U.S. Department of Labor
Office of Labor-Management Standards
Washington District Office
800 North Capitol St. NW, Suite 120
Washington, DC 20002-4244
(202) 513-7300 Fax: (202) 513-7301
January 29, 2015
Mr. Robert Council, President
Communications Workers of America
Local 2275
Franklin, VA
Case Number: 450-4512992()
LM Number: 513557
Dear Mr. Council:
This office has recently completed an audit of Communications Workers of America Local 2275 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). 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 2275’s fiscal year ending September 30, 2012 records revealed the following recordkeeping violations:
1. General Reimbursed and Credit Card Expenses
Local 2275 did not retain adequate documentation for some reimbursed expenses and credit card expenses incurred by union officers. For example, there were no receipts for charges for hotels, parking, gas, flowers, and rental cars, among other things. In addition, Local 2275 records did not always include a written explanation of the union business conducted.
As noted above, labor organizations must retain original receipts, bills, and vouchers for all disbursements. Union records must also include a written explanation of the union business conducted. 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 2275 officers did not always submit itemized receipts for meal expenses. 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.
In addition, Local 2275 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. 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.
3. Lost Wages
Local 2275 did not retain adequate documentation for lost wage reimbursement payments to several union officers. The union must maintain records 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. The OLMS audit found that Local 2275 records did not include the specific date lost wages were incurred, the number of hours lost on each date, or a description of the union business conducted.
4. Failure to Retain Records
Local 2275 failed to maintain several deposit slips from deposits made into the union’s account and an invoice from the accounting firm used by the union. All union records must be maintained.
Since Local 2275 merged into Communications Workers of America Local 2201, OLMS will take no further enforcement action at this time regarding the above violations.
Reporting Violations
The audit disclosed a violation of LMRDA Section 201(b), which requires labor organizations to file annual financial reports accurately disclosing their financial condition and operations. The Labor Organization Annual Report (Form LM-3) filed by Local 2275 for the fiscal year ended September 30, 2012 was deficient in the following areas:
1. Disbursements to Officers
Local 2275 did not properly report the lost time payments to some officers in Column D (Gross Salary) of Item 24 (All Officers and Disbursements to Officers). For example, the union reported the wrong amounts in Column D as follows:
• The union reported in Column D that Local 2275 President Council received $6,223 in gross salary in the fiscal year. The audit revealed that Council actually received $3,689 in gross salary during the fiscal year. The remainder of the money that the union reported in Column D was for disbursements for official business, which should have been reported in Column (E) (Allowances and Other Disbursements) in Item 24.
• The union reported in Column D that Local 2275 Secretary-Treasurer Betty Jarboe received $13,105 in gross salary in the fiscal year. However, the audit revealed that Jarboe actually received $28,170 in gross salary during the fiscal year.
• The union reported in Column D that , who was Local 2275 secretary-treasurer at the beginning of the fiscal year, did not receive any gross salary in the fiscal year. However, the audit revealed that actually received $6,960 in gross salary during the fiscal year.
The union must report most direct disbursements to Local 2275 officers and some indirect disbursements made on behalf of its officers 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 officers that do not have to be reported in Item 24. An "indirect disbursement" to an officer 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).
2. Total Receipts and Disbursements Incorrectly Reported
The total receipts and total disbursements figures reported on the union’s LM-3 report for fiscal year ending September 30, 2012 do not match the figures calculated by OLMS during the audit. The union reported total receipts of $116,795 and total disbursements of $92,937 for the fiscal year. The actual amount of money received by the union during the fiscal year was $152,796 and the amount of money disbursed was $142,013. Unions must report all money received by the union in the fiscal year in Items 38 through 43 and all money disbursed by the union in the fiscal year in Items 45 through 54 of Statement B.
3. Beginning and Ending Cash Incorrectly Reported
The beginning and ending cash figures reported in Item 25 on the union’s LM-3 report for fiscal year ending September 30, 2012 do not match the figures calculated by OLMS during the audit. The union reported that its cash at the beginning of the fiscal year was $27,919 and its cash at the end of the fiscal year was $51,777. The amount of cash that Local 2275 actually had at the beginning of the fiscal year was $55,715 and the amount of cash that Local 2275 actually had at the end of the fiscal year was $64,762. Unions must accurately report the amount of its cash at the beginning and end of the fiscal year in Item 25 of the LM-3 report.
Since Local 2275 has merged into Communications Workers of America Local 2201, no further action will be taken regarding these reporting violations.
Other Issues
Personal Expenses
The audit revealed that Secretary-Treasurer made numerous personal charges on her union credit card and the union paid the credit card bill for these purchases. Secretary-Treasurer also wrote two union checks to pay a non-union credit card. Union funds should only be disbursed for legitimate union expenses. Since is deceased, no further action will be taken regarding this matter.
I want to extend my personal appreciation to Communications Workers of America Local 2275 for the cooperation and courtesy extended during this compliance audit. If we can provide any additional assistance, please do not hesitate to call.
Sincerely,
District Director
cc: Betty Jarboe, Secretary-Treasurer
Robert Johnson, Local 2201 Secretary-Treasurer