local 1546 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. Damiana Maggio, Treasurer