Reporting and Disclosure

200   Reporting In General

201   Labor Organization Information Report In General
202   Who Must File
203   Time and Place to File Initial Reports and Terminal Information Reports
204   Requirement to Adopt a Constitution and Bylaws
205.100  Contents of LM-1 Report: Constitution and Bylaws
205.200  Contents of LM-1 Report: Name, Address, Office of Union; Names and Titles of Union Officers
205.300  Contents of LM-1 Report: Dues, Fees, Work Permits, Assessments
205.400  Contents of LM-1 Report: Qualifications and Restrictions on Membership
205.500  Contents of LM-1 Report: Levying of Assessments
205.600  Contents of LM-1 Report: Insurance or Benefit Plans
205.700  Contents of LM-1 Report: Disbursement of Funds
205.800  Contents of LM-1 Report: Audit of Finances
205.900  Contents of LM-1 Report: Calling of Meetings
206.100  Contents of LM-1 Report: Selection of Officers
206.200  Contents of LM-1 Report: Removal of Officers
206.300  Contents of LM-1 Report: Fines and Appeals
206.400  Contents of LM-1 Report: Bargaining
206.500  Contents of LM-1 Report: Ratification of Contract
206.600  Contents of LM-1 Report: Authorization of Strikes
206.700  Contents of LM-1 Report: Issuance of Work Permits
206.800  Contents of LM-1 Report: Signatures  
207   (Number Reserved)
208   Changes in Information on LM-1 Report: Form LM-1A
209   (Number Reserved)

210   Labor Organization Annual Reports LM-2, LM-3 In General 
211   Who Must File
212   Time and Place to File Initial and Terminal Reports
213   Combined or Consolidated Reporting
214   Information Required by Law
214.100  Contents of Annual Report: Fiscal Year
214.200  Contents of Annual Report: Assets
214.300  Contents of Annual Report: Liabilities
214.400  Contents of Annual Report: Receipts
214.500  Contents of Annual Report: Salary and Disbursements to Officers and Employees
214.600  Contents of Annual Report: Loans to Officers, Members and Employees
214.700  Contents of Annual Report: Loans to Business Enterprises
214.800  Contents of Annual Report: Other Disbursements
214.900  Contents of Annual Report: Signatures, Names and Addresses of Organization
215   Subsidiary Organization
216   Methods of Accounting
217-218  (Numbers Reserved)
219   Labor Organization Financial Report, LM-3

220   Trust in Which a Labor Organization Is Interested

230   Trusteeship Reports; Who Must Report 
231   When and Where Reports Must Be Filed
232   Initial Trusteeship Report, LM-15        
233   Semiannual Trusteeship Report, LM- 15
234   (Number Reserved)
235   Information and Financial Reports for Trusteed Unions, LM-2, LM-6
236   Terminal Trusteeship Report, LM-16
237-239 (Numbers Reserved)

240   Union Officer and Employee Reports In General
241   Who Must File
242   Time and Place to File Union Officer and Employee Reports
243   Benefit from Employer of Union Members
244   Transaction with Employer of Union Members
245   Benefit from Business which Deals with Employer of Union Members
246   Benefit from Business which Deals with Union
247   Business Transaction with Employer of Union Members
248   Payment Received from Any Employer or Consultant
249   (Number Reserved)

250   Employer Reporting In General
251   Employer Reports; Who Must Report
252   When and Where to File Employer Reports
253   Payment to Unions, Officers, etc.
253.100  Payments Excepted under Taft-Hartley In General
253.200  Payments Excepted under Taft-Hartley: Payments to Employee-Consultant Acting Openly
253.300  Payments Excepted under Taft-Hartley: Regular Wage Exception
253.400  Payments Excepted under Taft-Hartley: Payments of Disputed Claims
253.500  Payments Excepted under Taft-Hartley: Sales and Purchases at Market Prices
253.600  Payments Excepted under Taft-Hartley: Dues Deducted from Wages
253.700  Payments Excepted under Taft-Hartley: Payments to Welfare and Pension Trust
253.800  Payments Excepted under Taft-Hartley: Payments to Fringe Benefit Trust
253.900  Payments Excepted under Taft-Hartley: Scholarship or Child Care Center Trust
253.950  Payments Excepted under Taft-Hartley: Legal Services Trust Fund
254   Payments to Employees
255   Expenditure to Interfere with, Restrain or Coerce Employees
255.500  "Free Speech" Right of Employer
256   Expenditures to Obtain Information
257   Agreement with Consultant
258   Payment to Consultant
259   Employer Report, Form LM-10

260   Consultant Reporting In General
261   Who Must Report
262   When and Where to File Consultant Reports
263   Persuasion by Consultant
264   Supplying of Information by Consultant
265   "Advice" Exemption
265.500  Attorney-Client Exemption
266   Supervisors and Employees
267-268  (Numbers Reserved)
269   Consultant: Agreement and Activities Report, LM-20
269.500  Consultant: Receipts and Disbursements Report, LM-21

270   Private Disclosure: Unions to Members and Employees
271   (Number Reserved)
272   What Union Must Make Available to Members
273   (Number Reserved)
274   Member Must Make Demand
275   Requirement of "Just Cause" to Examine Union Books
276   When Member Can Sue to Enforce Right
277-279  (Numbers Reserved)

280   Public Disclosure In General 
281   Effect of Acknowledgment and Filing of Reports by OLMS
282   Cancellation and Removal of Reports from OLMS Files
*283-284 (Numbers Reserved)
285   Retention of Reporting Records
286-289  (Numbers Reserved)

*290 Surety Company Reporting 
291-299  (Numbers Reserved)

REPORTING AND DISCLOSURE IN GENERAL

200.001 SEE LMRDA, TITLE II AND SECTION 301 OF TITLE III

200.101 REPEAL OF TAFT-HARTLEY REPORTING PROVISIONS

LMRDA, SECTION 201

(d) Subsections (f), (g), and (h) of section 9 of the National Labor Relations Act, as amended, are hereby repealed.
(e)  Clause (i) of section 8 (a) (3) of the National Labor Relations Act, as amended, is amended by striking out the following: "and has at the time the agreement was made or within the preceding twelve months received from the Board a notice of compliance with section 9 (f), (g), (h)".

200.105 PREVIOUS REQUIREMENTS

Sections 9 (f), (g), and (h) of the National Labor Relations Act, 1947, (Taft-Hartley) provided that any labor organization wishing to use the services of the NLRB file annually certain registration and financial reports, as well as non-Communist affidavits executed by each of its officers. These requirements of the National Labor Relations Act have been repealed by section 201(d) of the Labor-Management Reporting and Disclosure Act.

200.201 REGULATORY AUTHORITY

LMRDA, SECTION 208

The Secretary shall have authority to issue, amend, and rescind rules and regulations prescribing the form and publication of reports required to be filed under this title and such other reasonable rules and regulations (including rules prescribing reports concerning trusts in which a labor organization is interested) as he may find necessary to prevent the circumvention or evasion of such reporting requirements. In exercising his power under this section the Secretary shall prescribe by general rule simplified reports for labor organizations or employers for whom he finds that by virtue of their size a detailed report would be unduly burdensome, but the Secretary may revoke such provision for simplified forms of any labor organization or employer if he determines, after such investigation as he deems proper and due notice and opportunity for a hearing, that the purposes of this section would be served thereby.
See specific Regulations published in 29 CFR 402, 403, 404, 405, 406 and 408.

200.400 EFFECTIVE DATE - GENERAL APPLICATION

   Sections 201, 202, and 203 became effective immediately upon the date of enactment, September 14, 1959. Section 207, which is titled "Effective Date", merely specifies the period within which reports required under those sections must be filed.

200.450 LATE REPORTING

   The mandatory language of section 207 allows no extension of reporting dates. The report should be submitted as completely as possible on or before the reporting date, indicating what information has not been furnished, why it has not been furnished, and when it will be submitted.  This includes situations where constitution or bylaws are in the process of revision.

200.501 CIVIL ENFORCEMENT

LMRDA, SECTION 210
 

Whenever it shall appear that any person has violated or is about to violate any of the provisions of this title, the Secretary may bring a civil action for such relief (including injunctions) as may be appropriate. Any such action may be brought in the district court of the United States where the violation occurred or, at the option of the parties, in the United States District Court for the District of Columbia.

200.550 CIVIL VENUE

   For purposes of venue, failure to file a report is not a violation that "occurs" in the District of Columbia. Section 210 provides that civil actions may be brought in the District Court where the violation occurred, or, at the option of the parties, in the District of Columbia. The Congressional policy that it is fairer to require the Government to bear the cost of litigation in localities throughout the country rather than to force unions and employers, many of them obviously small, to come to the District of Columbia, applies to all types of Title II violations, failure to file, filing misinformation, or the destruction of records. 
Wirtz v. Cascade Employer’s Association, Inc. of Pacific Northwest, 219 F.Supp. 84, 87 (D.D.C 1963)  

   (Technical Revisions: Dec. 2016)

200.610 CRIMINAL PROVISIONS

LMRDA, SECTION 209

(a) Any person who willfully violates this title shall be fined not more than $10,000 or imprisoned for not more than one year, or both.
(b) Any person who makes a false statement or representation of a material fact, knowing it to be false, or who knowingly fails to disclose a material fact, in any document, report, or other information required under the provisions of this title shall be fined not more than $10,000 or imprisoned for not more than one year, or both.
(c) Any person who willfully makes a false entry in or willfully conceals, withholds, or destroys any books, records, reports, or statements required to be kept by any provision of this title shall be fined not more than $10,000 or imprisoned for not more than one year, or both.
(d) Each individual required to sign reports under sections 201 and 203 shall be personally responsible for the filing of such reports and for any statement contained therein which he knows to be false.

200.650 CONSTITUTIONALITY OF CRIMINAL PROVISIONS

   An officer of a local union was convicted in the U. S. District Court of willfully concealing, withholding and destroying certain books and financial records of his union, in violation of section 209 (c) of LMRDA.
   On appeal, the convicted officer alleged that the District Court lacked jurisdiction to try him because (1) LMRDA is unconstitutional, and (2) the evidence did not establish that the activities of his union affected commerce within the meaning of LMRDA.
   In affirming the conviction the Court of Appeals recognized the constitutional power vested in Congress to regulate labor management matters affecting commerce in the manner described in section 2(c) of LMRDA, and concluded that the criminal remedies provided in section 209(c) bear a reasonable relation to the nefarious conditions which Congress found to exist and sought to correct.
Lawson v. United States 300 F. 2d 252, 49 LRRM 2557 (10th Cir. 1962).

   (Technical Revisions: Dec. 2016)

200.660 FALSE OR INCOMPLETE STATEMENTS

   Where the actual practice of a union in disciplining or removing its officers is different from the provision for such discipline or removal in the union's constitution, a report on the LM-1 which does not indicate the difference between the practice and the constitutional requirement is not in compliance with the law.

FALSE ENTRIES

200.670 WHEN VIOLATION OCCURS

   A false entry, willfully made, constitutes a violation of section 209(c) of the Act. Consequently, any person who willfully makes a false entry in any of the records "required to be kept by the provisions of this title" is liable within the meaning of the Act, regardless of whether or not said person signs reports. Because a false entry constitutes a violation it is not necessary that such false entry be made with the intent to report to the Department. It follows that the violation occurs at the time of entry, as opposed to the time the report is submitted.

200.680 LEDGER ACCOUNTS

   Prior to an election the incumbent president and secretary-treasurer issued quarterly work cards to certain members without charge in order to induce the recipients thereof to vote for them. The individual ledger accounts of those members who received the work cards fraudulently reflected the payment of quarterly dues.
   Where the ledger accounts show dues payments by the individual members who received work cards when, in fact, said members made no dues payments and none were made in their behalf, a falsification of records within the purview of section 209(c) has occurred.

LABOR ORGANIZATION INFORMATION REPORT IN GENERAL

201.001 LMRDA, SECTION 201(a)

Every labor organization shall adopt a constitution and bylaws and shall file a copy thereof with the Secretary, together with a report, signed by its president and secretary or corresponding principal officers, containing the following information--
   (1) the name of the labor organization, its mailing address, and any other address at which it maintains its principal office or at which it keeps the records referred to in this title;
   (2) the name and title of each of its officers;
   (3) the initiation fee or fees required from a new or transferred member and fees for work permits required by the reporting labor organization;
   (4) the regular dues or fees or other periodic payments required to remain a member of the reporting labor organization; and
   (5) detailed statements, or references to specific provisions of documents filed under this subsection which contain such statements, showing the provision made and procedures followed with respect to each of the following: (A) qualifications for or restrictions on membership, (B) levying of assessments, (C) participation in insurance or other benefit plans, (D) authorization for disbursement of funds of the labor organization, (E) audit of financial transactions of the labor organization, (F) the calling of regular and special meetings, (G) the selection of officers and stewards and of any representatives to other bodies composed of labor organizations' representatives, with a specific statement of the manner in which each officer was elected, appointed, or otherwise selected, (H) discipline or removal of officers or agents for breaches of their trust, (I) imposition of fines, suspensions, and expulsions of members, including the grounds for such action and any provision made for notice, hearing, judgment on the evidence, and appeal procedures, (J) authorization for bargaining demands, (K) ratification of contract terms, (L) authorization for strikes, and (M) issuance of work permits. Any change in the information required by this subsection shall be reported to the Secretary at the time the reporting labor organization files with the Secretary the annual financial report required by subsection (b).

201.002 SEE 29 CFR 402.

201.003 SEE 29 CFR 451.1 to 451.6 for extended discussion of coverage of Labor Organizations.

201.004 SEE Instructions for Form LM-1, Labor Organization Information Report.

WHO MUST FILE

202.001 DEFINITION OF "LABOR ORGANIZATION"

   See Manual Entry 030.601 ff for definition of the term "labor organization” in section 3(i) of the Act and for discussion of coverage.

202.005 FOREIGN LOCALS

   Foreign locals do not have to submit reports required by section 201 of the Act.

*202.010 CONSOLIDATED LOCAL

   Where two local unions consolidate under a new charter but retain the same members and assets as the former separate organizations, the consolidated local is considered a new labor organization which must file the reports required by section 201. The initial information report on Form LM-1 is due within ninety days after the consolidation takes effect, and annual reports must be filed ninety days after the end of the fiscal year of the new organization.
   Further, each organization which loses its identity through the consolidation must file a terminal report within thirty days of the effective date of such loss of identity.
   See 29 CFR 402.2, 402.5, 403.2 and 403.5, and Manual Entries 203.001 ff and 212.100 ff.

May, 1973

TIME AND PLACE TO FILE INITIAL REPORTS AND TERMINAL INFORMATION REPORTS

INITIAL REPORTS

203.001 LMRDA, SECTION 207(a)

Each labor organization shall file the initial reports required under section 201(a) within ninety days after the date on which it first becomes subject to this Act.

203.002 SEE 29 CFR 402.2, 402.3.

203.005 EFFECTIVE DATE FOR INITIAL REPORT

   Section 207(a) of the Act requires a labor organization to file its initial report within 90 days
after becoming subject to the Act. Thus, once a group has taken one of the steps subjecting it to the Act (e.g., electing provisional officers) it should adopt a constitution and bylaws as quickly as possible and file it with the Secretary not later than 90 days after taking the action which makes it subject to the Act. Similarly, an LM-1 should be filed with as much information as is possible with a statement attached indicating that the group is newly formed and that therefore some of the questions are not applicable or immediately answerable.

203.006 ELECTRONIC FILING

Electronic Forms System (EFS) is the Office of Labor-Management Standards’ (OLMS) web-based reporting system for filing electronic reports. Specifically, the labor organization information report Form LM-1, the labor organization annual Forms LM-2, LM-3, and LM-4 reports, the Form LM-30 Labor Organization Officer and Employee report, the Form LM-10 Employer report, and the Form LM-20 and LM-21 labor relations consultant reports can be filed electronically. As of January 1, 2021, all of the preceding forms must be filed electronically with the exception of the Form LM-30. A link to the EFS can be found at https://www.dol.gov/agencies/olms/reports/electronic-filing.

   (Jan. 2021)

TERMINAL INFORMATION REPORTS

203.102 SEE 29 CFR 402.5

203.105 COMBINED REPORTS

   Where locals have gone out of existence the technical requirements of the Act provide for terminal labor organization reports, financial reports (if necessary), and terminal financial reports. If convenient to combine these reports in any way, it is possible to do so, so long as all of the information required in the Regulations is contained in the reports. (The specific requirements for the terminal reports are discussed in section 402.5 and 403.5 of the Regulations.)

REQUIREMENT TO ADOPT A CONSTITUTION AND BYLAWS

204.001 LMRDA, SECTION 201(a)

   Every labor organization shall adopt a constitution and bylaws and shall file a copy thereof with the Secretary, together with a report, signed by its president and secretary or corresponding principal officers, containing the following information--. . .

204.002 SEE 29 CFR 402.1, 402.3(b)

204.005 DIFFERENCE BETWEEN CONSTITUTION AND BYLAWS

   Section 201 requires the adoption of written documents which contain the substance of what is generally contained in the constitution and bylaws of an organization. Ordinarily the two terms are distinguishable to the extent that the document which sets forth the mode of organization, the fundamental organic law, and the principles governing the body, and which enacts and establishes the organization and fixes the structure and the aggregate of powers of the association is denoted as the constitution. The term "bylaws", on the other hand, is generally used to denote the rules, details and regulations applicable to the internal affairs of the association.

According to Webster, bylaws would include such matters as duties of members, fees or dues, authority in case of disputes and the order of business. It is stated in section 402.1 of the Regulations that "as used in this part 'constitution and bylaws' means the basic written rules governing the organization." If the constitution incorporates the substance of what may more often be described as bylaws, and if in fact it includes all of the basic written rules governing the organization, and if other bylaws, as that term is usually understood, either denominated as such or otherwise, actually do not exist, no formal adoption thereof need be made. However, in such case a statement should be included in the LM-1 report to the effect that the constitution embodies all of the basic written rules governing the organization, and that no bylaws as such have been adopted.

See also Manual Entries 204 ff.

   (Technical Revisions: Dec. 2016)

204.200 ADOPTION OF INTERNATIONAL CONSTITUTION BY LOCAL

   Section 201 of the Act requires a labor organization to adopt a constitution and bylaws and file a copy with the Secretary. This section presumes that the constitution and bylaws adopted will be adequate for the operation of the adopting labor organization and that the provisions will be in accordance with the Act. Where a local union adopts the constitution and bylaws of a parent union, such documents must contain provisions which are applicable to the adopting union. Where the language of an adopted International constitution and bylaws is limited in its application to the conduct of the International's business and no provisions are made for the guidance of the internal operation of subordinate unions, then any subordinate union which adopts such documents as its own without any additions, has not met the requirements of Title II of the Act.

See also Manual Entries 205 ff.

CONTENTS OF LM-1 REPORT:
CONSTITUTION AND BYLAWS

205.101 LMRDA, SECTION 201(a)

Every labor organization shall adopt a constitution and bylaws and shall file a copy thereof with the Secretary, together with a report, signed by its president and secretary or corresponding principal officers, containing the following information-- . . .

205.105 INFORMATION NEED NOT BE IN CONSTITUTION OR BYLAWS

   Section 201(a) requires that a labor organization file with the Secretary of Labor a copy of its constitution and bylaws, together with an information report containing ". . . (3) detailed statements or references to specific provisions of documents filed under this subsection, showing the provision made and procedures followed with respect to each of the following: . . . (J) authorization for bargaining demands . . . (K) ratification of contract terms."
         It is the position of this Office that the language of the statute does not require that provisions and procedures in question must be contained in the constitution or bylaws, and our interpretation finds support in the option given labor organizations of filing "detailed statements" in lieu of "references to specific provisions of documents." The provisions and procedures may be informal; the statute is only concerned that, in whatever form they exist, they be described in detail on the information report.

205. 110 PARENT CONSTITUTION ADOPTED BY SUBORDINATE

   Under section 402.3(b) of the Regulations, a subordinate labor organization may adopt the constitution and bylaws of a national or international union and the subordinate organization will not have to file copies of these documents under the conditions stated in that section of  the Regulations.
   This exemption from filing copies is limited to the adoption of the constitution and bylaws of a national or international labor organization and therefore if a local union has adopted the constitution and bylaws of a district council, the local must file two copies of the district council’s constitution and bylaws with its LM-1.
   However, Item 18 on the Form LM-1 must be answered by every labor organization, including those governed by the constitution of an international labor organization, either by a detailed statement or by reference to the constitution filed on behalf of the reporting organization.

205.120 FILING OF CONSTITUTION ON BEHALF OF SUBORDINATES

   Section 402.3 of the Regulation on "Labor Organization Information Reports" permits an international labor organization to file copies of its constitution on behalf of its subordinate organizations provided that the subordinate organizations indicate in their filings that they have adopted such international constitution. This section of the Regulation does not, however, relieve the subordinate organizations of the responsibility in regard to reporting the provisions made or procedures followed with respect to the matters asked about in Item 18 of Form LM-1. Such provisions or procedures may be reported by giving citations to a document which contains detailed statements describing the provisions or procedures or by the submission of a detailed statement which describes the provisions or procedures.

See also Instructions on use of LM-1, Preparing This Form.

    (Technical Revisions: Dec. 2016 and Jan. 2021)

CONTENTS OF LM-1 REPORT:
NAME-ADDRESS-OFFICES OF UNION
NAMES-TITLES OF UNION OFFICERS

205.201 LMRDA, SECTION 201(a)

(1) the name of the labor organization,  its mailing address, and any other address at which it maintains its principal office or at which it keeps the records referred to in this title;
   (2) the name and title of each of its officers;
See 29 CFR 452.17 - 452.21 for definition of "Officer."

NOTE: Items 4, 8, 9, and 15 of Form LM-1 cover section 201(a)(1) and (2).

   (Technical Revisions: Dec. 2016)

CONTENTS OF LM-1 REPORT:
                     DUES-FEES-WORK PERMITS-ASSESSMENTS

205.301 LMRDA, SECTION 201(a)

(3) the initiation fee or fees required from a new or transferred member and fees for work permits required by the reporting labor organization;
   (4) the regular dues or fees or other periodic payments required to remain a member of the reporting labor organization; and . . .
NOTE: Item 16 of LM-1 covers section 201(a)(3) and (4).  Under this item, the basic reporting principle is that dollar and cents figures are required instead of constitutional references.

CONTENTS OF LM-1 REPORT:
QUALIFICATIONS AND RESTRICTIONS
ON MEMBERSHIP

205.401 LMRDA, SECTI0N 201(a)(5)(A)

. . . qualifications for or restrictions on membership, . . .
NOTE: LM-1, Item 18(A) covers section 201(a)(5)(A)

CONTENTS OF LM-1 REPORT: 
LEVYING OF ASSESSMENTS

205.501  LMRDA, SECTION 201(a)(5)(B)

. . .levying of assessments,…
NOTE: LM-1, Item 18(B) covers section 201(a)(5)(B)

CONTENTS OF LM-1 REPORT:
INSURANCE OR BENEFIT PLANS

205.601 LMRDA, SECTION 201(a)(5)(C)

 . . . participation in insurance or other benefit plans, . . .

NOTE: LM-1, Item 18(C) covers section 201(a)(5)(C).
NOTE: Plans referred to here may be reportable under the Employee Retirement Income Security
Act of 1974 which is administered in part by the Employee Benefits Security Administration.
           

   (Technical Revisions: Dec. 2016)

205.605 BENEFIT PLANS

   The only benefit plans which must be reported under Item 18(C) on the Form LM-1 are plans which are entirely union operated. No report is required under section 201(a)(5)(C) or Item 18(C) of the LM-1 with respect to plans established by collective bargaining which are operated jointly by employer and employee representatives or by an independent trustee.

205.607 VOLUNTARY RELIEF FUND

   A Voluntary Relief Fund is raised by contributions at the time of the death of a member who has voluntarily affiliated himself with the fund and the entire amount thereof is paid to the party or parties designated to receive it. Any expenses incurred in the operation of the fund come from a General Fund and there is no guaranty as to the amount any beneficiary will receive.

   This plan would seem to be a type of benefit plan within the meaning of section 201(a)(5)(C) of the Act. It is necessary under section 201(a) of the Act to either submit a detailed statement or copy of a document with references to the specific provisions thereof which contain such a statement, showing the provision made and procedures followed with respect to each such plan. In addition, it would appear to be necessary to report receipts and disbursements of the Association pursuant to the plan in the annual financial report required to be filed under section 201(b) of the Act.

CONTENTS OF LM-1 REPORT:
DISBURSEMENT OF FUNDS

205.701 LMRDA, SECTION 201(a)(5)(D)

. . . authorization for disbursement of funds of the labor organization, . .
NOTE:  Form LM-1, Item 18(D) covers section 201(a)(5)(D).

205.705 MEANING OF "DISBURSEMENT”

   It would not be responsive to answer Item 18(D) of the LM-1 Form by citing a provision of the union's constitution which states, "All checks must be signed by the Treasurer," when the treasurer is not authorized, in point of fact, to sign checks whenever he wishes, but must have permission from some other person or group.

CONTENTS OF LM-1 REPORT:
AUDIT OF FINANCES

205.801 LMRDA, Section  201(a)(5)(E)

. . . audit of financial transactions of the Labor organization,…
NOTE: LM-1, Item 18(E) covers section 201(a)(5)(E).

CONTENTS OF LM-1 REPORT:
CALLING OF MEETINGS

205.901 LMRDA, SECTION 201(a)(5)(F)

. . . the calling of regular and special meetings, . . .
NOTE: LM-1, Item 18(F) covers section 201(a)(5)(F).

CONTENTS OF LM-1 REPORT:
SELECTION OF OFFICERS

206.101 LMRDA, SECTION 201(a)(5)(G)

. . .  the selection of officers and stewards and of any representatives to other bodies composed of labor organizations' representatives, with a specific statement of the manner in which each officer was elected, appointed, or otherwise selected . . .

NOTE: LM-1, Item 18(G)(1), (2) and (3) covers section 201(a) (5) (G).

CONTENTS OF LM-1 REPORT: 
REMOVAL OF OFFICERS

206.201 LMRDA, SECTION 201(a)(5)(H)

. . . discipline or removal of officers or agents for breaches of their trust, . . .
NOTE: LM-1, Item 18(H) covers section 201(a) (5) (H).
NOTE: For adequacy of removal procedures see Manual Entry 490 ff., and 29 CFR 417.

CONTENTS OF LM-1 REPORT:
FINES AND APPEALS

206.301 LMRDA, SECTION 201(a)(5)(I)

. . . imposition of fines, suspensions, and expulsions of members including the grounds for such action and any provision made for notice, hearing, judgment on the evidence, and appeal procedures, . . .
NOTE: LM-1, Item 18(I) covers section 201(a)(5)(I).

CONTENTS OF LM-1 REPORT:
BARGAINING

206.401 LMRDA, SECTION 201(a)(5)(J)

. . . authorization for bargaining demands, . .

NOTE: LM-l Item 18(J) covers section 201(a)(5)(J).

CONTENTS OF LM-1 REPORT:
RATIFICATION OF CONTRACT

206.501 LMRDA, SECTION 201(a)(5)(K)

. . . ratification of contract terms , . . .
NOTE: LM-1, Item 18(K) covers section 201(a)(5)(K).

206.505 VOTING UPON COLLECTIVE BARGAINING AGREEMENTS

   There is nothing in the Act which regulates the procedures unions must follow in voting upon collective bargaining contracts.  However, section 201(a)(5)(J) and (K) does require, as part of the labor organization information report, a detailed statement or references to specific provisions of documents containing detailed statements showing the provisions made and procedures followed with respect to authorization for bargaining demands and ratification of contract terms.

CONTENTS OF LM-1 REPORT:
AUTHORIZATION OF STRIKES

206.601 LMRDA, SECTION 201(a)(5)(L)

. . authorization for strikes, . . .
NOTE: LM-1, Item 18 (L) covers section 201 (a)(5)(L).

206.605
  
   There is no specific provision in the Act respecting the manner in which strike votes may be taken.  However, section 201(a)(5)(L) does require as part of the report under section 201, a detailed statement or references to specific provisions of documents showing the provisions made and procedure followed with respect to authorization for strikes.
   Apart from the requirement in the National Emergencies provisions of the Taft-Hartley Act, which calls for a last-offer secret ballot conducted by the National Labor Relations Board, no Federal legislation is now in effect which imposes a secret strike vote upon unions in this area.

CONTENTS OF LM-1 REPORT: 
ISSUANCE OF WORK PERMITS

206.701 LMRDA, SECTION 201(a)(5)(M)

... issuance of work permits . . .
NOTE: LM-1, Item 18(M) covers section 201 (a)(5)(M).

206.705 "REFERRAL” OR "HIRING HALL" SYSTEMS UNDER 201(a)(5)(M)

   The United States District Court for the Northern District of Alabama has said that referral slips used in a union hiring hall system amount to "work permits" within the meaning of section 201(a)(5)(M) of LMRDA. The Court found that a reference to a provision in a union's constitution which deals with transfers of members from one local union to another and the means by which such transferred members obtain permission to work is not sufficiently responsive to the requirement, under section 201(a)(5)(M), that the union provide "detailed statements" about the "issuance of work permits," when the union also has a "referral” or "hiring hall" system under which the union regularly receives requests from employers to furnish them with employees for the kind of jobs customarily done by members of the union. This latter information must also be included under Item 18(M) of the Form LM-1. 
Allen v. Local 92, International Association of Bridge, Structural, and Ornamental Iron Workers, 47 LRRM 2214 (N.D Ala. 1960).

   (Technical Revisions: Dec. 2016)

CONTENTS OF LM-1 REPORT:
SIGNATURES

206.801  LMRDA, SECTION 201(a)                 

Every labor organization shall adopt a constitution and bylaws and shall file a copy thereof with the Secretary, together with a report, signed by its president and secretary or corresponding principal officers,…

206.802 PERSONAL RESPONSIBILITY OF SIGNATORIES OF REPORTS
              
               SEE 29 CFR 402.8

(Technical Revisions: Dec. 2016)

206.805 INTERNATIONAL OFFICERS SIGNING FOR LOCALS

   Reports under section 201 of the Act must be signed by the persons specified in the section. There is no exception permitting international representatives to sign reports for local unions, although the Act does not preclude them from assisting local officers in the preparation of these reports.

206.810 PROPER SIGNATURES WHEN OFFICERS CHANGE

   The question of which officer is the proper one to sign labor organization reports when a labor organization selects new officers, particularly when the new officers take office in the 90 day period following the end of the labor organization's fiscal year, is left to the discretion of the labor organization. In the absence of a union rule or determination specifying which officers are to sign the report, we should proceed on the assumption that the current officers should sign the report.

206.820 PROPER OFFICERS TO SIGN WHERE THE EXECUTIVE BOARD IS THE GOVERNING BODY

See Manual Entry 214.920 and Note following.
See also Instructions for Use of LM-1, “Who Must File.”

CHANGES OF INFORMATION ON LM-1 REPORT

208.001 LMRDA, SECTION 201 (a)(5)

Any change in the information required by this subsection shall be reported to the Secretary at the time the reporting labor organization files with the Secretary the annual financial report required by subsection (b).

See Instructions for Item 18 on Form LM-2, Item 21 on Form LM-3, and Item 9 on Form LM-4.

   (Technical Revisions: Dec. 2016)

208.002 SUBSEQUENT REPORTS

               See 29 CFR 402.4

   (Technical Revisions: Dec. 2016)

208.005 CHANGE IN CONSTITUTION OR BYLAWS

   Section 201(a)(5) of the Act and section 402.4 of the regulations require that a union which revises the most recent constitution and bylaws it has filed with the Office of Labor-Management Standards must file two dated copies of its revised constitution and bylaws at the time it files its annual financial report.  However, a union which has a uniform constitution and bylaws prescribed by its parent national or international union is not required to file a copy of a revised uniform constitution and bylaws if its parent body files copies. 
   Section 201(a)(5) of the Act and section 402.4 of the regulations require that a union which changes the practices and procedures for which separate statements must be filed on Form LM-1 must file an amended Form LM-1 when it files its annual financial report to update the information submitted on its previous Form LM-1.
     When a union is not governed by a uniform constitution and bylaws prescribed by a parent national or international union, but the union is required by that parent union to make changes in its constitution or bylaws, the union must file the newly revised constitution and bylaws with its annual report. See Form LM-2 Instructions, Item 18; Form LM-3 Instructions, Item 21; and Form LM-4 Instructions, Item 9.    

   (Revised: Dec. 2016)

208.100 CHANGE OF OFFICERS

   Information with regard to change of officers is reported in the Labor Organization Annual Report (Form LM-2) in Schedule 11 where all officers of the labor organization during the period covered by the report must be listed, together with a code indicating if they left office during the period, continued in office throughout the period, or newly assumed office during the period.

   When a labor organization uses Form LM-3, this information must be supplied in Item 24.

   (Technical Revisions: Dec. 2016)

LABOR ORGANIZATION ANNUAL REPORTS 
LM-2/LM-3/LM-4 IN GENERAL

210.001 LMRDA, SECTION 201(b)

   Every labor organization shall file annually with the Secretary a financial report signed by its president and treasurer or corresponding principal officers containing the following information in such detail as may be necessary accurately to disclose its financial condition and operations for its preceding fiscal year--
   (1) assets and liabilities at the beginning and end of the fiscal year;
   (2) receipts of any kind and the sources thereof;
   (3) salary, allowances, and other direct or indirect disbursements (including reimbursed expenses) to each officer and also to each employee who during such fiscal year, received more than $10,000 in the aggregate from such labor organization and any other labor organization affiliated with it or with which it is affiliated, or which is affiliated with the same national or international labor organization;
   (4) direct and indirect loans made to any officer, employee, or member, which aggregated more than $250 during the fiscal year, together with a statement of the purpose, security, if any, and arrangements  for repayment;
   (5) direct and indirect loans to any business enterprise, together with a statement of the purpose, security, if any, and arrangements for repayment; and
   (6) other disbursements made by it including the purposes thereof; all in such categories as the Secretary may prescribe.

210.002 SEE 29 CFR 403.2

210.005 REPORTING WHERE DUES PAID DIRECTLY TO PARENT BODY

   An employer checks off the dues and initiation fees of a local union’s members and forwards them directly to the parent body.  After per capita and other charges are deducted the remainder is sent to the local.
   If an intermediate or parent body receives dues checkoff directly from an employer on behalf of the reporting organization, the reporting organization does not report in Item 36 the portion retained by the intermediate or parent body for per capita tax or other purposes, such as a special assessment. Any amounts retained by the intermediate body or parent body other than per capita tax must be explained in Item 69 (Additional Information). For example, if the intermediate body or parent body retained $500 of the reporting organization's dues checkoff as payment for supplies purchased from that body by the reporting organization, this should be explained in Item 69, but the $500 should not be reported as a receipt or disbursement on either organization's Form LM-2. If, however, the intermediate body or parent body disbursed part of the reporting organization's dues checkoff on that organization's behalf, this amount should be included in Item 36 and in the appropriate disbursement item on the reporting organization's Form LM-2. For example, if the intermediate body or parent body disbursed $500 of the reporting organization's dues checkoff to an attorney who had provided lobbying services to the reporting organization, this amount should be reported in Item 36 and as a disbursement in Schedule 16 (Political Activities and Lobbying) of the reporting organization's Form LM-2.  See Form LM-2 Instructions, Item 36 (Dues and Agency Fees).

   (Revised: Dec. 2016)

WHO MUST FILE

211.001 LMRDA, SECTION 201(b)

Every labor organization shall file annually with the Secretary a financial report . . .
See Instructions for LM-2, Sections II and VII.

   (Technical Revisions: Dec. 2016)

211.002 SEE 29 CFR 403.2; 403.3; 403.4; 403.5

211. 100 FOREIGN LOCALS

   Foreign locals do not have to submit reports required by section 201 of the Act.

TIME AND PLACE TO FILE INITIAL AND TERMINAL REPORTS

212.001 LMRDA, SECTION 207(b)

Each person required to file a report under section 201(b), 202, 203(a), or the second sentence of 203(b) shall file such report within ninety days after the end of each of its fiscal years; except that where such person is subject to section 201 (b), 202, 203(a), or the second sentence of 203(b), as the case may be, for only a portion of such a fiscal year (because the date of enactment of this Act occurs during such person’s fiscal year or such person becomes subject to this Act during its fiscal year) such person may consider that portion as the entire fiscal year in making such report.

212.002 SEE 29 CFR 403.2(a) 403.5

212.003 ELECTRONIC FILING

Electronic Forms System (EFS) is the Office of Labor-Management Standards’ (OLMS) web-based reporting system for filing electronic reports. Specifically, the labor organization information report Form LM-1, the labor organization annual Forms LM-2, LM-3, and LM-4 reports, the Form LM-30 Labor Organization Officer and Employee report, the Form LM-10 Employer report, and the Form LM-20 and LM-21 labor relations consultant reports can be filed electronically. As of January 1, 2021, all of the preceding forms must be filed electronically with the exception of the LM-30. A link to the EFS can be found at https://www.dol.gov/agencies/olms/reports/electronic-filing.

   (Jan. 2021)

INITIAL REPORTS

212.005 PERIOD COVERED

   A union which elected to file a report covering the last six months of its fiscal year for the year in which the Act became effective, when it might have complied with the Act by reporting only the final three and a half months, was properly ordered to produce records to validate its entire report, even though some of the records were related to events occurring prior to the effective date of the Act. The reason for this is that when the union chose to file its report for the six month period, it assumed the burden imposed by the Act of maintaining the necessary records to support the report which it chose to file.
International Brotherhood of Teamsters v. Goldberg, 303 F.2d 402, 407, 49 LRRM 2968 (D.C. Cir. 1962), cert. denied, 373 U.S. 938 (1962).

   (Technical Revisions: Dec. 2016)

TERMINAL REPORTS

212.100 CONSOLIDATION WITH OTHER LOCAL

   Where locals have gone out of existence due to consolidation with other locals, the technical requirements of the Act provide for terminal labor organization reports, financial (if necessary), and terminal financial reports. If convenient to combine these reports in any way, it is possible to do so, as long as all of the information required in the Regulations is contained in the reports. (The specific requirements for the terminal reports are discussed in sections 402.5 and 403.5 of the Regulations.)

212.200 MOST FREQUENT PROBLEMS

1. Often letters are received giving some terminal information but no financial report.
2. Omissions on terminal reports.
   a. Effective date of termination or loss of reporting identity.
b. Reason for termination.
c. Name and mailing address of the labor organization into which terminated organization has been consolidated, merged or otherwise absorbed.
3. Failure to report ultimate disposition of residual assets or plans for disposition.
4. Missing annual reports for fiscal years prior to the terminal report.
See Instructions for LM-2, Parts III, IV, V, and XII; Instructions for LM-3, Parts III, XI, and XII; and Instructions for LM-4, Item 3 (Amended or Terminal Report) and Part X.

   (Technical Revisions: Dec. 2016)

212.300 DISSOLVED UNIONS

   If the labor organization should lose its identity through merger, consolidation, or otherwise—that is, if the local should cease to exist as a separate local—then it must file a terminal report within 30 days after it ceases to exist.

*212.350 TERMINAL REPORT NEED NOT LIST ASSETS AT ZERO

   A labor organization that has gone out of existence need not list its assets at zero on its terminal financial report. The reporting provisions of the Act require only that a labor organization disclose its financial operations. The organization is not required to make any financial transaction, such as a formal transfer of assets, prior to the time it ceases to be a labor organization. Thus, an organization filing a terminal report must show its financial status, including assets, as of the time it ceased to be a labor organization.

6/77

COMBINED OR CONSOLIDATED REPORTING

213.005 GENERALLY NOT ALLOWED

   The Act requires that every labor organization covered by its provisions submit an annual financial report which covers its own financial activities and operations.  A report submitted for two labor organizations combines and consolidates the financial activities of those labor organizations and therefore is not acceptable.  Each local must submit its own report which is signed by its president and treasurer or corresponding principal officers.

213.007 NOT ALLOWED WHEN LOCAL “HANDLES” FUNDS

   Where a local union pays a monthly assessment to a Joint Board which is (1) deposited in a bank account to the credit of the local’s Unemployment Relief Fund, (2) set up for the benefit of the members of the local, and (3) disbursed by a committee made up of members of the local, a report of the receipts and disbursements from this fund must be reported separately by the local on its LM-3 and may not be reported in a consolidated financial report by the Joint Board.
   One of the conditions for filing consolidated financial reports is that the local unions included in the report “neither receive nor handle any funds.”  The local in question appears to be “handling” the funds of the Unemployment Relief Fund in that it exercises sole control over the disbursements therefrom through a committee made up of members of the local.  The Joint Board’s only function in connection with the fund is to do the bookkeeping of the fund transactions.

213.100 WHEN ALLOWED

   A consolidated labor organization annual report by an intermediate body such as a joint board or council which includes the financial condition and operations of its constituent locals is acceptable, provided (1) each constituent local union files a separate, individual annual report properly signed, (2) the intermediate body reports the names of officers of the constituent locals to whom any payments have been made together with the purpose and amount of such payments, and (3) each of the locals included in the report neither receives nor handles any funds, nor does it hold title alone to any assets or other property. All relevant questions are to be completed, and the intermediate body with which the local is affiliated indicated on the negative report as well as a showing made that the local has no receipts, no disbursements, no assets, and no liabilities.
   Consolidated annual reports by groups of locals each of which has assets or handles funds but whose accounts are handled on a pooled or centralized basis are unacceptable. There is nothing in the LMRDA which prohibits centralized accounting. However, under section 201(b) each labor organization must submit annually a report of its own financial condition and operations showing its assets, liabilities, receipts, and disbursements. Thus, if a number of labor organizations wish to utilize centralized accounting, such accounting must have the capability of producing, and in fact produce, separate and distinct annual reports limited to the financial condition and operations of the individual locals or other bodies being served by the centralized accounting service.

  (Revised: Dec. 2016)

*213.200 SIMPLIFIED ANNUAL REPORTS FOR CERTAIN SMALLER LABOR ORGANIZATIONS

   Pursuant to 29 CFR 403.4(b) a local labor organization which is not in trusteeship and which has no assets, no liabilities, no receipts, and no disbursements during the period covered by the annual report of the national organization with which it is affiliated need not file an annual financial report if the following conditions are met:

   (1) It is governed by a uniform constitution and bylaws filed on its behalf pursuant to §402.3(b) of this chapter, and does not have governing rules of its own;

   (2) Its members are subject to uniform fees and dues applicable to all members of the local labor organizations for which such simplified reports are submitted;

   (3) The national organization with which it is affiliated assumes responsibility for the accuracy of, and submits with its annual report, a separate letter-sized sheet for each local labor organization containing the following information with respect to each local organization in the format illustrated below as part of this regulation:

         (i) The name and designation number or other identifying information;

         (ii) The file number which the Office of Labor-Management Standards
  has assigned it;

         (iii) The mailing address;

         (iv) The beginning and ending date of the reporting period which must be the same as that of the report of the national organization;

         (v) The names and titles of the president and treasurer or corresponding principal officers as of the end of the reporting period;

         (vi) The names and titles of the officers as of the end of the reporting period;

   (4) At least thirty days prior to first submitting simplified annual reports, the national organization notifies the Office of Labor-Management Standards, Division of Reports Processing and Disclosure, U.S. Department of Labor, 200 Constitution Avenue N.W., Washington, D.C. 20210, in writing, of its intent to begin submitting simplified annual reports for affiliated local labor organizations;

   (5) The national organization files a terminal report on Form LM-3 clearly labeled on the form as a terminal report, for any local labor organization which has lost its identity through merger, consolidation, or otherwise if the national organization filed a simplified annual report on behalf of the local labor organization for its last reporting period; and

   (6) The national organization assumes responsibility for the accuracy of and submits with its annual report and the simplified annual reports for the affiliated local labor organizations, the following certification in duplicate properly completed and signed by the president and treasurer of the parent national organization:

   September , 1976 (Technical Revisions: Dec. 2016)

   We, the undersigned, duly authorized officers of (name of national organization), hereby certify that the local labor organizations individually listed on the attached documents come within the purview of 29 CFR 403.4(b) for the reporting period from (beginning date of national organization’s fiscal year) through (ending date of national organization’s fiscal year), namely:

   (1) they are local labor organizations;

   (2) they are not in trusteeship;

   (3) they have no assets, liabilities, receipt, or disbursements;

   (4) they are governed by a uniform constitution and bylaws, and fifty copies of the most recent uniform constitution and bylaws have been filed with the Office of Labor -Management Standards;

   (5) they have no governing rules of their own; and

   (6) they are subject to the following uniform schedule of fees and dues: (Specify schedule for dues, initiation fees, fee required from transfer members, and work permit fees, as applicable.)

   Each document attached contains the specific information called for in 29 CFR 403.4(b)(3)(i)-(vi), namely:  (i) the local labor organization’s name and designation number; (ii) the file number assigned the organization by the Office of Labor-Management Standards; (iii) the local labor organization’s mailing address; (vi) the beginning and ending date of the reporting period; (v) the city; county and state where the local labor organization is chartered to operate; and (vi) the names and titles of the officers of the local labor organization as of (the ending date of the national organization’s fiscal year).

   Furthermore, we certify that the terminal reports required by 29 CFR 403.4(b)(5) and 29 CFR 403.5(a) have been filed for any local labor organizations which have lost their identity through merger, consolidation, or otherwise on whose behalf a simplified annual report was filed for the last reporting period.

(FORMAT FOR SIMPLIFIED ANNUAL REPORTING)

SIMPLIFIED ANNUAL REPORT

INFORMATION REQUIRED BY LAW

214.001 LMRDA, SECTION 201(b)

   . . . the following information in such detail as may be necessary accurately to disclose its financial condition and operations for its preceding fiscal year--
   (1) assets and liabilities at the beginning and end of the fiscal year;
   (2) receipts of any kind and the sources thereof;
   (3) salary, allowances, and other direct or indirect disbursements (including reimbursed expenses) to each officer and also to each employee who, during such fiscal year, received more than $10,000 in the aggregate from such labor organization and any other labor organization affiliated with it or with which it is affiliated, or which is affiliated with the same national or international labor organization;
   (4) direct and indirect loans made to any officer, employee, or member, which aggregated more than $250 during the fiscal year, together with a statement of the purpose, security, if any, and arrangements for repayment;
   (5) direct and indirect loans to any business enterprise, together with a statement of the purpose, security, if any, and arrangements for repayment; and
   (6) other disbursements made by it including the purposes thereof;
all in such categories as the Secretary may prescribe.
See Instructions for Form LM-2, Section XI; LM-3, Section XI; and LM-4, General Instructions, Items 1-24.

   (Technical Revisions: Dec. 2016)

214 .002 SEE 29 CFR 403.2(b), 403.3

214.101 to 214.850 deal with the items listed in section 201(b).

CONTENTS OF ANNUAL REPORT: 
FISCAL YEAR

214.101 LMRDA, SECTION 201(b)

..... its financial condition and operations for its preceding fiscal year---

214.102 FISCAL YEAR FOR REPORTS REQUIRED

               SEE 29 CFR 403.1

   (Technical Revisions: Dec. 2016)

214.105 NEED TO ADOPT FISCAL YEAR

   The law does not call for a specific fiscal year period. It is however, implicit in the phrase that "every labor organization shall file annually" a financial report. Therefore each labor organization should select a convenient fiscal year ending date for reporting purposes.

214.110 CHANGE IN FISCAL YEAR

   It is not necessary to obtain the approval of the Secretary of Labor of a proposed change in a labor organization’s fiscal year. However, organizations which file Federal income tax returns must obtain approval of the Internal Revenue Service of any proposed change of fiscal year. Request for that approval is made on Form 1128, obtainable through district offices of the Internal Revenue Service.

214.111

   There is nothing in the Labor-Management Reporting and Disclosure Act of 1959 which prevents local unions from changing their fiscal years for the purpose of bringing them into uniformity or for any other reason of administrative or accounting convenience.

214.115 INTERNATIONAL CHANGING LOCAL' S FISCAL YEAR

   A clause adopted by an international labor organization making it mandatory for each subordinate local's fiscal year to end on December 31 of each year is proper if appropriate action to comply was taken by the locals. Such action by the locals would have to be in accordance with their own constitution and bylaws, and in conformity with other regulations, such as those of the Internal Revenue Service pertaining to fiscal years. If, therefore, the local's fiscal year in fact ended on December 31, the local would then have until the end of March to comply with section 201(b). However, if such proper action was not taken, and the local's fiscal year in fact ended on some other previously established day, the 90-day period for making the report should be calculated from that date.

   (Revised: Dec. 2016)

214.120 EFFECT OF CHANGE

   Locals designating a new fiscal year prior to the expiration of a previously established fiscal year period are required, by 29 CFR 403.1, to file a financial report for the resulting period of less than 12 months. Subsequent reports should be filed within 90 days after the close of each new succeeding year.

CONTENTS OF ANNUAL REPORT:
                                                       ASSETS

214.201 LMRDA, SECTION 201(b)(1)

. . . assets and liabilities at the beginning and end of the fiscal year; . . .

214.205

See Instructions for LM-2, Items 15, 16, 22-29. (For examples of assets). 
See Instructions for LM-3, Items 13, 25-31.

214.210 CLAIMS IN LITIGATION

      “Grain Warehousemen’s Local No. X,” affiliated with International Union Y, is induced by International Union Z to disaffiliate from International Union Y and to affiliate with it (Z).  One of X’s assets was a $6,000 bond on deposit with International Y.  Y refuses to turn over the bond and as part of the “affiliation” with Z, International Union Z takes an assignment of X’s claim and pays X the full $6,000.  It is expected that Z will be able to recover the bond but in any event the officers of Z feel it a worthwhile expenditure for securing a going local, X, and if unsuccessful are prepared to treat the $6,000 as an organizing expense.

      The proper reporting by the International of the claim for the bond which they (Z) have taken from Local X is “Other Assets,” reportable in Item 28 of the LM-2. The amount of this contingent claim should be set forth in the supporting schedule for “Other Assets” (LM-2, Schedule 7) and full details should be furnished in Item 69 -- Additional Information.

(Technical Revisions: Dec. 2016)

214.215 YEARLY GROWTH IN U.S. TREASURY BONDS

      Yearly growth in U.S. Treasury Bonds can be shown on Form LM-2 in either of two ways.  If the bond is carried on the books at cost, actual cost is entered in Item 25, Columns A and B.  When the bond is converted into cash, total redemption price is entered in Item 43 (and supporting Schedule 3). Alternately, if the bond is carried on the books at current appreciated value, rather than cost, the yearly growth would be shown by entering that increased value at the end of the reporting period in Item 25, Column B, and entering the cost of the bond in Item 69 with a brief explanation of the noncash increase in value.

            (Technical Revisions: Dec. 2016)

214.220 DEPRECIATING AND EXPENSING FIXED ASSETS

            Land and buildings must be itemized, whereas automobiles and other vehicles, and office furniture and equipment should be aggregated.  A labor union is required to record the purchase of fixed assets as assets in its financial records and to charge a portion of the cost of those items in each year in which they have a useful life (i.e., depreciate).  To expense a fixed asset is to charge the cost of the asset to current expenses, rather than enter the asset on the books and periodically depreciate it.   It is generally not permissible to expense certain fixed assets, such as buildings, office furniture and equipment (e.g., computers, photocopiers), and automobiles.  If it is permissible under accounting procedures and tax law to expense a fixed asset, and the union does so in its books, then the union may report the fixed assets in this manner on the Form LM-2.  All fixed assets, other than land, must be reported in Form LM-2, Column C with accumulated depreciation or an amount expensed.  Fixed assets must be reported even when expensed, fully depreciated, or carried on the books at scrap value or other nominal value.
           
            (Revised: Dec. 2016)

CONTENTS OF ANNUAL REPORT:
LIABILITIES

214.301 LMRDA, SECTION 201(b)(1)

. . assets and liabilities at the beginning and end of the fiscal year; . .

214.305 

      See Instructions for LM-2, Items 17, 30-34.
      See Instructions for LM-3, Items 32-36.
      See Instructions for LM-4 Item 15.

214.310 CONTINGENT LIABILITIES (PENDING DAMAGE SUITS)

      The United States District Court for the Northern District of Alabama has held that a union  
 must include in its financial report any contingent liabilities in the form of pending damage suits.  The Court said:

Defendant (union) has filed with the U.S. Secretary of Labor two financial reports under (section 201(b) LMRDA). . . The Court finds there is reasonable cause to believe these reports are inaccurate, incomplete, or inadequate explanations of the financial condition of defendant.  Specifically,  the Court finds . . . that defendant has contingent liabilities of upwards of a quarter of a million dollars, in the form of certain damage suits pending in Alabama State courts, which were not reported on either financial report filed with the U.S. Secretary of Labor; ...

Allen v. Local 92, International Association of Bridge, Structural, and Ornamental Iron Workers, 47 LRRM 2214 (N.D. Ala. 1960).

            (Technical Revisions: Dec. 2016)

214.320 PER CAPITA LIABILITIES

A local union which owes per capita taxes to a superior body at the end of its fiscal year should report such obligations on its annual report as "Other Liabilities," Item 33 on Form LM-2, with detailed information in Schedule 10, or as "Other Liabilities" in Item 35 on Form LM-3.

            (Technical Revisions: Dec. 2016)

CONTENTS OF ANNUAL REPORT:  RECEIPTS

214.401 LMRDA SECTION 201(b)(2)

. . . receipts of any kind and the sources thereof; . . .

214.405

See Instructions for LM-2, 36-49. See Instructions for LM-3, 38-44.

214.410 STRIKE FUND

The requirements for reporting the receipts and disbursements of a Strike Fund for which the reporting organization has the accountability are the same as for reporting all other receipts and disbursements of the reporting organization. The Instructions for Form LM-2 state, in part, that the Statement of Receipts and Disbursements should include all cash receipts and disbursements of the reporting organization during the reporting period. Receipts must be identified as to kind and source and disbursements must be identified as to purpose.

      The financial report should accurately disclose the consolidated financial condition and operations of the labor organization for the period for which it is filed; and include the general fund, strike fund and any other receipts and/or disbursements for which the labor organization has financial accountability.

214.420 UNION ADVERTISING INCOME

      Labor organizations must include in their annual financial reports filed under section 201(b) of the Act, statements concerning income received from the sale of advertising space in their newspaper or journal.

NOTE: If the newspaper or journal is operated as a separate entity, see ruling on Subsidiary Organizations, Manual Entries 215 ff.

*214.430 REPORTING OF SHORT-TERM TRANSFERS OF UNION FUNDS

      On May 15, a union used $10,000 from its checking account to acquire a six-month certificate of a savings and loan association. On November 15 of the same year, the certificate of deposit was redeemed and the money returned to the union's checking account. A question was raised as to the proper handling of this type of transaction for purposes of reporting under the LMRDA.

      The acquisition and redemption of a certificate of deposit does not constitute the ordinary type of cash flow activity required to be reported as a receipt and disbursement for purposes of reporting under the LMRDA. The transferred funds were already part of the union's "cash" assets. The exchange of funds between cash accounts of the same labor organization, such as to and from savings accounts, subsidiary checking accounts, or credit union accounts, also do not constitute reportable cash flow activities. If the transferred money were reported as part of the union's cash flow activities for the fiscal year, the results would clearly distort the union's financial status by inflating the amount of money reported as taken in and paid out for the fiscal year involved.

      The distinction, for reporting purposes, between cash transfers and actual receipts and disbursements is explained in the Instructions for the LM-2 (page 34, column 1) under the heading (Statement B - Receipts and Disbursements).  The explanation, which appears in the second paragraph, states that "the purpose of Statement B is to report the flow of cash in and out of the labor organization during the reporting period.  Transfers between separate bank accounts or between special funds of the labor organization, such as vacation or strike funds, do not represent the flow of cash in and out of the labor organization.  Therefore, these transfers should not be reported as receipts and disbursements of the labor organization.” 

      (Revised: Dec. 2016)

CONTENTS OF ANNUAL REPORT:
SALARY AND DISBURSEMENTS TO OFFICERS AND EMPLOYEES

214.501 LMRDA, SECTION 201(b)(3)

. . . salary, allowances, and other direct or indirect disbursements (including reimbursed expenses) to each officer and also to each employee who, during such fiscal year, received more than $10,000 in the aggregate from such labor organization and any other labor organization affiliated with it or with which it is affiliated, or which is affiliated with the same national or international labor organization; . . .

214.505

See Instructions for LM-2, Schedules 11 and 12. 
See Instructions for LM-3, 24, 45, 46
See Instructions for LM-4, Item 18

            (Technical Revisions: Dec. 2016)

214.510 OFFICERS RECEIVING LESS THAN $10,000

      The salaries of all officers of labor organizations must be reported, but only the salaries of employees who receive more than $10,000 in the aggregate must be reported.  Any other construction of this section would make the words “also to” as used in this section superfluous.  If the $10,000 limitation had been intended to apply to both officers and employees, we would expect the section to read, “to each officer and employee who received more than $10,000.”  But the words “also to” create two separate reporting categories: (1) officers, and (2) employees who receive more than $10,000.

214.520 ALLOWANCES

      If “allowance” payments by the union are to a representative who is an officer of the labor organization, they are reportable under (E), Schedule 11, of the LM-2, Labor Organization Annual Report.  If “allowance” payments are to a representative who is not an officer of the labor organization but is an employee of the labor organization, they are reportable under (E), Schedule 12 in Columns D-G if his total compensation from all affiliated labor organizations (salary, expenses, and other direct or indirect payments) is more than $10,000, and on the Totals Received By Employees Making Less than $10,000 Line if $10,000 or less.

            (Technical Revisions: Dec. 2016)

214.530 BUSINESS REPRESENTATIVES EXPENSES

      The law does not limit the amount of expenditures of union funds by business representatives.  It leaves the establishment of such a limit to the organization.  All such expenditures, however, must be reported in the union’s annual financial report.  With publicity available on the amount, the membership can act, if they wish, to set limits.  Similarly, a union may, if it wishes, and if the constitution and bylaws permit, contract with its business representatives to pay part or all of their personal expenses.  Such expenditures must also be reported by the union in its annual financial reports.

214.540 FUNDS FOR DEFENSE OF UNION OFFICER

      Where a union makes payments to a law firm for legal fees occasioned by the legal defense of one of its officers, the disbursement of such funds must be shown on the LM-2 as an expense or allowance to the officer and may not be shown as an organizational expense to the union. The union argument that because of persecution of union officials the possibility of a criminal action is an inherent risk of union office and therefore the allocation of funds for the defense of a union officer is in the interest of the union, is not a valid argument.

214.550 POLITICAL CONTRIBUTIONS

      If a labor organization makes contributions to the political campaign fund of one of its own or even some other labor organization's officers or employees, it must report them under either sections 201(b)(3) or 201(b)(6) of this law.
NOTE: This opinion does not pass upon the legality of such contributions under any other law.

214.560 DISBURSEMENTS FOR TIME SPENT ON UNION BUSINESS

      Under section 201(b)(3) of the Act, the "salary, allowances, and other direct or indirect disbursements . . . to each officer . . . " must be reported.  Even though disbursements to officers for "lost time” and "payments to officers for union business" may be repayment for lost income while performing in the role of a shop chairman, they nevertheless are direct disbursements to an officer when the shop chairman is also an officer of the union.  Under the circumstances, such payments to shop chairmen who are also officers must be reported.  In Form LM-2 reports, such disbursements should be reported in Schedule 11, and should be taken into account in calculating amounts of disbursements reported in Statement B.  In Form LM-3 reports, such disbursements should be reported in Item 24 "All Officers and Disbursements to Officers," and identified in Item 45, "To Officers.”

      "Lost time" disbursements which are made to a shop chairman who is not also an officer should also be reported.  In Form LM-2 reports, such disbursements should again be taken into account in reporting amounts in Statement B, and should be reported in Schedule 12 as explained in the  instructions for Form LM-2 reports.  In Form LM-3 reports, such disbursements must be included in Item 46, "To Employees." Include disbursement to individuals other than officers who receive lost time payments even if your organization does not consider them to be employees or does not make any other direct or indirect disbursements to them.

          (Revised: April 2017)

214.570 PERSONAL TRANSPORTATION EXPENSES

      An elected union officer whose official duties and responsibilities are principally at the union headquarters in City X maintains his "legal residence" or "home" in City Y, 300 miles away from the union headquarters. Travel each weekend to his home in City Y at union expense by public transportation is not the type of transportation expense covered in Schedule 11 of the Instructions for Labor Organization Annual Report, LM-2, which permits the union to enter in a general category the expenses for the transportation by public carrier of an officer on official business if payment was made to the public carrier or their agents by the reporting organization either directly or through its credit arrangements. For purposes of reporting on Form LM-2, the officer is not considered to be on official business when he travels to his "legal residence" 300 miles away from his principal place of work and abode. Therefore, the union must report the payment for transportation expenses in Schedule 11 (All Officers and Disbursements to Officers) of Form LM-2 in Column G (Other Disbursements) rather than reporting the transportation expenditures in a general category of union expenses.

214.571 DISBURSEMENTS FOR FOOD AND REFRESHMENTS

      Disbursements by a union for food and refreshments for the union's officers, employees, and other individuals must be reported on the LM-2 in accordance with the following rules:

1. Direct and indirect disbursements to officers and employees for their food and refreshments when the disbursements are necessary for conducting official union business must be reported in column F of Schedule 11 or 12, as appropriate, of the LM-2.

2. Direct and indirect disbursements to officers and employees for their food and refreshments when the disbursements are not necessary for conducting official union business, but are essentially for the personal benefit of the officers and employees, must be reported in column G of Schedule 11 or 12, as appropriate, of the LM-2.

3. Indirect disbursements for food and refreshments at general membership gatherings should be reported in Schedule 18 and Item 53 of the LM-2.

4. Indirect disbursements for food and refreshments for the entertainment of individuals other than officers and employees on official union business may be reported in Schedule 18 and Item 53 of the LM-2. If the disbursements are made directly to an officer or employee to reimburse him for the expenditure, they must be reported in column F of Schedule 11 or 12, as appropriate, of the LM-2.

Manual entries 214.572 through 214.577 provide specific examples to illustrate these general rules.

See also the Instructions for Schedules 11 and 12 of the LM-2.

            (Technical Revisions: Dec. 2016)

214.572 DINNER MEETING OF OFFICERS

      The officers of union A meet to dinner in order to discuss business to be conducted at a regular monthly membership meeting or to discuss collective bargaining proposals. The union's disbursements for the meals, whether direct or indirect, must be reported in column F of Schedule 11 on the LM-2, because the general rule that a union should show in column F its expenditures for officers' food and refreshments which are necessary for conducting official union business appears to be applicable to this situation. The union's disbursements may be allocated among the officers.

            (Technical Revisions: Dec. 2016)

214.573 FREQUENT LUNCHEONS OF OFFICERS

      The officers of union A go out for lunch together several times a week, during which general union matters are usually discussed. The bill is charged to the union's account. The frequency and regularity of the meetings, and the fact that they take place at a time when the officers would otherwise normally be paying for meals themselves, appear to indicate that the meals are more for the personal benefit of the officers rather than necessary for conducting official union business. In this case, therefore, unless it can be shown that the luncheons are actually necessary for conducting official union business, such disbursements of the union must be reported in column G of Schedule 11 of the LM-2 rather than in column F, and may be allocated among the officers.

            (Technical Revisions: Dec. 2016)

214.574 ENTERTAINMENT OF NONUNION INDIVIDUAL

      The officers of union A have dinner with a journalist who is doing research for a news article on the union. Such a meeting would ordinarily be considered official union business. Therefore, the union's disbursements for the officers' meals may be reported in column F of Schedule 11 of the LM-2 rather than in column G and may be allocated among the officers. The cost of the journalist's meal may be reported in Item 53 and Schedule 18 if the union's disbursement is indirect; if a direct disbursement is made to an officer to reimburse him for paying for the journalist's meal, it must be reported in column F of Schedule 11. This is an application of the general rules that all direct and indirect disbursements to officers for their meals and entertainment which are necessary for conducting official union business must be reported in column F of Schedule 11, and that only indirect disbursements for the food and entertainment of individuals other than officers on official union business may be reported in the appropriate disbursement schedule (LM-2 Schedules 15-19), and taken into account in the cash disbursements reported in Statement B.

      (Technical Revisions: Dec. 2016)

214.575 GENERAL MEMBERSHIP FUNCTIONS

      Union A has refreshments at a membership meeting or a Christmas party for its members and staff. The union's indirect disbursements may be reported in Schedule 18 and Item 53 of the LM-2 as provided in Section XI of the instructions for completing column F of Schedule 11.

            (Technical Revisions: Dec. 2016)

214.576 FREQUENT DINNER MEETINGS OF OFFICERS OF TWO UNIONS

      The officers of union A and union B hold regular weekly dinner meetings in order to discuss general matters of mutual concern. The officers of the two unions alternate in paying for the meals with their union's credit cards. The net effect of this quid pro quo arrangement is that all the officers are getting dinners each week paid by the unions. If each union paid for its officers' meals each week, all disbursements in connection with the dinner meetings would be reported in column F of Schedule 11 (if the meetings are in fact necessary for conducting union business) of the LM-2 of each union. The fact that the officers find it more convenient to alternate in charging the costs to their respective unions does not change the actual nature of the situation. Therefore, each union must report in column F or G of Schedule 11 of its LM-2 all the expenditures for each dinner meeting for which it pays the bill because each union's LM-2 would contain misleading information if any disbursements were reported in Item 53 and Schedule 18. The disbursements may be allocated among the officers.

            (Technical Revisions: Dec. 2016)

214.577 INFREQUENT MEETING OF OFFICERS OF TWO UNIONS

      The officers of union A and union B hold a meeting to discuss the strategy for a possible strike at a plant which employs members of both unions. Refreshments are ordered and paid through union A's credit card. The costs of the refreshments for union A's officers should be reported in column F of Schedule 11 because the meeting appears to be necessary for conducting union business and because of the general rule that a union's direct and indirect disbursements for food and refreshments for its officers on official union business must be reported in column F of Schedule 11 of the LM-2; these disbursements may be allocated among the officers. The disbursements for the refreshments for union B's officers, however, may be reported in Item 50 and Schedule 15 because the officers would be considered to be a group other than officers and employees of the reporting union (in accordance with Section (part XI) of the instructions for completing column F of Schedule 11) and because, unlike the frequent quid pro quo meetings in Entry 214.576, allowing these disbursements to be reported in the general categories would not result in misleading information .

      (Technical Revisions: Dec. 2016)

214.580 PERSONAL LODGING EXPENSES

      Where a union pays the hotel bills of an officer who during his workweek resides at a hotel in the city where the union headquarters is located and which is his principal place of work but who maintain his home and legal residence in another city, such payments must be reported as disbursements to the officer rather than as an office or administrative expense of the union. On Form LM-2 such payments must be reported in Schedule 11 (All Officers and Disbursements to Officers) in column G (Other Disbursements) and not in Item 53 (Office and Administrative Expense). The instructions for Schedule 11 and Item 53 indicate that a union may report in Item 53 the disbursements for a hotel room of an officer on official business if payment was made to the hotel or its agents by the union either directly or through its credit arrangements. The hotel expenses intended to be within Item 53 are those of an officer on official union business away from union headquarters and home; such as attending a convention, conferring with employers, or directing a strike.

            (Technical Revisions: Dec. 2016)

214.585 OTHER PERSONAL EXPENSES

      Personal expenses of officers, such as laundry, valet service or meals and beverages, paid by the union must be reported as disbursements to officers (Item 54 - Disbursements to Officers) and may not be reported as an expense of the union (Item 53 - Office and Administrative Expense), even if incurred by an officer engaged in official union business. The instructions for Schedule 19 and Item 53 of LM-2 permitting a union to expense the cost of a hotel room of an officer on official union business under some circumstances specifically refers to "expenses for hotel room" and this is intended to include only hotel rent. On Form LM-2 personal expenses incurred by an officer engaged in official union business are reported in the appropriate cash disbursement item and supporting Schedule 11 (Disbursements to Officers) in column F (Expenses Including Reimbursed Expenses). Personal expenses incurred by an officer not engaged in official union business are reported in the appropriate cash disbursement item and supporting Schedule 11 in column G (Other Disbursements).

      (Technical Revisions: Dec. 2016)

214.590 EXPENSES FOR A CHARTERED PLANE

      Where a labor organization charters a plane to transport a number of its officers and employees to a special meeting (it having been determined that a chartered flight would cost less than space on a regular flight), the expenses of the charter may be allocated equally among such officers and employees in Schedules 11 and 12 of Form LM-2, even if the plane is booked by one officer in his name. Because a chartered flight is not transportation by "public carrier," as that term is used in Schedule 11 of the instructions for Form LM-2, the cost of the flight may not be shown as a regular union expense in the other disbursement schedules (Schedules 15-19) whether or not the union paid the airline directly or through its credit arrangements with the airline.

      (Technical Revisions: Dec. 2016)

214.591 AUTOMOBILE LEASES FOR PERSONAL USE

            The United States Court of Appeals for the Second Circuit upheld the conviction of two union officers for violation of sections 201(b) and 209(b) and (d) of LMRDA for failing to report as "disbursements to officers" payments of union funds for long-term automobile leases for themselves and their friends and for gas and oil expenditures for personal use. The court stated that, "the auto, gas and oil . . . disbursements were squarely in the category of 'disbursements to officers' (a heading in the Local's Annual Reports), to be reported as such rather than reported, as they were, under some other general heading such as "Disbursements --for Other Purposes' or 'Office and Administrative Expense'."

United States v. Ferrara, 451 F.2d 91, 96 (2d Cir. 1971), cert. denied, 405 U.S. 1032 (1972).

          (Technical Revisions: Dec. 2016)

214.592 USE OF UNION CAR

      If a union officer or employee has the use of an automobile owned or leased by the union, the cost borne by the union to operate the vehicle is considered a disbursement to the officer or employee (Schedule 11 or 12) and may not be reported in the other disbursement schedules (Schedules 15-19).  For purposes of Form LM-2 the costs borne by the union to operate the automobile are reported in one of the following ways, as appropriate:

1. If the automobile is used solely for official union business, the entire cost of operating the car is treated as money disbursed indirectly to the officer or employee for the benefit of the organization and should be entered on the appropriate line in Column F ("Expenses Including Reimbursed Expenses") of Schedule 11 ("Disbursements to Officers") or Schedule 12 ("Disbursements to Employees").
2. If the automobile is used for both official and personal business, the entire cost of operating the car is reported in one of the following ways, as appropriate:
   1. The union may break down the total cost of operating the car into the amount incurred for official union business and the amount not incurred for official union business; the amount attributable to union business is reported in Column F and the other amount in Column G of Schedule 11 or Schedule 12.
   2. Alternatively, the union may choose not to divide the total cost of operating the car into the amounts incurred for official union business and for personal matters. In that event, if 50% or more of the use of the car is for official union business, the total cost is entered in Column F with a footnote indicating that the car was also used for personal business. If the official use of the car is less than 50%, the total cost is entered in Column G with a footnote indicating that the car was also used for official union business.
3. If officers or employees are given the use of automobiles but they must bring the cars daily to union headquarters where they become part of a pool of vehicles available to other officers and employees during the day, it may be difficult to allocate the total cost of operating a car to a particular individual; in that event, the arrangement may be reported by an asterisk after the name of each officer or employee to whom a car was assigned in Schedule 11 or Schedule 12 with a footnote stating: "Use of Car__ see Item 69." In Item 69 the union should indicate: Type of car; the year; the model; initial cost; current market value; and the nature of the arrangement, e.g., that the individual has private use of the car but that it is principally for official union business and others also use it for that purpose.

(Technical Revisions: Dec. 2016)

214.593 USE OF UNION-OWNED HOUSE

      If a union provides an officer with the free use of a house, the yearly rental value of the house must be reported as a disbursement to the officer.  It may be reported by an asterisk after the name of the officer in Schedule 11 with a footnote stating: "Use of House—see Item .69.”  In Item 69 the union would indicate that the union furnishes a house for the officer and would set forth the yearly rental value of the house.

            (Technical Revisions: Dec. 2016)

214.595 EXPENSE ALLOWANCE NOT ACTUALLY USED FOR EXPENSES

      If payments to officers or employees for expense are in excess of the amounts of the actual expenses incurred, the excess must be reported as salary or allowances and not as expenses.
     
See also Manual Entry 214.605 on advances.

CONTENTS OF ANNUAL REPORT:
LOANS TO OFFICERS-MEMBERS-EMPLOYEES

214.601 LMRDA, SECTION 201(b)(4)

. . . direct and indirect loans made to any officer, employee, or member, which aggregated more than $250 during the fiscal year, together with a statement of the purpose; security, if any, and arrangements for repayment; . . .

214.605 ADVANCES

      An advance in salary and business expenses would be considered a loan, payable by services to be rendered.  In the case of  Grone v. Economic Life Ins. Co., 80 A. 809, 816 (Del. Ch. 1911), the court said “One of the meanings of ‘advance’ is a loan and when used in that sense naturally implies a reimbursement, so as to imply relation of debtor and creditor.”  Inre Will of Altman, 6 N.Y.S.2d 972, 973-74 ( Sur. 1938), the court said “The word ‘advances’, when taken in its strict legal sense, does not mean gift-advancements, and does mean a sort of loan; and taken in its ordinary and usual sense, includes both loans and gifts-loans more readily, perhaps, than gifts.”  Because of the debtor-creditor relationship created by an “advance”, we believe a loan would be constituted.

      (Technical Revisions: Dec. 2016)

214.610
      See Instructions, Form LM-2, Schedule 2.  Form LM-3, Items 18, 56.

      (Technical Revisions: Dec. 2016)

CONTENTS OF ANNUAL REPORT:
LOANS TO BUSINESS ENTERPRISES

214.701 LMRDA, SECTION 201(b)(5)

 . . . direct and indirect loans to any business enterprise, together with a statement of the purpose, security, if any, and arrangements for repayment; and . . .

214.705

             See Instructions for LM-3, Item 18.

            (Technical Revisions: Dec. 2016 and Jan. 2021)

214.720 REPORTABLE AS “LOANS RECEIVABLE” ON LM-2

      All loans made to business organizations by the reporting labor organization, whether secured or unsecured, must be reported as “Loans Receivable” except those of an investment nature, such as an arrangement with a bank or similar institution for the block purchase of mortgages or the bona fide purchase of obligations of a business enterprise on the open market.  “Loans Receivable” are reported under Item 24 of the LM-2 and the supporting information required for loans to business organizations must be supplied in Schedule 2 thereof.

            (Technical Revisions: Dec. 2016)

214.730 LOANS TO AFFILIATES OR SUBSIDIARIES

      Where an international labor organization makes loans to a “subsidiary organization” of a subordinate labor organization, or to the subordinate organization itself, which provide for the payment of interest (at any percent) on the loan, the transaction is basically a loan to the subordinate or its “subsidiary organization” and, consequently, is to be reported as “Loans Receivable” under Item 24 of the Statement of Assets and Liabilities of Form LM-2 of the International.  It is not to be reported as any form of investment by the international labor organization, notwithstanding the fact that it may receive a more than adequate return by way of interest for the use of its money by the subordinate.  This is true even if the loan is secured by first mortgages on the property (or properties) for which the loan is made.

      (Revised: Dec. 2016)

CONTENTS OF ANNUAL REPORT:
OTHER DISBURSEMENTS

214.801 LMRDA, SECTION 201(b)(6)

      . . . other disbursements made by it including the purposes thereof; . . .
See Manual Entries 512 ff., PROPRIETY OF EXPENDITURES.

214.805 See Instructions for LM-3, Items 45-55.  Instructions to LM-2, Items 50-68.

214.806 DISBURSEMENTS FOR OTHER PURPOSES (LM-2, ITEM 53)

      There is nothing in the Act which would tend to prevent a labor organization from voting to spend money to arrange or help to arrange a picnic for its members, nor any provision denying to a union the right to divide its treasury or a share thereof among its members.  Such expenditures and disbursements would be among the items to be reported by the organization in its annual report.  In making disbursements from a union treasury, the Act specified that those should be made in accordance with the constitution and bylaws of the organization and with the applicable resolutions of its governing body, if any.

      (Revised: Dec. 2016)

214.810 USE OF UNION AUTOMOBILE

      When a union officer is furnished a car by the union which is used partially for his own use, it is necessary that the union report the approximate cash value of the benefit which the officer personally derives from the use of the car, and enter an asterisk with a brief explanation under “Other Disbursements to Officers” in Schedule 11, Column G, of the LM-2.

      (Technical Revisions: Dec. 2016)

214.816 LOANS TO OTHER LABOR ORGANIZATIONS

      On its annual report a labor organization need not list separately with supporting detail loans made to labor organizations whether or not affiliated with it.  Loans made to labor organizations must be reported in Items 24 and 61 of Form LM-2 or Items 26 and 53 of form LM-3 as part of the aggregate of all loans.  On Form LM-2 a loan to another labor organization must also be included in the total on the “Total of loans not listed above”  of Schedule 2 as part of the aggregate of loans to entities other than an “officer, employee, member, and business enterprise.”

            (Technical Revisions: Dec. 2016)

214.820 UNION PURCHASE OF OFFICER’S MORTGAGE

      An international bought a block of 20 mortgages for investment purposes from a mortgage lending institution.  The face value of the mortgages totaled $250,000.  This transaction was reported on the LM-2 at line 26 “Investments,” on Statement A -- Assets and Liabilities.

      In the course of an audit of the international’s records to verify the LM-2 filing, the investigator noted that one of the mortgagors was an employee of the international.  In discussing this block mortgage purchase by the international with the financial institution concerned, the investigator ascertained that this mortgage loan was issued to the employee and included in the block at the request of a key official of the international.

      In the light of the above, the report of the international is incorrect and the mortgage loan involving the employee (face amount $20,000) should be included under “Loans Receivable,” and supported with proper detail in Schedule 2.

      Inasmuch as the loan in question was one indirectly made by the international, there appears to be a violation of section 503(a) of the Act.  Such matters should be pursued in accordance with existing procedures involving criminal violations under section 503.

      (Technical Revisions: Dec. 2016)

214.830 UNION EXPENSES FOR JOINT PICNIC

      For many years it had been the custom of Company X to sponsor an annual picnic for its employees.  After the Company was organized by Union Y, the union decided that it would co-sponsor the picnic and share the expenses equally with the Company.  The cost of the picnic for the 200 employees of the Company was $3,000.

      Since section 201 requires a union to report all of its disbursements, Union Y would be required to report the amount of money it donated to help defray the expenses of the picnic in its annual financial report.

214.840 DISBURSEMENT OF ASSETS PRIOR TO MERGER

      Local X merged with Local Y.  Prior to the merger all of the assets of Local X were transferred to a corporation set up to hold these assets.

      In these circumstances, a terminal report is required from Local X in order to apprise members of the union and the public of the independent existence of these assets.  The transfer of any cash assets to the corporation should be reported in Item 53 of the LM-2 as “other disbursements,” and described sufficiently to identify the purpose.  If assets other than cash, such as a building, are transferred, the related transactions should be reported only as “additional information” in Item 69 of Form LM-2 in sufficient detail to describe the action taken.

      In the event the union is entitled to use the LM-3 rather than LM-2 for its terminal report, the appropriate item to report the transfer of any cash assets to the corporation would be Item 5, and a detailed description of the purpose of the transfer should be shown in Item 56.  If assets other than cash, such as a building, are transferred, the related transactions should be reported only as “additional information” in Item 56, of LM-3 in sufficient detail to describe the action taken.

      While no additional information is technically called for by Item 5 of LM-3, section 402.5 of the Regulations (29 CFR 402.5) calls for full details as to the termination of existence of the Labor organization.  In any event, the Secretary has the power under section 208 to revoke a union’s eligibility to file the LM-3 report if this is necessary to obtain full disclosure.

            (Technical Revisions: Dec. 2016)

214.850 PAYMENTS TO TRUST FUND

      Payments made by a union to a trust fund established by the union for the benefit of officers must be reported in the annual report of the union on line 5555, “Benefits,” supported by information in Schedule 20, on the LM-2, or under Item50 on the LM-3.

      In addition, the first year that payments are made, an amended Form LM-1 must be filed with the labor organization’s LM-2 or LM-3 since the establishment of the trust is a change in the information reported under Item 18 (c), “Participation in insurance and other benefit plans,” of the union’s LM-1.

      (Technical Revisions: Dec. 2016)

CONTENTS OF ANNUAL REPORT:
SIGNATURES-NAMES AND ADDRESSES
OF ORGANIZATION

214.901 LMRDA, SECTION 201(b)

Every labor organization shall file annually with the Secretary a financial report signed by its president and treasurer or corresponding principal officers.

See Form LM-3 Items 4-9. Instructions for Form. LM-3, same items.
See Form LM-3, Items 57-58. Instructions for LM-3, these items.

            (Technical Revisions: Dec. 2016)

214.902 SEE 29 CFR 403.6 

214.905 INTERNATIONAL OFFICERS SIGNING FOR LOCALS

      Reports under section 201 of the Act must be signed by the persons specified in the section. There is no exception permitting international representatives to sign reports for local unions, although the Act does not preclude them from assisting local officers in the preparation of these reports.

214.910 PROPER SIGNATURES WHEN OFFICERS CHANGE

      The question of which officer is the proper one to sign labor organization reports when a labor organization selects new officers, particularly when the new officers take office in the 90 day period following the end of the labor organization’s fiscal year, is left to the discretion of the labor organization. In the absence of a union rule or determination specifying which officers are to sign the report, we should proceed on the assumption that the current officers should sign the report.
 
      214.920 PROPER OFFICERS TO SIGN REPORTS WHERE THE EXECUTIVE BOARD IS THE GOVERNING BODY

      Where a local labor organization's constitution and bylaws provide for a nine (9) man executive board which is the governing body of the labor organization, and all its members are elected by secret ballot, the proper officers to sign a Form LM-1 report are the elected officers whose functions most closely approximate those of president and secretary, respectively.  Likewise, the Form LM-2 report shall be signed by the elected officials whose functions most closely approximate those of president and treasurer.

NOTE: This entry deals with the question of signing reports when the union has no general officers but is governed by an executive board. It should not be taken to mean that general officers of a union may be elected by such a board. See 29 CFR 452.26.

      (Technical Revisions: Dec. 2016)

214.930 FINANCIAL SECRETARY AS TREASURER

      Use of the phrase "or corresponding principal officers" indicates that the reports should be signed by the officers performing the duties normally associated with the officers designated in the statute. Since large numbers of organizations have officers bearing the titles specified in the statute who have little knowledge regarding the matters required to be reported, while other officers with different titles (e.g., financial secretary) do possess such knowledge, such officers are in a much better position to prepare these reports and certify their correctness.  This would be the situation, for example, where the treasurer acts merely as the repository for the union’s funds while the financial secretary is responsible for the union’s financial operations and for maintaining the union’s financial soundness.

      (Technical Revisions: Dec. 2016)

SUBSIDIARY ORGANIZATION

215.003 DEFINITION

“A subsidiary organization,” within the meaning of these instructions, is any separate organization in which the ownership is wholly vested in the labor organization or its officers or its membership, which is governed or controlled by the officer, employee, or members of the labor organization, and which is wholly financed by the labor organization.
      See Instructions for Form LM-2, Part X.

      (Technical Revisions: Dec. 2016)

215.005

      See Instructions for Form LM-2, Part X.

      (Technical Revisions: Dec. 2016)

215.100 CREATION BY INTERNATIONAL LOAN

      Where an international labor organization, as part of an organizational campaign, causes a nonprofit, nonstock legal entity to be created in order to purchase a meeting hall, such an entity will be considered a “subsidiary” of the international where (1) all the officers of the newly created organization are identical with the officers of the international and (2) the organization is wholly financed by the international’s treasury even though the funds expended are reflected as a “loan” to the newly created corporation.  The LM-2 for the international should reflect the transactions involving the “subsidiary” organization in accordance with Section X on page 4 of the LM-2 instructions, “Labor Organizations with Subsidiary Organizations”  In no case would it be correct to report the financial interest of this entity solely as a “loan.”

215.200 HOLDING OF STOCK BY DISTRICT COUNCIL AND MEMBER LOCALS

      Where a District Council holds a portion of the equity ownership (i.e., common stock) of a corporation which owns the building which is used to house the District Council, and where the balance of the outstanding common stock is held by local labor organizations which are members of the Council, the Building Corporation in question comes within the definition of a “subsidiary organization” set forth in Part X of the instructions for the Form LM-2: Provided, That the initial financing came from the Council and/or its members: And provided further, That the corporation is governed or controlled by the Council and/or its members.

NOTE: In a case-involving a “subsidiary organization” which is wholly owned, controlled and financed by an intermediate labor organization, such as a District Council, and its member organizations, (e.g., the stock is held by the intermediate organization and the member locals), the obligation to report the entire net assets, financial condition, and operations of such “subsidiary organization” nonetheless remains with the intermediate labor organization (the District Council).

      Assuming that the District Council in the example above elects to report the activities of the subsidiary, the Building Corporation, in a separate report as set forth in Method (2) in of Part X of the instructions for Form LM-2, then in the District Council’s own Form LM-2 it should include in “Item 69 -- Additional Information” a descriptive itemization of the composition of the remaining ownership by the various participating locals of that District Council, in order to fulfill the requirements for full disclosure of the subsidiary ownership.

When a “subsidiary organization” is owned, controlled and financed under the above circumstances, reporting required financial information on it by use of Method (1) as set forth in Part X of the instructions for the LM-2 (consolidated method) is not practical due to the distortion of the financial condition and operations of the reporting labor organization (the District Council) that would result.  Consequently, use of Method (1) should be discouraged.

      (Revised: Dec. 2016)

215.300 HOLDING OF STOCK BY MEMBER LOCALS

      A Development Corporation was formed to hold title to a building in which various locals of a Joint Council maintain their offices.  All of the stock in the corporation is held by the constituent locals of the Joint Council.  The Joint Council controls and finances the corporation.
      Under these conditions the Development Corporation may be considered a “subsidiary organization” of the Joint Council.  The term “membership” in the subsidiary organization definition (as distinguished from the statutory definition of member in section 3(o) of the Act) is applicable to the participating locals which constitute the membership of the Joint Council.  Since all of the stock in the Development Corporation is held by these locals, ownership is thus wholly vested in the membership of the Joint Council.

215.310 HOLDING OF STOCK BY INTERNATIONAL OFFICERS

      A labor organization organized a corporation, the stock of which was held in trust by succeeding officers of the International.  The funds representing the capital stock of the corporation were applied to the purchase of a vacation resort held in the name of the corporation.  The remainder of the purchase price of the resort was provided by mortgage loans made by various affiliates of the International.

      The creation of the corporation was wholly financed by the International, and control of the outstanding stock has always been vested in its officers.  The equity capital for the purchase of the resort was provided by the labor organization, notwithstanding secured loans held by affiliates against the property amounting to a major portion of the purchase price.  For these reasons, the corporation and its property are to be considered as wholly owned, controlled and financed by the International and should be reported by it as a “subsidiary organization” according to the instructions accompanying the LM-2.

215.400 “HOLDING CORPORATION” OF SUBSIDIARY

      When a local labor organization creates two separate corporations, one of which is a holding company for the other which owns the building where the union meets, and where the officers of the local are the officers of both corporations and the ownership of both corporations is vested in membership of the local, the Department will consider both entities “subsidiary organizations” as that term is defined in the Instructions for the LM-2 (Section X) since ownership and control actually reside in the local.

            (Technical Revisions: Dec. 2016)

215.500 BUILDING CORPORATION

      Where a local union creates a nonprofit building corporation which is financed, under terms permissible under the Employee Retirement Income Security Act (ERISA), by a mortgage loan obtained from a jointly administered Welfare Fund of the local, and that corporation is wholly controlled by the officers of the union and is indirectly owned by the union through possession of 100% of the stock of the corporation, the corporation is a “subsidiary organization” within the meaning of that term as it is defined in Form LM-2 Instructions Part X Organizations X.

      Since the corporation is wholly owned and controlled by the local, the presence of a mortgage would not constitute outside financing so as to take the corporation outside of the scope of the definition of a subsidiary organization.

      (Technical Revisions: Dec. 2016)

215.600 INTERVENTION OF TRUSTEES

      Where a labor organization creates a trust, the trustees of which are representatives of the labor organization and where the purpose of the trust is to hold all the outstanding stock in a building corporation for and on behalf of the Labor organization, and the primary purpose of the corporation is to house the labor organization, the building corporation is a “subsidiary organization” within the meaning of that term as defined in Form LM-2 Instructions Part X.

      In short, the intervention of trustees holding the labor organization’s ownership interest in a building corporation does not change the status of the building corporation as a “subsidiary organization” if it otherwise comes within the terms of the definition.

      (Technical Revisions: Dec. 2016)

215.700 RECEIPT OF INCOME BY SUBSIDIARY

      A separate organization wholly owned by the union, or its officers, or its members, would be considered “wholly financed” by the union despite the receipt of some operating income from rent, sales, etc., if the funds used to establish it as a going concern originally were either union funds or were obtained by the union through credit arrangements with lending institutions.  Even if the subsidiary subsequently becomes fully self-supporting through operating revenue, it will nevertheless be considered “wholly financed” by the union if a source of that revenue is capital furnished by the union.

      (Revised: Dec. 2016)

METHODS OF ACCOUNTING

216.005 METHODS OF ACCOUNTING CASH VERSUS ACCRUAL

      The Department of Labor does not prescribe a particular method of accounting, and it would not be necessary to convert accounting records from an accrual to a cash basis in order to prepare required financial statements, as long as the method used accurately reflects the operations and financial condition of the organization.  However, the accounts should be kept in a manner that will permit the preparation of the required reports.

      The statement of receipts and disbursements required by sections 201(b)(2) through 201(b)(6), which is provided for in the Department’s Forms LM-2 and LM-3, is essentially an accounting of the inflow and outflow of an organization’s cash during the fiscal period.  Consequently, a profit and loss statement prepared on the accrual basis is not acceptable as compliance with the above-mentioned sections of the Act since this reflects the income and expenses of an organization in the fiscal period and not the disposition of its cash. Preparation of a cash receipts and disbursement statement when the accrual method of accounting is used normally requires only an analysis of the organization’s cash receipts and disbursements records in order to properly reclassify its cash transaction, where necessary, to conform to the types of accounting classifications represented by like items on the prescribed forms.

      The statement of assets and liabilities required by the statute is essentially an accrual type of statement and provides for reporting all receivables, payables, accruals and deferred items.  Consequently, it should not be necessary for an organization which maintains its records on the accrual system of accounting to change its procedures in order to prepare the statement of assets and liabilities.

LABOR ORGANIZATION FINANCIAL REPORT - LM-3

219.001 LMRDA, SECTION 208

      In exercising his power under this section the Secretary shall prescribe by general rule simplified reports for labor organizations or employers for whom he finds that by virtue of their size a detailed report would be unduly burdensome but the Secretary may revoke such provision for simplified forms of any labor organization or employer if he determines, after such investigation as he deems proper and due notice and opportunity for a hearing, that the purposes of this section would be served thereby.

219.002 See 29 CFR 403.4

219.005
     
      See instructions for LM-3, I.

      (Technical Revisions: Dec. 2016)

219.010 RECEIPTS OF SUBSIDIARY ORGANIZATION INCLUDED IN $250,000

To determine the eligibility of a labor organization to file a Form LM-3, the receipts of a subsidiary organization are considered part of the receipts of the labor organization.  Thus, if the receipts of a union and its subsidiary organization total $250,000 or more, the union is ineligible to file a Form LM-3 even though the union’s receipts alone would total less than $250,000.

      (Technical Revisions: Dec. 2016)

TRUST IN WHICH A LABOR ORGANIZATION IS INTERESTED

220.001 LMRDA, SECTION 208

      The Secretary shall have authority to issue, amend, and rescind rules and regulations prescribing the form and publication of reports required to be filed under this title and such other reasonable rules and regulations (including rules prescribing reports concerning trusts in which a labor organization is interested) . . .

For definitions and interpretations of “trust in which a labor organization is interested,” see Manual Entries 041.301 ff.

(Technical Revisions Dec. 2016 and Revisions: Jan. 2021)

TRUSTEESHIP REPORTS: WHO MUST REPORT

230.001 LMRDA, SECTION 301

1. Every labor organization which has or assumes trusteeship over any subordinate labor organization shall file with the Secretary within thirty days after the date of the enactment of this Act or the imposition of any such trusteeship, and semi-annually thereafter, a report, signed by its president and treasurer or corresponding principal officers, as well as by the trustees of such subordinate labor organization, containing the following information: (1) the name and address of the subordinate organization; (2) the date of establishing the trusteeship; (3) a detailed statement of the reason or reasons for establishing or continuing the trusteeship; and (4) the nature and extent of participation by the membership of the subordinate organization in the selection of delegates to represent such organization in regular or special conventions or other policy-determining bodies and in the election of officers of the labor organization which has assumed trusteeship over such subordinate organization.  The initial report shall also include a full and complete account of the financial condition of such subordinate organization as of the time trusteeship was assumed over it.  During the continuance of a trusteeship the labor organization which has assumed trusteeship over a subordinate labor organization shall file on behalf of the subordinate labor organization the annual financial report required by section 201(b) signed by the president and treasurer or corresponding principal officers of the labor organization which has assumed such trusteeship and the trustees of the subordinate labor organization.
2. The provisions of section 201(c), 205, 206, 208, and 210 shall be applicable to reports filed under this title.
3. Any person who willfully violates this section shall be fined not more than $10,000 or imprisoned for not more than one year, or both.
4. Any person who makes a false statement or representation of a material fact, knowing it to be false, or who knowingly fails to disclose a material fact, in any report required under the provisions of this section or willfully makes any false entry in or willfully withholds, conceals, or destroys any documents, books, records, reports, or statements upon which such report is based, shall be fined not more than $10,000 or imprisoned for not more than one year, or both.
5. Each individual required to sign a report under this section shall be personally responsible for the filing of such report and for any statement contained therein which he knows to be false.

See Manual Entry 300: TRUSTEESHIPS, for definition and discussion of Trusteeships.

230.002 SEE 29 CFR 408

230.005 APPROVAL OF CONTROL BY LOCAL

      Where a special representative of the International assumes a degree of supervision over the affairs of a local, a trusteeship report should be filed in accordance with section 301 of the Act.

Whether the supervision or control of the local by the International is undertaken with the local’s approval is not material to the reporting requirement.

230.100 SUPERVISORSHIP

      Any suspension of autonomy imposed on a subordinate labor organization by a parent body is a trusteeship.  A union argument that the suspension is one of “supervisorship” imposed for the benefit of the subordinate organization is not valid and does not affect the reporting requirements of the Act.

230.105 GOVERNMENT EMPLOYEES’ LOCAL

      An International union which establishes a trusteeship over a subordinate unit comprised solely of government employees is not required to comply with the reporting requirements of section 301 (a) since that section applies only to trusteeship over a subordinate “labor organization.”  An organization composed of government employees is not a “labor organization” within the meaning of section 3(i) of the Act.

*230.200 FOREIGN LOCAL

      An International union which is subject to the Act must report any trusteeship it establishes over a subordinate union which is located outside the territorial jurisdiction of the United States, if the foreign affiliate is a “labor organization” within the meaning of the Act.  The International must file the initial, semiannual, and terminal trusteeship reports; it need not file an annual financial report for the subordinate, since section 201(b) does not require a foreign organization to file such reports when it is not under trusteeship.

230.300 SUIT AGAINST OFFICERS OF DISSOLVED LOCAL

      If a pending civil suit against the officers of a local which has been dissolved is brought by the International as the legal successor of the dissolved local, then no trusteeship report would be necessary.  If, however, the suit is brought by the International in a supervisory capacity on the theory that a trusteeship exists, then a report would be due.  In the latter case the claim asserted against the local’s officers would be the operation of the local and the local would to that extent be in existence until its dissolution and transfer of its assets to its legal successor.

                                       TRUSTEESHIP REPORTS: 
WHEN AND WHERE REPORTS MUST BE FILED

231.001 LMRDA, SECTION 301(a)

            Every labor organization which has or assumes trusteeship over any subordinate labor organization shall file with the Secretary within thirty days after the date of the enactment of this Act or the imposition of any such trusteeship, and semiannually thereafter, a report . . .

231.002 SEE 29 CFR 408.2

TRUSTEESHIP REPORTS:
INITIAL TRUSTEESHIP REPORT - LM-15

232.001 LMRDA, SECTION 301(a)

      . . . signed by its president and treasurer or corresponding principal officers, as well as by the trustees of such subordinate labor organization, containing the following information: (1) the name and address of the subordinate organization; (2) the date of establishing the trusteeship; (3) a detailed statement of the reason or reasons for establishing or continuing the trusteeship; and (4) the nature and extent of participation by the membership of the subordinate organization in the selection of delegates to represent such organization in regular or special conventions or other policy-determining bodies and in the election of officers of the labor organization which has assumed trusteeship over such subordinate organization.  The initial report shall also include a full and complete account of the financial condition of such subordinate organization as of the time trusteeship was assumed over it.

232.002 SEE 29 CFR 408.3

232.003 

      For meaning of “corresponding principal officer,” see Manual Entry 214.930.

232.005 SEE INSTRUCTIONS FOR LM-15

232.100 TRUSTEESHIPS ESTABLISHED PRIOR TO THE ACT

      Section 301(a) of the Act requires that initial reports show the financial conditions of the subordinate labor organization as of the date the trusteeship was established, even if it was established before September 14, 1959, the effective date of the Act.

TRUSTEESHIP REPORTS:
SEMIANNUAL TRUSTEESHIP REPORT - LM-15

233.001 LMRDA, SECTION 301(a)

      Every labor organization which has or assumes trusteeship over any subordinate labor organization shall file with the Secretary within thirty days after the date of the enactment of this Act or the imposition of any such trusteeship, and semiannually thereafter, a report . . .

233.002 SEE 29 CFR 408.4

233.005 SEE INSTRUCTIONS FOR LM-15A

TRUSTEESHIP REPORTS:
INFORMATION AND FINANCIAL REPORTS
FOR TRUSTEED UNIONS LM-2 - LM-46

235.001 LMRDA, SECTION 301(a)

      During the continuance of a trusteeship the labor organization which has assumed trusteeship over a subordinate labor organization shall file on behalf of the subordinate labor organization the annual financial report required by section 201(b) signed by the president and treasurer or corresponding principal officer of the labor organization which has assumed such trusteeship and the trustees of the subordinate labor organization.
See Instructions for LM-15, “Other Reports Required.”

235.002 SEE 29 CFR 403.2(c), 408.5, 408.6.

235.005 PERIOD COVERED

      An international labor organization imposed a trusteeship over one of its locals on March 1.  The local in question has a fiscal year ending December 31.  The international did not take control of the local’s finances until June 1.  The trusteeship was lifted on September 30 of that same year.  The local labor organization officers submitted an LM-2 covering the period January 1 to February 28 although no such partial report was required from the local officers.

      Since the trusteeship was imposed on March 1, the international is required to cover in its terminal financial report the finances of the local from the beginning of the local’s fiscal year (January 1) to the date of termination of the trusteeship.  However, since the local’s officers filed a report covering the period January 1 through February 28, the international’s terminal financial report may cover the period of March 1 through September 30.  The fact that the international did not take control of the local’s finances until June 1 is irrelevant as the trusteeship was imposed on March 1.

235.100 RESPONSIBILITY FOR DELINQUENT REPORTS

      Section 301(a) of LMRDA requires that during the continuance of a trusteeship the labor organization which has assumed trusteeship over a subordinate labor organization shall file the annual financial report required by section 201(b) of the Act on behalf of the subordinate labor organization.

      Where a local fails to file a financial report within 90 days after the end of its reporting year and such local subsequently has a trusteeship imposed over it, the responsibility for filing such financial report falls upon the international.  The application of this requirement is not to be viewed as assigning retroactive responsibility to the international for the local’s failure to file.  The filing of the annual report is a continuing obligation and since it is unfulfilled, the international has assumed the statutory duty of filing by virtue of imposing the trusteeship.

TRUSTEESHIP REPORTS:
TERMINAL TRUSTEESHIP REPORT - LM-16

236.002 SEE 29 CFR 403.5, 408.7, 408.8

      See Instructions for LM-15, “Other Reports Required.”

236.100 DECERTIFICATION

      The decertification of a local union as the bargaining agent with the employer does not constitute any basis for assuming that the trusteeship has been terminated.  The trusteeship may be continued until such time as any litigation with regard to the local’s treasury is resolved.  Of course, the international will be required to submit semiannual reports during the pendency of the trusteeship. Formal dissolution of the union would normally constitute a termination of the trusteeship.

UNION OFFICER AND EMPLOYEE REPORTS
IN GENERAL

240.001 LMRDA, SECTION 202

1. 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 –
   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 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, 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.
2. 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 of 1940, 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.
3. 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.

240.002 SEE 29 CFR 404

240.100 FORM OF REPORT; SPECIAL REPORTS

      See 29 CFR 404.3.

      (Technical Revisions: Dec. 2016)

240.200 UNION OFFICERS BASED OUTSIDE THE UNITED STATES

      While the Department takes the position that the reporting provisions of the LMRDA are limited to “activities of persons or organizations within the territorial jurisdiction of the United States,” its application in any particular case will depend on whether there is a substantial relationship between the transactions in question and United States property or interests which are the objects of the Act’s protection.

      For example, there would ordinarily not be sufficient relationship to require reporting where an officer of a foreign local has a financial interest in a foreign company with which the local deals, although the officer may on occasion perform official union business in the United States such as attending an international conference or convention.  However, a foreign member of an international executive board, who participates in the board’s meetings in the United States, may well be required to report otherwise reportable holdings in a United States company with which the international deals, even though his principal office is in a foreign country.

      In other words, each case would require evaluation of the substantiality of the official’s contacts with the United States and of the impact on United States interests.

WHO MUST FILE

241.002

      For definitions of “labor organization officer,” “labor organization employee,” see 29 CFR 404.1.

ATTORNEY-CLIENT COMMUNICATIONS

Nothing contained in this part shall be construed to require an attorney who is a member in good standing of the bar of any State to include in any report required to be filed pursuant to the provisions of section 202(a) of the Act and of this part any information which was lawfully communicated to such attorney by any of his clients in the course of a legitimate attorney-client relationship.

29 CFR 404.5

      (State in the above section also includes any Territory or the District of Columbia.  See 29 CFR 401.2.)

      (Revised: Jan. 2021)

241.005 USE OF FORM LM-30 PRIOR ACTIVITIES

      A former union officer who engaged in activities clearly reportable under section 202 prior to the issuance of Form LM-30, and who did not report such activities until after the issuance of that form, is required to report on Form LM-30.

      The regulations governing reporting by union officers and employees (29 CFR Part 404) require reports to be made on Form LM-30 which is incorporated by reference into the regulations.  Thus, insofar as Form LM-30 requires reporting of matters reportable under LMRDA since its passage, it cannot be said that the form is being given retroactive application.  Reports of the activities in question were required to be made at the end of the fiscal year in which such activities were undertaken and only the manner in which they are to be reported has been changed.

            (Revised: Dec. 2016)

241.100 INTERNATIONAL OFFICER WITH INCOME FROM BUSINESS DEALING WITH LOCAL UNION

      Section 202(a) 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.

241.200 TRUSTEES

      The trustee appointed by a superior labor organization to administer or supervise a subordinate labor organization which has been placed in trusteeship is subject to the reporting requirements of section 202.

241.300 APPLICATION TO MEMBERS

      Reports are required only from those “officers” and “employees” of labor organizations who have engaged in any of the activities specified in section 202(a) of the Act.  Activities specified therein need not be reported if undertaken by a member of the labor organization, provided, the member is neither an officer nor an employee of the union.

241.400 SELF-INCRIMINATION

      Reports required of union officers or union employees under section 202(a) of LMRDA must be submitted notwithstanding the fact that the information required to be included in the report may disclose a violation of section 302 of the Taft-Hartley Act.  Because section 302 contains a criminal provision, it has been argued that the reporting required by LMRDA 202(a) infringes on the constitutional 5th Amendment protection against self-incrimination.  However, the only court so far to have ruled on a 5th amendment challenge to Section 202(a) rejected it.  See United States v. McCarthy, 422 F.2d 160, 160 (2d Cir. 1970).

      (Revised: Dec. 2016)

241.500 FRANCHISED AGENTS

      Franchised agents of the American Guild of Variety Artists (AGVA) who act only as representatives of artist and entertainers in dealing with employers in the entertainment field would have no duty to report the payments made to AGVA for the franchise under section 203 of the Act.  Franchised agents when acting as such would not be employers within the meaning of section 203 or within the meaning of that definition in the Act.  The agent’s interest in representing the artist is opposed to that of the employer.  The success of the agent depends upon the bargain he can strike on behalf of the artist.  His income is derived from commissions on earnings of his clients.  Thus, it cannot be fairly concluded that agents, insofar as they are acting in that capacity alone, are employers subject to the reporting requirements of section 203 of the Act.

      However, a different conclusion would be warranted in those cases where franchised agents not only act as representatives of artist but also act as producers of package shows, etc.  Clearly, when acting as a producer, the agent would be an employer within the meaning of the Act and reports would be required under section 203(a)(1) for the payments made to AGVA in the form of a franchise fee.  Such payments do not seem to fall within the exceptions contained in section 203(a)(1).  (But payments made by them as producers into the AGVA welfare trust fund or the AGVA sick and relief fund would seem to fall within the exceptions contained in section 302(c)(5) of the LMRA, and consequently would not have to be reported under section 203(a)(1).)

      The question may be asked whether a franchised agent may be considered an “. . . agent . . . or other representative” of AGVA within the meaning of section 3(q) and therefore come within the reporting requirements of section 202.  It should be pointed out that section 202 of the Act does not employ the terms “agent” or “representative”; it refers to “officers” and “employees” of a labor organization.  In our opinion, a person independently engaged in the business of representing professional entertainers is not an “employee” or “officer” of the union to which the entertainer may belong by reason of his contractual duty to observe the conditions laid down in the union’s standard form of contract for the protection and benefit of his clients.

241.600 DEPENDENCE ON EMPLOYER OBLIGATION TO REPORT

      The fact that employers are excepted from reporting certain transactions with union officers and employees by virtue of section 203(a) does not in any way affect the obligation of the union officers and employees to report such transactions, where the applicable provision of section 202 does not provide a pertinent exception.

*241.700 “DE MINIMIS”

      We should all take cognizance of the “de minimis non curat lex” doctrine.  This means that courts will not find persons guilty of acts involving trivial sums of money. The instructions for Form LM-30 provide that:

Insubstantial payments and gifts. You do not have to report any payments or gifts totaling 250 or less from any one source, and payments or gifts valued at $20 or less do not need to be included in determining whether the $250 threshold has been met. For example, if you receive from an employer two gifts worth $20 each and two restaurant meals worth $150 each, you need only keep records of the restaurant meals, and report your receipt of this $300 value. However, you may not use the exception to hide the receipt of a series of payments or gifts purposely set at  $20 or less to avoid reaching the $250 reporting threshold.  For example, you would have to report your receipt of individual tickets worth $20 or less to all of a professional baseball team’s home games even if they are provided before each game rather than given as a complete package at the start of the season.

Widely-attended gatherings. You also do not have to report the benefits, such as food and entertainment, that you received while in attendance at one or two widely attended receptions, meetings or gatherings in a single fiscal year for which an employer or business has spent $125 or less per attendee per gathering. You do not have to include the value of those gatherings in determining whether the $250 threshold has been met for the employer or business providing the meeting or gathering. However, if you attend three or more such widely-attended gatherings provided by an employer or business, you must count the value of all such events.  A gathering is widely attended if a large number of persons are in attendance and the attendees include union officers and employees and a substantial number of individuals with no relationship to a union or a trust in which a labor organization is interested. For a gathering to qualify as widely attended, those individuals with a relationship to a union must be treated the same as others when the
employer or business advertises or distributes invitations for the event and must be treated alike at the event.

      (Revised: Dec. 2016)

241.750 UNION OFFICERS BASED OUTSIDE THE UNITED STATES

See Manual Entry 240.200.
 

TIME AND PLACE TO FILE UNION OFFICER AND EMPLOYEE REPORTS

242.001 LMRDA, SECTION 207(b)

      Each person required to file a report under section 201(b), 202, 203(a), or the second sentence of 203(b) shall file such report within ninety days after the end of each of its fiscal years; except that where such person is subject to section 201(b), 202, 203(a), or the second sentence of 203(b) as the case may be, for only a portion of such a fiscal year (because the date of enactment of this Act occurs during such person’s fiscal year or such person becomes subject to this Act during its fiscal year) such person may consider that portion as the entire fiscal year in making such report.

242.002 SEE 29 CFR 404.1, 404.2

242.005 FISCAL YEAR

See 29 CFR 404.1 and Manual Entries 214 ff.

242.006 ELECTRONIC FILING

Electronic Forms System (EFS) is the Office of Labor-Management Standards’ (OLMS) web-based reporting system for filing electronic reports. Specifically, the labor organization information report Form LM-1, the labor organization annual Forms LM-2, LM-3, and LM-4 reports, the Form LM-30 Labor Organization Officer and Employee report, the Form LM-10 Employer report, and the Form LM-20 and LM-21 labor relations consultant reports can be filed electronically. As of January 1, 2021, all of the preceding forms must be filed electronically with the exception of the LM-30. A link to the EFS can be found at https://www.dol.gov/agencies/olms/reports/electronic-filing.

      (Jan. 2021)

BENEFIT FROM EMPLOYER OF UNION MEMBERS

243.001 LMRDA, SECTION 202(a)(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 reimburse 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;…

243.005 PAYMENTS UNDER INCENTIVE PLAN

      Payments made under an incentive plan which is contained in the collective bargaining agreement and which contemplates the payment of additional compensation to employees who through additional effort obtain new accounts for the employer would not be reportable by the union officer-employees who received such additional compensation, since such payments are received for work as a bona fide employee of such employer.

243.100 COMPANY PICNIC

      For many years it had been the custom of Company X to sponsor an annual picnic for its employees.  After the company was organized by Union Y, the union decided that it would co-sponsor the picnic and share the expenses equally with the company.  The cost of the picnic for the 200 employees of the company was $3,000.
      No report would be required pursuant to section 202 from a union officer who attends this picnic.  Even if the union officer was not an employee of the company, the value, such as food, beverage, etc., of what he received there would be insignificant. 
      It is to be noted, however, that the Secretary of Labor may require special reports in situations of the nature described above if he so desires.

243.200 NEGOTIATING EXPENSES

      Company A and Union B are attempting to negotiate production standards related to the operation of new equipment.  The company, through its plant officers, invites several union representatives who are employees to visit other plants of the company with a view to observing the new equipment in operation.  It was believed that when the union representatives viewed the new equipment in operation they would have a more adequate factual basis for negotiating a production standard with Company A.  The company paid the union representatives their regular wages and their actual expenses for travel and hotel accommodations (one night’s lodging).
      Under these circumstances, no labor officer reports are required from the union representatives because the payment of bona fide expenses by the company in connection with collective bargaining and negotiations are considered to come within the scope of regular wages.
      This principle would not apply to a union officer who is not an employee of the employer.

243.300 FREE ACCOMMODATIONS

      A union officer who received complimentary hotel accommodations from a hotel which employed members of the union which he represents is deemed to have received a “benefit with monetary value” within the meaning of section 202(a)(1) and is required to report thereon.

243.400 POLITICAL CONTRIBUTIONS

      Where an employer contributes to the campaign fund of one of his employees who is running for local public office and that employee is also an officer of the labor organization which represents the employees in collective bargaining with the employer, the employer is required to file a report of the payment pursuant to section 203(a)(1) of the Act.  The union officer is also required to report the payment in question by virtue of section 202(a)(1).
      The legality of an employer’s contributions to the campaign fund of one of the employer’s employees who is also a union officer, requires consideration of section 505 of the Act which amends section 302 of the Labor Management Relations Act, for which the Department of Labor is not assigned responsibility.
      Contributions by a corporation, or a labor organization to a person campaigning for Federal office are made criminal offenses under 52 U.S.C. 30118 (formerly cited as 2 U.S.C. 441b and 18 U.S.C. 610) and it is also a crime for a candidate for a Federal office to receive such contributions.

      (Technical Revisions: Dec. 2016)

243.500 BONA FIDE INVESTMENTS

      Bona fide investments in stocks “traded on a securities exchange registered as a national securities exchange under the Securities Exchange Act of 1934" are excluded from the reporting requirements of section 202(a) of the Act by section 202(b).  For example, this exclusion does not apply to:

      (1) Stocks traded on an unregistered exchange.

      (2) Stocks traded only on an organized foreign exchange.

      (3) A gift of stock, regardless of where the stock is traded.

      (4) Stock held in a private “closed” family corporation.

      The exclusion does apply, however, to bona fide investments (“purchases”) made by a union official in the stock of a company whose employees he represents, provided that the stock is traded on a registered exchange such as the New York Stock Exchange.  Likewise, the income from such stocks is not required to be reported.

243.510 STOCKS TRADED OVER THE COUNTER

      If a union official holds stock in a corporation traded over the counter and his union has a contract with that corporation, he would be required to file a report since the reporting exemption in section 202(b) applied only to securities traded on a securities exchange registered under the Securities Exchange Act of 1934.

243.511

      President A of Local 100 is a regular production employee of the B Corporation.  The stock of B Corporation is traded over the counter, that is, it is not traded on a regulated exchange.  Assume that President A got his stock, now worth $8,000 and which brings him dividend income of $600 a year, through many years of purchases under the B Corporation stock purchase plan available to all employees.  Under section 202(a)(1) a report is required from President A.  The requirement of a report does not imply that the act or behavior or agreement to be reported is illegal.  It means that the Congress decided that the reporting of the interest and public disclosure of the report are desirable in accomplishing the objectives of the LMRDA.

            (Technical Revisions: Dec. 2016)

243.520 EMPLOYEE STOCK PURCHASE PLANS

      Where an employer whose stock is traded on a national securities exchange has an employee stock purchase plan by which all employees including labor union officials who are employees may purchase the employer’s stock at a discount from the market price, no reports are required with regard to these purchases and holding of the employer’s stock by labor organization officers for the reason that they come within the exception of section 202(b) of the Act and section 302(c) of the Labor Management Relations Act, 1947, as amended (payments to a union officer “as compensation for, or by reason of, his service as an employee of such employer”).

243.522

      An officer of a union who participates in an employee stock plan authorizing a regular deduction from his pay check, to be applied to the purchase of government bonds, and under which the employer, whose employees the union represents or is actively seeking to represent, contributes one-fourth as much to buy company stock for the employee must be reported under section 202(a)(1) and (2) of the Act, in the absence of an applicable exemption.  Such a report would have to list and describe the officer’s holdings of, and transaction in, this stock for the preceding fiscal year, whether acquired under the Plan or not. However, the exemption contained in section 202(b) could apply.  That section provides that 202(a)(1) and (2) shall not be construed to require any such officer or employee of a labor organization 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.

243.600 FREE USE OF HUNTING LODGE

QUESTION: I am the president and business agent of my local.  We have a collective bargaining agreement with the CDE Company.  The CDE Company has a private lodge on a lake in the Adirondack Mountains in New York for the use of its officers.  As the families of the Corporation’s officers were not using the lodge before July, I was offered the use of the facilities for a 2 week period in late June.  Do I have to report under these circumstances?

ANSWER: Yes.  This is a gift of more than nominal value and consequently is required to be reported pursuant to section 202(a)(1) of the Act.

TRANSACTION WITH EMPLOYER OF UNION MEMBERS

244.001 LMRDA, SECTION 202(a)(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 form other legal or equitable interest in the business of an employer whose employees such labor organization represents or is actively seeking to represent; . . .

244.100 LOANS

      It is clear that loans in excess of a minimal amount must be reported by an officer or employee of a union which represents, or is actively seeking to represent, the employees of the employer who makes the loan.  Although subsections (1) and (6) of section 202(a) contain exceptions which might be construed to apply to such loans, subsection (2) of section 202(a) specifically covers such loans and does not contain any exceptions; there appears to be no basis for the exclusion of such loans from the reporting requirements contained in that paragraph.

244.120 “DE MINIMIS” LOANS

      Congress intended that union officers report loan arrangements with their employers that pose conflicts of interest - for example, a 40 year, 2 percent loan in the amount of $20,000 so that the officer could buy a home, would pose a reportable conflict. 

      (Revised: Dec. 2016)

244.150 CASH ADVANCES

      A cash advance would not be considered a loan if at the time the advance is made to the employee union officer, he had already rendered services to the employer the value of which exceeded the amount of the cash advance.  It would seem that the employee was equitably entitled to the money advanced and consequently had not, in fact, received a loan.

244.170 EMPLOYER AS A GUARANTOR OF LOAN

      See Manual Entry 253.041.

BENEFIT FROM BUSINESS WHICH DEALS WITH EMPLOYER OF UNION MEMBERS

245.001 LMRDA, SECTION 202(a)(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 . . .

245.005 STOCKHOLDER IN MUSIC PUBLISHING FIRM

      When an officer of a musician’s union holds stock and is an officer in music publishing firms whose income is derived from record companies which engage in collective bargaining with the musician’s union, reports may be required if a substantial part of the business of the music publishing firms consists of dealing with record companies whose employees the union represents or is actively seeking to represent.

245.100 LEASING TRUCKS TO EMPLOYER

      Where a collective bargaining agreement between a local of newspaper truck drivers and the employer provides that each member-employee of the union may lease a truck to the employer at X dollars per day of use, and an officer of the union who is a regular driver-employee of the employer leases his truck to the employer, no report under section 202(a)(3) of the Act is required for the reason that the leasing arrangement amounts to an incidental benefit of the employment relationship.

      245.200 SUBSTANTIALITY OF DEALING

Union Officers A and B of a local union are co-owners of a building corporation.  The corporation, through intermediaries who are regular meat wholesalers, sold meat to employers who bargain with the local union.  In 1962, some 80% of the corporation’s business of approximately $100,000 was with such employers.  Both A and B owe reports for the year 1962 with regard to their interest in and their income from the building corporation pursuant to section 202(a)(3), since both the interest and the income are “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.”  See Form LM-30 Instructions, Section X, Part B (Items 8-12) Business, Definition of “substantial part.”

      (Revised: Dec. 2016)

245.300 BUSINESS AGENT - SIDE EMPLOYMENT

      If a union business agent were to take a job with an employer (and thereby receive income), and the employer’s business consisted in substantial part of buying from, selling to, or otherwise dealing with other employers whose employees the labor organization with which the business agent is affiliated represents or is actively seeking to represent, a report would be required from the business agent.  This would be so even though the primary employer does not himself employ anyone who is a member of the labor organization with which the business agent is affiliated and the labor organization does not represent and is not actively seeking to represent employees of the primary employer, and even though the business agent’s job with the primary employer would not put him into contact with employees of any of the companies with which the primary employer deals and he will have no responsibility for activities in labor relations matters.

245.400 EQUIPMENT RENTING

      If an officer or employee of Union X rents theatrical equipment to groups staging amateur plays, and such groups employ persons represented by Union X, the officer or employee renting the equipment must file a report pursuant to section 202(a)(3).  The amateur group is the employer, and the renting of equipment is a business, a substantial part of which is carried on with employers whose employees Union X represents.
Opinion 9/16/60

245.500 REPAIR BUSINESS

      Mr. A, Secretary-Treasurer and Business Agent of a union, is also the owner, along with his wife and minor child, of a small corporation whose major business activity is the repair of motion picture projection equipment used in theaters and the sale of new equipment to these same theaters.  He is considered one of the most competent repairmen in the area where he resides.  Certain members of his union alleged that he had been delinquent in getting wage raises for them for the reason that he was more concerned with having good personal business relations with the theaters with which he would have to bargain to secure wage raises for the members of his union.  This union official is required to file a full report of his income from the corporation as well as that of his wife and minor child.

BENEFIT FROM BUSINESS
WHICH DEALS WITH UNION

246.001 LMRDA, SECTION 202(a) (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; . . .

246.005 MEMBER OF PARTNERSHIP DEALING WITH UNION

      A and B are employees of an international union in a professional capacity and also have interests in a partnership which is under contract to render the same type of professional services to the union.  The union has reported the persons concerned as employees who perform services other than those which are exclusively clerical or custodial in nature.If each of the persons referred to is in fact an employee of the labor organization, section 202(a) (4) would be applicable, since by virtue of his connection with a partnership which performs professional services pursuant to a contract with the labor organization, there is an “interest, legal or equitable, which he . . . directly or indirectly held in . . . a business any part of which consists of … dealing with such labor organization.”  In addition, such persons no doubt also derived income and benefits with monetary value from the partnership which deals with their union employer.  In such instance, the employee is required to file a report with the Office.

246.100 DISPENSING MACHINES

      Where a business agent for a union makes a deal with the union and employer whereby dispensing machines are installed in the plant and the profits are split among the agent, the union and the employer, the agent is required to report any profits which he derives from the transaction under section 202(a)(4) and 202(a)(5).

246.200 INTEREST MAY BE AS CREDITOR

      Union Officer A of a local union had a one-third ownership interest (worth $8,000) in an insurance agency, a legal entity which is independent of the local and not a “subsidiary organization” thereof.  Union Officer B, of the same local, was a creditor of the insurance agency by virtue of a loan of $10,000, secured by a 5% interest bearing note, made to the agency in 1959.  During the years 1960 to 1962, while the note was still outstanding and interest payments were received by Officer B in the amount of $500 per annum, the agency “wrote” the automobile insurance policies for the local.
      Section 202(a) (4) requires a report from a union officer who has an interest in an entity which does any business with the union of which he is an officer.
      Therefore, reports are required from both union officers.  The language of section 202(a) (4) is broad enough to render a distinction between a creditor or owner interest “academic.”

246.250 INCOME FROM BUSINESS DEALING WITH TRUST

      A union officer or employee is required to report income he receives from a business any part of whose buying and selling activities are with a trust in which his labor organization is interested.  While this type of situation is not specifically covered in LMRDA, by 29 CFR 404.2, we are requiring union officers and employees to file reports as to their income or interest in a business, any of the activities of which are with the trust in which their labor organization is interested.

246.300 OFFICERS AS WHOLESALER

      When a local union establishes a gasoline station for the purpose of providing discounts for its members, and the president of the local union purchases wholesale gasoline with his own money, which he then sells to the union at a profit to himself, he is required under section 202(a) (4) of the LMRDA to file reports on these transactions with the union.

246.400 GRATUITIES FROM HOTEL WHERE CONVENTION HELD

      Union officers who receive complimentary hotel rooms and other gratuities of substantial value from the hotel at which the union holds its convention are required to report pursuant to section 202(a)(4).
      While the furnishing of complimentary rooms by hotels to officials of organizations which hold conventions at their establishments is a common practice, reports under section 202(a)(4) nevertheless are required from the union officers so that the union members may be aware of substantial gratuities received by their representatives by virtue of their position in the labor organization, and to disclose any possible conflict of interest situation between such officials and the employers which sell to or otherwise deal with the union.

246.500 “SUBSIDIARY ORGANIZATION” AS BUSINESS

      Where a labor organization has a “subsidiary organization” as defined in Article X of the Instructions for the Preparation of LM-2, and where the officers of the labor organizations are also officers of the “subsidiary organization,” and where, further, there is full and complete disclosure of the activities of the “subsidiary organization” by the labor organization in accordance with the special instructions for subsidiary organizations” in Article X, it will not be necessary for the officers of the labor organization to file union officer reports pursuant to section 202(a) of the Act for the income, etc., received from the “subsidiary” since examination of the LM-2 filed by the labor organization will disclose to the members and the public the full income, expense, and allowances received by the union officer from the labor organization itself and its “subsidiary organization.”

      (Technical Revisions: Dec. 2016)

246.600 INCOMES AS EMPLOYEE OF INSURANCE COMPANY

      A union officer, who is an employee of an insurance company from which the union welfare fund procures insurance, is required to report that money which he receives as an employee of the insurance company, inasmuch as he derives income from a business which sells to or otherwise deals with a labor organization of which he is an officer.

246.605 EMPLOYEE OF UNION ATTORNEY

      A union president who works part-time for the union’s attorney, keeping the union’s books and filing necessary reports, and who receives half of the attorney’s retainer from him as compensation, is required to file a report under section 202(a) (4) since the attorney operates a business (practice of law) which deals with the union and the union president receives income from that business.  It is immaterial that motions passed by the executive board of the union and the membership indicate that this arrangement was known.

246.700 “DE MINIMIS” STOCKHOLDING, INTEREST OR INCOME

      An employee of a labor organization purchased, in an “Over-the-Counter” transaction in 1963, $400 worth of a common stock of a business which supplies his labor organization with more than one million dollars annually in goods and services.  This employee occupies a position which requires him to make policy recommendations to officers of the labor organization regarding the purchase of such goods and services.
      No report would ordinarily be required of the union employee under these circumstances (even though Over-the-Counter securities do not come within the exception from union officer and employee reporting in section 202(b)) if (1) his total holdings, including the $400 purchase, had a prevailing market price of $1,000 or less, (2) the holdings were unrelated to the employee’s status in the labor organization, and (3) he received income of $100 or less from the stock during 1963.  This type of transaction comes within the terms of exclusion in Item (ii) of the Instructions relating to Part A of the LM-30.

      (Revised: Dec. 2016)

246.800 EMPLOYEE OF CREDIT UNION

      If a credit union grants loans to a labor union, a report would be required from an officer of that labor union who is also an employee of the credit union.  However, no report would be required merely because the credit union grants loans to members of the labor union.
      There is nothing in the nature of the purposes or policies of a credit union which would appear to be adverse to the interests of a related labor union.  However, it is conceivable that because of peculiar circumstances an employee of the credit union might find that his duty to the credit union conflicts with the duty he owes to his labor organization as its elected officer or employee.  It might also be possible that a person could abuse his position with the credit union in such a way as to violate his duty of trust in relation to the labor organization.

BUSINESS TRANSACTION WITH EMPLOYER
OF UNION MEMBERS

247.001 LMRDA, SECTION 202(a) (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 . . .

247.005 UNION OFFICERS AS EMPLOYEE OF PENSION FUND

      When a union officer is paid by the employer for services rendered in the capacity of a secretary to a pension fund, both the union officer and the employer are required to report the transaction.

247.100 DISPENSING MACHINES

      See Manual Entry 246.100.

247.200 OPERATING A SIDE BUSINESS

      The business agent of a local union has a side business which consists of repairing motion picture equipment and selling new equipment to the theater operators who are the employers of the members of the union which the business agent represents.  The transactions with the employers are a substantial part of the business agent’s side business.  He is required to file reports of his interest in and the income from that business under section 202(a) (3) of the Act (for which there is no statutory exception).  On the other hand, the employers need not report under section 203(a) (1) since their purchases of equipment and their payments to the business agent for repairs are at the prevailing market price in the regular course of business.

247.300 DISCOUNTS AVAILABLE TO ALL EMPLOYEES

      Section 202(a) (5) is designed to pick up any direct or indirect business transactions between the union officer for his wife or minor child) and the employer whose employees the union officer’s organization represents.  Here there are two very important statutory exceptions, namely, payments of bona fide wages to the union officer for regular work performed, and purchases and sales of goods or services in the regular course of business at prices generally available to any employee of the employer.
      The second exception to reporting under section 202(a) (5) may be illustrated by this situation.  An automobile manufacturer, in order to promote the sale of its cars to its own employees, offers any regular employee a car at a 20% discount.  President A of the local that has collective bargaining relations with this automobile manufacturer buys a car at the 20% discount; President A is a regular employee on the assembly line.  Since President A is a regular employee, no report of the discount given to him by the employer need to be made since the same discount is available to all employees.  On the other hand, if President A were not an employee, a report would be required.

PAYMENT RECEIVED FROM ANY EMPLOYER OR CONSULTANT

248.001 LMRDA, SECTION 202(a) (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.

248.005 SCOPE OF SECTION

      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.  The Committee Reports supply this example:

Union Officer C accepts a payment from employer K with the understanding that C’s union will not attempt to organize the K firm plant.
     
Normally it would be expected that C’s union would attempt to organize that plant.  This transaction, which is reportable under 202(a) (6) of LMRDA by the union officer, (and by the employer under 203(a) (1)), is one that is also indictable under section 302(a) of the Taft-Hartley Act.

      A union officer must report under section 202(a) (6), if he receives any payment by way of dividends or otherwise from a firm which is competitive to one which has collective bargaining agreements with his own union.
Conflict of interest reporting under section 202(a) (6) does not require an employer who manufactures sweaters in California to report a wedding gift of $1,000 he has given to his son-in-law who is the Business Agent of a Machinist Union in Pittsburgh for the reason that, in the absence of any other factors, no conflict of interest situation is posed.  The key issue of the problem lies in whether the payment (received by the union officer) poses a “conflict of interest” in the responsibilities of the union officer to his members to whom he owes fiduciary responsibilities as a union officer to represent them with undivided loyalty.
      A payment by an employer to an ordinary member of the union who is not an officer would not be reportable.  Similarly, if the maker of the payment does not meet the definition of employer, no report would be required by the union officer even if the payment he received was clearly one that poses a conflict of interest situation.
      Exceptions: In 202(a) (6) of the Act note the reference to section 302(c) of Taft-Hartley.  Union officers will be particularly concerned with subsections 1 and 3 thereof.  Note that the language of those subsections has been incorporated specifically in several of the first five subsections of 202(a).  By far the most important one is the bona fide regular employee exception: Where an employer pays a union officer wages for work performed, no report is required.  The difficulties stem from those released or lost time situations.  For example, where a union officer is responsible for handling grievances for the union in his plant, the contract between the union and the employer may provide in many instances that this officer shall be excused from his regular work to handle the grievances and shall be paid his regular wages while handling the grievances.  Such a situation will not normally require reports from the union officer or the employer on the theory that 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.

248.100 TRANSACTION WITH PRESIDENT OF EMPLOYER ACTING IN INDIVIDUAL CAPACITY

      Union Officer A works for a union that represents employees of X Corporation.  A sold his stock interest in X Corporation to Y, President of X Corporation.  Y purchased the stock in his individual capacity.  Y owns 30% of the X Corporation’s stock (the 30% includes the stock secured from A).  The purchase agreement between A and Y calls for an initial payment on execution of the agreement and the balance payable in five equal annual installments.  Under these circumstances both A and Y are required to file reports of this transaction; A under section 202(a) (6), and Y under section 203(a) (1).  Notwithstanding the fact that Y purchased stock in his own individual capacity, he is considered an employer under section 3(a) of the Act. See Note 1.
      At the same time Mrs. B, wife of Union Officer B (who is also an officer of a union that represents employees of X Corporation), also sold her stock interest in X Corporation to Y in his individual capacity.  Payments are on the same terms as the transaction involving A and Y.  Under these circumstances, Union Officer B is required to report pursuant to section 202(a) (6) with regard to the payments received by his wife from Y.  On the other hand, Y is not required to report under 203(a) (1) the payments made to the wife of Union Officer B. See Note 2.

NOTE 1:
 A key official of corporation will be considered to be an employer within the meaning of section 3(e) of the Act if he has the responsibility for any aspect of the employer-employee relationship of the corporate employer, albeit he is dealing in his “individual” capacity with a union officer.

NOTE 2:
Under section 202(a) (6) a union officer must report any payments received by his wife or minor child, whereas, under section 203(a) (1) an employer need report only payments made to a union officer and is not required to report payments to a union officer’s wife unless the wife is a mere conduit for the transmission of funds to the union officer.

      (Revised: Dec. 2016)

248.200 PAYMENT OF WAGES FOR WORK NOT PERFORMED

      Members of a local were paid wages by X Department Store for a project on which they did no work but on which they would have been employed had not the store inadvertently employed a non-union contractor.  Payment of the funds was made by the store to the union steward for disbursement to the members of the local.
      Section 202(a)(6) requires every "officer" or "employee" of a labor organization to file a report listing any payment of money which he received from any employer except payments of the kind referred to in section 302(c) of LMRA. Therefore, the union steward is required to report the receipt of this payment if he is an "officer" or "employee” of the labor organization within the meaning of those terms as they are defined in sections 3(f) and 3(n) of LMRDA. Further, any officer of the union who received payments from the store through the union steward would be required to file a report.
      X Department Store is required to report the payment pursuant to section 203(a) (1).  Since the payment in question was a payment of wages for work not performed, it cannot be said to come within the regular wage exception in section 302(c) of LMRA.       
     
248.300 PAYMENTS TO JOINT APPRENTICESHIP COMMITTEE

      Payments by employers to a Joint Apprenticeship Training Program, which has been created under the conditions set forth in section 302(c)(6) of the Labor Management Relations Act (section 505 of LMRDA) are not required to be reported under section 202(a)(6) of LMRDA by a union officer serving as the union representative on such a committee.
      See also Manual Entry 253.805.

EMPLOYER REPORTING IN GENERAL

250.001 LMRDA, SECTION 203

      (a) Every employer who in any fiscal year made--
      (1) any payment or loan, direct or indirect, of money or other thing of value (including reimbursed expenses), or any promise or agreement therefore, to any labor organization or officer, agent, shop steward, or other representative of a labor organization, or employee of any labor organization, except (A) payments or loans made by any national or State bank, credit union, insurance company, savings and loan association or other credit institution and (B) payments of the kind referred to in section 302(c) of the Labor Management Relations Act, 1947, as amended;
      (2) any payment (including reimbursed expenses) to any of his employees, or any group or committee of such employees, for the purpose of causing such employee or group or committee of employees to persuade other employees to exercise or not to exercise, or as the manner of exercising, the right to organize and bargain collectively through representatives of their own choosing unless such payments were contemporaneously or previously disclosed to such other employees;
      (3) any expenditure, during the fiscal year, where an object thereof, directly or indirectly, is to interfere with, restrain, or coerce employees in the exercise of the right to organize and bargain collectively through representatives of their own choosing, or is to obtain information concerning the activities of employees or a labor organization in connection with a labor dispute involving such employer, except for use solely in conjunction with an administrative or arbitral proceeding or a criminal or civil judicial proceeding;
      (4) any agreement or arrangement with a labor relations consultant or other independent contractor or organization pursuant to which such person undertakes activities where an object thereof, directly or indirectly, is to persuade employees to exercise or not to exercise, or persuade employees as to the manner of exercising, the right to organize and bargain collectively through representatives of their own choosing, or undertakes to supply such employer with information concerning the activities of employees or a labor organization in connection with a labor dispute involving such employer, except information for use solely in conjunction with an administrative or arbitral proceeding or a criminal or civil judicial proceeding; or
      (5) any payment (including reimbursed expenses) pursuant to an agreement or arrangement described in subdivision (4);
shall file with the Secretary a report, in a form prescribed by him, signed by its president and treasurer or corresponding principal officers showing in detail the date and amount of each such payment, loan, promise, agreement, or arrangement and the name, address, and position, if any, in any firm or labor organization of the person to whom it was made and a full explanation of the circumstances of all such payments, including the terms of any agreement or understanding pursuant to which they were made.
* * * * *
      (d) Nothing contained in this section shall be construed to require an employer to file a report under subsection (a) unless he has made an expenditure, payment, loan, agreement, or arrangement of the kind described therein.  Nothing contained in this section shall be construed to require any other person to file a report under subsection (b) unless he was a party to an agreement or arrangement of the kind described therein.
      (e) Nothing contained in this section shall be construed to require any regular officer, supervisor, or employee of an employer to file a report in connection with services rendered to such employer nor shall any employer be required to file a report covering expenditures made to any regular officer, supervisor, or employee of an employer as compensation for service as a regular officer, supervisor, or employee of such employer.

250.002 REGULATIONS

      See 29 CFR Part 405

250.010 EFFECTIVE DATE

      Sections 201, 202, and 203 became effective immediately upon the date of enactment, September 14, 1959.  Section 207, which is titled “Effective Date,” specifies the period within which reports required under those sections must be filed.

      (Revised: Dec. 2016)

250.100 ATTORNEY

      An attorney who meets the definition of employer (see Manual Entry 030.440) and makes a loan of money to a labor organization would be required to file an employer report under section 203(a) (1).

250.200 CORPORATE OFFICERS

      A manager or a president of a corporation may be required to report under section 203 payments to a union officer, even if the payment involves an activity “individual” in nature and not on behalf of the corporate employer, as for example, the sale at half the true and fair market value of his home to a union officer of the union which represents the employees his corporate firm employs.

250.300 FRANCHISED AGENTS OF AGVA

      See Manual Entry 030.450.

EMPLOYER REPORTS: WHO MUST REPORT

251.001 LMRDA PROVISIONS

      See Manual Entry 250 ff. for statutory provisions; 030.400 for definition of “Employer.”

251.002

      See 29 CFR 405.1(b), 405.7, 405.8

251.005 NONUNION EMPLOYER

      The fact that none of an employer’s employees are union members does not except him from the reporting requirements of this section, if otherwise he would be required to report.

251.100 SELF-INCRIMINATION

      Reports required of employers under section 203(a) of LMRDA must be submitted notwithstanding the fact that the information required to be included in the report may disclose a violation of section 302 of the Taft-Hartley Act (section 302 contains a criminal provision).  It has been argued that the requirement to file such a report infringes on the 5th amendment to the Constitution of the United States.

NOTE:
For a discussion of the constitutionality of the Reporting requirements, see Manual Entry 241.400.

WHEN AND WHERE TO FILE EMPLOYER REPORTS

252.001 LMRDA, SECTION 207(b)

      Each person required to file a report under section 201(b), 202, 203(a), or the second sentence of 203(b) shall file such report within ninety days after the end of each of its fiscal years; except that where such person is subject to section 201(b), 202, 203(a), or the second sentence of 203(b), as the case may be, for only a portion of such a fiscal year (because the date of enactment of this Act occurs during such person’s fiscal year or such person becomes subject to this Act during its fiscal year) such person may consider that portion as the entire fiscal year in making such report.

252.002

      See 29 CFR 405.1, 405.2, 405.3, 405.4, 405.5

252.005 DUE DATE

      The Act requires that employer reports be submitted within 90 days after the end of an employer’s fiscal year so as to include information on all reportable payments and agreements or arrangements which occurred during the year.  If certain arrangements are subject to the reporting requirements, reports should be submitted after the end of every fiscal year in which such an arrangement was made and also after every year in which payments were made pursuant to such an arrangement.  At the same time, the employer would report any other payments or agreements or arrangements required by the form.

252.006 ELECTRONIC FILING

Electronic Forms System (EFS) is the Office of Labor-Management Standards’ (OLMS) web-based reporting system for filing electronic reports. Specifically, the labor organization information report Form LM-1, the labor organization annual Forms LM-2, LM-3, and LM-4 reports, the Form LM-30 Labor Organization Officer and Employee report, the Form LM-10 Employer report, and the Form LM-20 and LM-21 labor relations consultant reports can be filed electronically. As of January 1, 2021, all of the preceding forms must be filed electronically with the exception of the Form LM-30. A link to the EFS can be found at https://www.dol.gov/agencies/olms/reports/electronic-filing.

      (Jan. 2021)

PAYMENTS TO UNIONS-OFFICERS-ETC.

253.001 LMRDA, SECTION 203(a) (1)

      . . . any payment of loan, direct or indirect, or money or other thing of value (including reimbursed expenses), or any promise or agreement therefore, to any labor organization or officer, agent, shop steward, or other representative of a labor organization, or employee of any labor organization, except (A) payments or loans made by any national or State bank, credit union, insurance company, savings and loan association or other credit institution and (B) payments of the kind referred to in section 302(c) of the Labor Management Relations Act, 1947, as amended;

253.005 PAYMENT FOR WORK NOT PERFORMED

      See Manual Entry 248.200.

253.007 EMPLOYER-MEMBER PAYING DUES

      Although there is no mention in section 302(c) of the LMRA of dues paid to a union by an employer who is a member of the union, such payments need not be reported by the employer under section 203(a)(1) of the LMRDA.  It has previously been held that employers may join or retain membership in a union so long as they were not required to do so.  Obviously, the right to join includes the obligation to pay dues.  Further, while the dues are paid by employers, they are paid by them in the capacity of union members and not in the capacity of employers.  However, if the union’s constitution establishes higher dues for employers, these dues would have to be reported, since the payments are required from them as employers and not as members.

      (Technical Revisions: Dec. 2016)

253.010 REIMBURSEMENT OF EMPLOYEES FOR WORK PERMIT COSTS

      An employer imported a number of men from local unions of a national union outside the jurisdiction of the local affiliate of that national to work on a special project within that local’s jurisdiction.  Under the constitution and bylaws of the national union, such workmen were required to pay a charge for a work permit in the jurisdiction of the local where work was secured.  The imported workmen paid the work permit fee to the local and obtained receipts which were subsequently turned over to the employer who reimbursed the men for this expense.
      In the absence of evidence showing that such an arrangement was a scheme to achieve an indirect payment by an employer to a union, the reimbursement of the men by the employer of the cost of a work permit is consistent with a legitimate effort by an employer to make it more attractive for specialized employees to work for him away from their own home base.

253.020 PRESIDENT OF EMPLOYER ACTING IN INDIVIDUAL CAPACITY

      Union Officer A, whose union represents employees of X Corporation, sold his stock interest in X Corporation to Y, President of X Corporation. Y purchased the stock in his individual capacity. Y owns 30% of the X Corporation’s stock (the 30% includes the stock secured from A). The purchase agreement between A and Y calls for an initial payment on execution of the agreement and the balance payable in five equal annual installments. Under these circumstances, both A and Y are required to file reports of this transaction; Y is required to report under section 203(a) (1). Notwithstanding the fact that Y purchased stock in his own individual capacity, he is considered an employer under section 3(e) of the Act. (See Note 1)
      At the same time Mrs. B, wife of Union Officer B (who is also an officer of a union that represents employees of X Corporation), also sold her stock interest in X Corporation to Y in his individual capacity.  Under these circumstances, Union Officer B is required to report pursuant to section 202(a) (6) with regard to the payments received by his wife from Y.  Y is not required to report under 203(a) (1) the payments made to the wife of Union Officer B. (See Note 2)

NOTE 1:
A key official of a corporation will be held to be an employer within the meaning of section 3(e) of the Act if he has the responsibility for any aspect of the employer-employee relationship of the corporate employer, albeit he is dealing in his “individual” capacity with a union officer.

NOTE 2:
Under the specific language of section 203(a)(1) an employer need report only payments made to a union officer and is not required to report payments made to a union officer and is not required to report payments to a union officer’s wife unless the wife is a mere conduit for the transmission of funds to the union officer.

      (Revised: Dec. 2016)

253.030 POLITICAL CONTRIBUTIONS

      See Manual Entry 243.400.

253.040 LOANS TO EMPLOYEES

      Employers are not required to report loans made to employees under circumstances and terms unrelated to the employees’ status in a labor organization, unless the Secretary, in particular cases, requires the submission of a special report on such information.  Whether a particular loan meets the condition set forth above is, of course, a question of fact to be determined in each case on the basis of the pertinent circumstances.  The size and terms of a particular loan, especially in relation to the size and terms of loans actually made to other employees, would be significant circumstances in making this determination.

253.041 EMPLOYERS AS GUARANTOR OF OFFICER LOAN

      An employer who guarantees payment of a bank loan made to a labor organization representative is required to report this since it constitutes an “other thing of value” to the recipient within the meaning of section 203(a)(1).  It would correspondingly be required to be reported by a recipient labor organization officer or employee under section 202 of the Act.

253.045 ADVANCES

      An advance on salary offered to all employees is not reportable by the employer since it may be regarded as a payment of the kind referred to in section 302(c)(1) of the LMRA, 1947, in that it is payable to an officer of a labor organization by reason of his service as an employee of said employer.  Further, Instructions to LM-10, Employer Report, Part A, Question 8A, makes the following exception:

“(b) Loans made to employees under circumstances and terms unrelated to the employees’ status in a labor organization.”

253.050 UNION MEMBERS WHO CONTRACT WORK

      Members of local unions who are classified as contractors are employers in addition to being members.  As employers they are required to file reports with the Office regarding payments in excess of regular dues which they make to their local union and that are not among those excluded from the Act under section 302(c).

      (Revised: Dec. 2016)

253.060 NEGOTIATING EXPENSES

      Company A and Union B are attempting to negotiate production standards related to the operation of new equipment.  The company, through its plant officers, invites several union representatives to visit other plants of the company with a view to observing the new equipment in operation.  It was believed that when the union representatives viewed the new equipment in operation they would have a more adequate factual basis for negotiating a production standard with Company A.  The company paid the union representatives their regular wages and their actual expenses for travel and hotel accommodations (one night’s lodging).

      Under these circumstances, no employer report is required from the company and no labor officer reports are required from the union representatives because the payment of bona fide expenses by the company in connection with collective bargaining and negotiations are considered to come within the scope of the regular wage exception referred to in section 302(c) of the LMRA, 1947, as amended.

      But see Manual Entry 243.200.

253.061 MEALS FOR BARGAINING COMMITTEE

      The practice of any employer, who pays for meals of a five-man bargaining committee of an independent local on the occasion of its meeting several times a year with the employer’s management committee to discuss matters under the collective bargaining agreement, is not reportable under section 203(a)(1) of the Act in view of Item (e) of the exclusions listed in the instructions for Question 8A, Part A of Form LM-10 (sporadic or occasional gifts or gratuities) if the practice involves an insubstantial cost per recipient and amounts to occasional acts of hospitality which the employer extends to other groups with which it meets to discuss matters of mutual interest.

      (Technical Revisions: Dec. 2016)

253.062 COMPLIMENTARY ROOMS TO UNION OFFICERS

      Hotels which furnish complimentary rooms to union officers as such during a convention are required to file reports under section 203(a)(1) notwithstanding the exception in section 302(c)(3) of the Taft-Hartley Act, as amended.  While the furnishing of complimentary rooms by hotels to officials of organizations which hold conventions at their establishments is a common practice, where rooms are made available without charge or at a substantial “discount” because the men involved are officers of the union dealing with the hotel, reports are required from both parties.

253.070 ADVERTISING IN UNION LITERATURE

      Expenditures for employee advertisements in union souvenir journals paid to a labor organization should be treated as “sporadic and insubstantial.”  Where such payments are made to a banquet group or committee composed of employees of the employer, such payments need not be reported unless the purpose is to persuade the employees in relation to their collective bargaining rights.  See also Form LM-10 FAQ 31(A) (noting that this is not a blanket rule and reporting also depends on the frequency and amount of the expenditures). 

      An employer pays a labor organization $1,000 for a full-page advertisement in a commemorative booklet that is given to all of the officers of local unions attending a union conference. The same employer also pays $2,000 to conduct marketing activities from a trade booth at the conference. The employer must file a Form LM-10 reporting the $1,000 paid for the advertisement in the commemorative booklet, and the $2,000 for the conference trade booth.
Under section 203(a), and subject to multiple exceptions, employers must report payments to labor organizations and their officials. 29 U.S.C. § 433(a)(1). Section 203(a)(1)(B) exempts payments of the kind referred to in section 302(c) of the Labor Management Relations Act (LMRA). 29 U.S.C. § 433(a)(1)(B). Section 302(c) covers payments "with respect to the sale or purchase of an article or commodity at the prevailing market price in the regular course of business." 29 U.S.C. § 186(c)(3). The purchase of "advertising" in a journal or use of a booth might be considered to be comparable to the purchase of an "article or commodity" within the meaning of the exception set forth in section 302(c)(3) of the LMRA, but the transactions, by all appearances, are not made in the "regular course of business." Unions are not in the business of producing and selling periodicals for advertising revenue or hosting trade shows. Thus, the payment is not in the regular course of business. In addition, the purpose of a commemorative journal is to raise funds for the union, and purchasers of space do so, at least in part, to support the union, and not merely for advertising purposes. Thus, there is no reliable way to assess a "prevailing market price" for journal entries or rental of a booth at a union conference; therefore this exemption is not applicable.

      (Revised: Dec. 2016)

253.071 

      29 CFR 405.5 by reference to Form LM-10 specifically excludes from the reporting requirements certain sporadic or occasional gifts, gratuities or favors of insubstantial value.  Advertisement in a testimonial booklet would not need to be reported unless its purpose, directly or indirectly, is to influence employees in relation to their collective bargaining rights.  See also Form LM-10 FAQ 31(A). 

      (Revised: Dec. 2016)

253.072 SOLICITING PAID ADVERTISEMENTS FROM EMPLOYER

      There is nothing in the LMRDA (of 1959) which would affect the legality of a union’s continuation of its practice of soliciting paid advertisements from employers for insertion in a souvenir journal in connection with its annual dinner.

253.080 CONTRIBUTIONS TO UNION APPRENTICESHIP PROGRAM

      The furnishing by an employer of less than $250 worth of steel every three or four years on the request of the union for use in the union’s apprenticeship training program can be considered a “sporadic or occasional gift... of insubstantial value” within the meaning of exception (e) of the exclusions listed in the instructions for Question 8A, Part A, of Form LM-10.  Therefore, no report of such a gift is required.

      (Revised: Dec. 2016)

253.081 TO IMPROVE LABOR-MANAGEMENT RELATIONS

      Occasional acts of hospitality which are designed solely to further sound labor-management relations, which involve an insubstantial cost for each person invited, and which the company extends in similar fashion to other groups with which it meets on matters of mutual interest need not be reported.

253.082 EMPLOYEE RECREATION

      Employer payments to a fund for the purposes of conducting a bowling league, picnic, clambake or Christmas party is not prohibited under the Act.  Neither is a report required from the employer; such payments fall within exception (e) of the exclusions listed in the instructions for Question 8A, Part A, of Form LM-10 which states that “sporadic or occasional gifts, gratuities, or favors of insubstantial value, given under circumstances and terms unrelated to the recipients’ status in a labor organization (e.g., traditional Christmas gifts),” need not be reported.
     
      (Technical Revisions: Dec. 2016)

253.083 EMPLOYEE PICNIC

      For many years it had been the custom of Company X to sponsor an annual picnic for its employees.  After the company was organized by Union Y, the union decided that it would co-sponsor the picnic and share the expenses equally with the company.  The cost of the picnic for the 200 employees of the company was $3,000.
      Under these circumstances no report is required from the company pursuant to section 203 of LMRDA under either the past or the present practice because the payment involved (at most $15.00 per employee and his family) is, in effect, a gift or additional wages of insubstantial value given under circumstances unrelated to the recipient’s status in a labor organization.  This is one of the administrative exceptions to the reporting requirements of LMRDA granted by the Secretary of Labor.

253.090 DIVIDENDS TO LABOR ORGANIZATION

      Payments of dividends to labor organizations which are stockholders of the corporation need not be reported, notwithstanding the fact that the corporation is on notice that the dividend payment is to a labor organization.

*253.091 PAYMENTS TO SUBSIDIARY OF A LABOR ORGANIZATION

      An employer made a payment to a Building Corporation which was a subsidiary of a local labor organization as reparation for a violation of the collective bargaining agreement.  The violation involved the employer’s breach of a contract provision prohibiting the use of prefabricated materials.  Since the reparation payment made to the subsidiary of the local did not fall within the exceptions set forth in section 302(c), Labor Management Relations Act, 1947, as amended, it is required to be reported by the employer under section 203(a)(1) of the LMRDA. 

      However, if the payments had been made as the result of a valid settlement, arbitration, or court decision, they might have been allowed by Section 302(c)(2)’s exception for “payment or delivery of any money or other thing of value in satisfaction of a judgment of any court or a decision or award of an arbitrator or impartial chairman or in compromise, adjustment, settlement, or release of any claim, complaint, grievance, or dispute in the absence of fraud or duress....” See Flynn v. Dick Corp., 481 F.3d 824, 181 LRRM 2673 (D.C. Cir. 2007)(order for employer to make payments to union trust funds would not violate §302 because would be made after decision finding breach of “traveling contractor” clause); Toyota Landscaping Co. v. S. Cal. Dist. Council of Laborers, 11 F.3d 114, 119 & n. 4, 144 LRRM 2824, 2828 & n. 4 (9th Cir.1993)(employer payments in settlement of grievance over breach of subcontracting clause).  When this exception applies, reporting is not required by employers under LMRDA §203(a)(1).  See Manual Entry 253.401.   

      (Revised: Dec. 2016)

PAYMENTS EXCEPTED UNDER TAFT-HARTLEY
IN GENERAL

253.101 LMRDA, SECTION 203(a) (1)

      . . . and (B) payments of the kind referred to in section 302(c) of the Labor Management Relations Act, 1947, as amended; . . .

253.106 
      
       The LMRDA of 1959 does not place with this Department any final authority to construe the provisions of law which are amended by section 505 of the Act.  Such authority is left, as before, in the courts having jurisdiction to decide questions arising in the criminal proceedings and civil actions contemplated by subsections (d) and (e) of the LMRA, (1947), as amended.  To the extent the provisions of this section as amended by the new law have a bearing on the Department’s responsibilities under Title II of the Reporting and Disclosure Act we may, of course, have to reach certain conclusions as to their meaning.  Furthermore, the Department of Labor is not in a position to advise as to the view the Department of Justice might take in carrying out that Department’s responsibilities for the enforcement of the criminal sanctions provided in section 302(d) of the Taft-Hartley Act.

253.107 

      Although it will no doubt have occasion to consider the meaning of section 302(c) in determining whether particular transactions are reportable under section 202(a)(6) and 203(a)(1) of the LMRDA, the Department of Labor has no administrative or enforcement responsibilities with respect to the prohibitions contained in section 302 of the Taft-Hartley Act.  Violations of that section are subject to injunctive restraint in the Federal district courts upon the petition of any interested party and the Attorney General can institute criminal proceedings for willful violations.

PAYMENTS EXCEPTED UNDER TAFT-HARTLEY:
PAYMENTS TO EMPLOYEE-CONSULTANT
ACTING OPENLY

253.201 LMRA, SECTION 302(c)

      The provisions of this section shall not be applicable (1) in respect to any money or other thing of value payable by an employer to any of his employees whose established duties include acting openly for such employer in matters of labor relations or personnel administration. . .

PAYMENTS EXCEPTED UNDER TAFT-HARTLEY:
REGULAR WAGE EXCEPTION

253.301 LMRA, SECTION 302(c) (1)

      . . . or 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; . . .

253.305 EXCEPTION FOR REGULAR PAYMENTS TO EMPLOYEES

      The explanation and instructions in the form for the Employer Report set forth that certain payments are not required to be reported under section 203(a) unless the Secretary, in particular cases, requires the submission of a special report thereon.  Among the payments not required to be reported are:

Payments made to any regular employee as wages or other compensation for service as a regular employee of the employer, or by reason of his service as an employee of such employer, for periods during regular working hours in which such employee engages in activities other than productive work, if the payments for such periods of time are: (1) required by law or a bona fide collective bargaining agreement, or (2) made pursuant to a custom or practice under such a collective agreement, or (3) made pursuant to a policy, custom, or practice with respect to employment in the establishment which the employer has adopted without regard to any holding by such employee of a position with a labor organization.
                            Part A, Form LM-10

But see Manual Entries 254.100, 255.200 and 266.100.

      (Technical Revisions: Dec. 2016)

253.320 CHIEF STEWARD’S PAY

      When a chief steward performs no productive work for the company during the regularly scheduled 40 hour work week, and the amount of payment is based upon the job classification held prior to his election as chief steward, and such payments are made pursuant to practices of long standing established in conjunction with collective bargaining agreements, such payments would fall within the exception (c) of the exclusions listed in the instructions for Question 8A, Part A, of Form LM-10, and thus would not need to be reported.

      (Technical Revisions: Dec. 2016)

253.321

      An employee who is paid at the rate of a forty-hour productive week, but whose entire function is that of a chief steward who hears and investigates grievances, would not need to have payments to him reported under section 203(a) of the Act.

253.322 RELEASED TIME PAYMENTS

      Pursuant to a collective bargaining agreement with the employer, wages are to be paid the president of a local labor organization in his capacity as “chief steward.”  As such, his activities performed on company time consist of the investigation of grievances and their processing.  The officer in question does not handle other union business during his period of employment with the employer.  Under such circumstances, no report of payments made to the officer is required of the employer on Form LM-10, exception (c) of the exclusions listed in the instructions for Question 8A, Part A and no report need be filed by the union officer pursuant to section 202 of the Act (see section 302(c), LMRA, 1947, as amended).

      (Technical Revisions: Dec. 2016)

253.330 PAYMENT FOR DEFERRED VACATION

      A bus driver for the X Tramway Corporation was elected to the office of Division President of one of the divisions of his union.  He took a leave of absence from the corporation as of January 1, 1963 to devote full time to his new duties.  He now raises a question concerning the report ability of a payment by the corporation to him of $268.00 which he earned in 1962 under a corporation policy which allows employees to draw vacation pay for vacation earned but not taken during the previous year.  The money thus accumulated is not paid to the employee until the next calendar year.
      Since the payment in question is a payment by an employer to a union officer, it would constitute a violation of section 302(a) of LMRA unless it can be considered to come within one of the exceptions contained in section 302(c) thereof.  Section 302(c) states that the provisions of section 302 shall not be applicable to any money payable by an employer to any officer 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.”  Since it appears to have been the policy of the employer in this case to allow all employees to take a money payment in lieu of a vacation, the payment to the Division President appears to come within the terms of section 302(c) (1) and is therefore exempted from the reporting requirements of section 202(a) (6) and section 203(a) (1) by the terms of those sections.

253.340 INCENTIVE PLAN PAYMENTS

      Payments made under an incentive plan which is contained in the collective bargaining agreement and which contemplates the payment of additional compensation to employees who through additional effort obtain new accounts for the employer come within the purview of section 302(c) (1) of LMRA and would therefore not be reportable by the employer under section 203(a) (1) of LMRDA in the absence of other factors.  Similarly, such payments would not be reportable by the union officer-employees who received such additional compensation.

253.350 CHRISTMAS BONUSES

      Christmas bonuses which are based on a certain percentage of earnings, and which are payable on a uniform basis to all employees without regard to their relationship to a union or their status therein, fall within exceptions provided in section 203(a)(1)(B) of the LMRDA (section 302(c)(1) of the LMRA).

      (Technical Revisions: Dec. 2016)

253.360 GROUP INSURANCE

      Under collective bargaining agreements where an employee selected to represent the union is granted leave of absence without pay for this purpose and during this leave the employee’s rights are preserved for him, including the provision for group insurance for the employee and his dependents in the same amount and in the same manner as is provided for active employees, no LM-10 report is required with regard to these payments pursuant to section 203(a) of the LMRDA.

      (Technical Revisions: Dec. 2016)

PAYMENTS EXCEPTED UNDER TAFT-HARTLEY:
PAYMENTS OF DISPUTED CLAIMS

253.401 LMRA, SECTION 302(c) (2)

      . . . with respect to the payment or delivery of any money or other thing of value in satisfaction of a judgment of any court or a decision or award of an arbitrator or impartial chairman or in compromise, adjustment, settlement, or release of any claim, complaint, grievance, or dispute in the absence of fraud or duress; . . .

PAYMENTS EXCEPTED UNDER TAFT-HARTLEY:
SALES AND PURCHASES AT MARKET PRICES

253.501 LMRA, SECTION 302(c) (3)

. . . with respect to the sale or purchase of an article or commodity at the prevailing market price in the regular course of business; . . .

253.505 STOCK PURCHASE PLAN

      Where an employer has a stock purchase plan under which all employees may purchase stock at a discount, no reports are due from the employer with regard to the benefit given union officers who are regular employees since the “benefit” is deemed to be additional compensation within the meaning of section 302(c)(1) of Taft-Hartley.

PAYMENTS EXCEPTED UNDER TAFT-HARTLEY:
DUES DEDUCTED FROM WAGES

253.601 LMRA, SECTION 302(c) (4)

      . . . with respect to money deducted from the wages of employees in payment of membership dues in a labor organization: Provided, That the employer has received from each employee, on whose account such deductions are made, a written assignment which shall not be irrevocable for a period of more than one year, or beyond the termination date of the applicable collective agreement, whichever occurs sooner; . . .

253.605 CHECKOFF NEGOTIATED BY SUPERIOR BODY

      Where a superior labor organization, such as a District Lodge of Machinists, negotiates a collective bargaining agreement with an employer under which there is a bona fide dues check off agreement which on its face meets the terms and conditions of section 302(c)(4) of the LMRA, 1947, as amended, no employer report, pursuant to section 203(a)(1) of the LMRDA, is required where by direction of the District Lodge the dues are sent directly to the local lodge in which the employees of the employer are members, even though the local lodge does not negotiate the agreement.

253.610 REPORTABLE DUES PAYMENTS

      If payments of employees’ union dues are made by an employer in accordance with section 302(c)(4) of the LMRA, the employer is exempted from the reporting requirements of section 203(a)(1) of the LMRDA with respect to such payments.  Otherwise, e.g., if the payments are made from the employer’s own funds or if they are made without an assignment meeting the statutory requirements, a report is necessary and should be made in such detail as is prescribed by section 203(a) of the LMRDA.

253.625 “DUES” INCLUDES INITIATION FEES AND ASSESSMENTS

      The Department of Justice has taken the position that “initiation fees and assessments, being incidents of membership, should be considered as falling within the classification of membership dues’ as that term is used in section 302(c)(4) of the LMRA.  Memorandum of Assistant Attorney General to Assistant Solicitor General, May 13, 1948, 22 LRRM 46.

NOTE:
In view of this opinion, no reports are required under section 203 of LMRDA of the payment of initiation fees or assessments by an employer to a union under a valid check off arrangement in writing providing for the payment of “membership dues.”

253.630 ASSESSMENTS

      A check off arrangement for assessments which parallels the requirements for the check off of membership dues would not be considered improper.  That is, where “the employer has received from each employee, on whose account such deductions are made, a written assignment which shall not be irrevocable for a period of more than one year, or beyond the termination date of the applicable collective agreement, whichever occurs sooner,” a check off of assessments would be proper.

253.640 EMPLOYER DEDUCTION OF SUPERVISOR DUES

      An employer is required by section 203(a)(1) of the LMRDA to report union dues deducted for supervisors formerly covered by a collective bargaining agreement and remitted to the union, unless such payment could be regarded as a payment “of the kind referred to in section 302(c) of the LMRA, 1947, as amended.”  The only portion of that exemption which would have any applicability in such an instance is section 302(c) (4) exempting “money deducted from the wages of employees in payment of membership dues in a labor organization” subject to a provision that the deduction be authorized by the employee by written assignment.
      In making such a determination it would be necessary to consider the broad definition of “employee” in section 3(f) of LMRDA as “any individual employed by an employer,” and the more restricted definition in section 2(3) of the LMRA, which expressly excludes from that category “any individual employed as a supervisor.”  When section 302(c) (4) is placed in the setting of the LMRDA, and absent the considerations which motivated Congress to exclude supervisors from the definition of “employee” in drafting the LMRA, our view is that the broader definition of “employee” in section 3(f) of the LMRDA appropriately applies to the 302(c) (4) exemption as it is adopted by the LMRDA.  Consequently, reporting would not be required of payments to unions for deductions from supervisors’ wages for membership in the union.

253.641 EMPLOYER-MEMBER PAYING DUES

      See Manual Entry 253.007.

253.650 DUES DEDUCTIONS FROM PENSION PAYMENTS

      The deduction of union dues from pension payments to retired employees who are union members is not prohibited by section 302(a) of the Labor Management Relations Act and would not have to be reported under section 203 of the LMRDA, if such deductions are made pursuant to a collective bargaining agreement and have been voluntarily authorized in writing.

PAYMENTS EXCEPTED UNDER TAFT-HARTLEY:
PAYMENTS TO WELFARE AND PENSION TRUST

253.701 LMRA, SECTION 302(c) (5)

      . . . with respect to money or other thing of value paid to a trust fund established by such representative, for the sole and exclusive benefit of the employees of such employer, and their families and dependents (or of such employees, families, and dependents jointly with the employees of other employers making similar payments, and their families and dependents): Provided, That (A) such payments are held in trust for the purpose of paying, either from principal or income or both, for the benefit of employees, their families and dependents, for medical or hospital care, pensions on retirement or death of employees compensation for injuries or illness resulting from occupational activity or insurance to provide any of the foregoing, or unemployment benefits or life insurance, disability and sickness insurance, or accident insurance; (B) the detailed basis on which such payments are to be made is specified in a written agreement with the employer, and employees and employers are equally represented in the administration of such fund, together with such neutral persons as the representatives of the employers and the representatives of employees may agree upon and in the event of the employer and employee groups deadlock on the administration of such fund and there are no neutral persons empowered to break such deadlock, such agreement provides that the two groups shall agree on an impartial umpire to decide such dispute, or in event of their failure to agree within a reasonable length of time, am impartial umpire to decide such dispute shall, on petition of either group, be appointed by the district court of the United States for the district where the trust fund has its principal office, and shall also contain provisions for an annual audit of the trust fund, a statement of the results of which shall be available for inspection by interested persons at the principle office of the trust fund and at such other places as may be designated in such written agreement; and (c) such payments as are intended to be used for the purpose of providing pensions or annuities for employees are made to a separate trust which provides that the funds held therein cannot be used for any purpose other than paying such pensions or annuities . . .

253.705 SCOPE OF PROVISION

      Section 505 of the LMRDA, 1959, amends section 302(c) of the LMRA, 1947, as amended, to provide in part, the conditions under which contributions by an employer to a union health and welfare fund can be made.  Included are requirements that the payments into the fund be held in trust for the benefit of employees and their families; that the detailed basis on which the payments are to be made is specified in a written agreement between the employee representative and the employer; and that employees and employers are equally represented, together with neutral persons selected by them in administration of the fund.  The Secretary of Labor does not have the authority to enforce (nor normally to investigate) those sections of the Act which are amendments to the LMRA, 1947, as amended.

253.706 PAYMENTS TO PLANS NOT MEETING STATUTORY CONDITIONS

      Where an employer makes payments to a union or jointly administer pension, vacation, or welfare plan created subsequent to the enactment of the Taft-Hartley Act which does not meet the conditions set forth in section 302(c)(5) and (6) of that Act, such payments are considered payments to a “labor organization or officer, agent, shop steward or other representative, or employee of any labor organization” and must be reported on Schedule B of form LM-10, the Employer Reporting Form, pursuant to section 203(a)(1) of the LMRDA.

253.710 TRUSTEES SELECTED BY UNIONS AND EMPLOYER ASSOCIATIONS

      In a situation where unions and employer associations, in the building trades industry, establish a trust fund pursuant to a collective bargaining agreement which is administered by trustees selected by the unions and the employer associations in accordance with section 302(c)(5) of LMRA, a question was raised as to the reportability (under section 203 of LMRDA) of payments made to such fund by an independent employer who enters into a similar agreement with the same unions under which his contributions are accepted by the trustees and administered for his employees without such employer having any voice in the selection of the management trustees or control over the trustees’ actions.
      The point in question was answered in a case brought under the LMRA.  In the case of United Marine Div., I. L. A., Local 333, A. F. of L. v. Essex Transp. Co., 216 F.2d. 410, 35 LRRM 2049 (3d Cir. 1954), the U.S. Court of Appeals for the Third Circuit rendered a decision which in substance was as follows:

Where a welfare fund, established by agreement between a union and an employer’s association, is operated by trustees chosen by the contracting parties, a promise, if any, by an employer, who is not a member of the employers’ association, to make payments to trustees of the fund is not a promise to make payment to representatives of any of the employer’s employees within the meaning of the statute prohibiting employers from making such payments.

Id. at 412-13.

The union brought suit in the District court to compel the Essex Transportation Company to make payments, per oral agreement, to trustees of a welfare fund for employees.  The defendant contended that if the agreement was made, it was insufficient to hold them liable for payments because of the provisions of section 302, LMRA.  In reversing the District Court’s judgment which had been in favor of the defendant, the Court of Appeals said, “The promise alleged was to pay these trustees.  These trustees were not, in our judgment, representatives of the employees.  They were trustees of a welfare fund.” Id. At 412.

In view of the Third Circuit decision, it would appear that no reports are required under section in 203 of the LMRDA where payments have been made to trust funds under similar conditions.

      (Revised: Dec. 2016)

253.720 DIRECT PAYMENTS TO UNION

      A group of independent retail stores joined together as an informal organization of employers.  These employers individually make payments to a local representing their employees for employee health and welfare benefits.  Part of this money is used to pay the premium on an insurance policy for employee benefits and the remainder is retained by the local to defray the expense of administering the program.
      The payments in question are payment to a labor organization and are therefore within the scope of section 203(a) (1) unless they are the kind referred to in section 302(c) of the LMRA.  While it is true that section 302(c) (5) of LMRA exempts money paid to a trust fund established under certain conditions for the purpose of providing employee health and welfare benefits, the payments in question are not being made to a trust fund, but are paid directly to the local which uses part of the money to pay the cost of an insurance policy for employee benefits.
      Under such circumstances, each employer making payments to the local must report these payments.  The amount to be reported is the entire amount which each employer pays the local and not just the difference which the local uses to defray the cost of administering the program.

253.730 PURPOSE OF EMPLOYER’S PAYMENTS

      Section 302(c) (5) and (6) require that the employer’s payments must be used exclusively for certain specified purposes.  It is not sufficient that the disbursements be, “directly related to the welfare of the union membership”; they must have one of the particular purposes specified in the statute.

253.750 PAYMENT TO UNION OFFICER BY EMPLOYER FOR PENSION FUND

      When a union officer is paid by the employer for services rendered in the capacity of a Secretary to a pension fund, both the union officer and the employer are required to report the transaction.

253.760 PAYMENT TO TRUST FOR LOST TIME

      Form LM-10 states that payments to a trust fund for periods of “lost time” are not required to be reported if they are either required by law or a bona fide collective bargaining agreement, or made pursuant to a custom or practice under such a collective bargaining agreement.

253.770 USE OF WELFARE FUND MONEY

      On appeal by the trustees of a jointly administered trust from an injunction granted by the District Court to the Kroger Company to prevent the trustees from making certain expenditures of fund monies, the Court of Appeals reversed the District Court insofar as the lower court held that coverage under a section 302(c)(5) trust could not be extended to allow retired employees of employers, employees of the trust, and officers and employees of the union to participate as beneficiaries under the trust.  The Court held that persons within these categories may participate as beneficiaries under the trust: Provided, That (1) the retired employees were covered by the trust while actively employed; and (2) the union (whose officers and employees may participate only if the union contributes to the fund for them as an employer) may not participate in the selection of employer trustees.
      In regard to employees of the trust itself, the Court held that their coverage is not improper even though the expense of their participation is effected by an internal book transfer from surplus since it does not infringe on other contributing employers’ contributions “any more than a cash wage and does not make the trust any less a contributor.”  The Court also excluded the trust from participation in the selection of employer trustees.  Blassie v. Kroger Co., 345 F.2d 58, 71, 59 LRRM 2034 (8th Cir. 1965),  reversing in part, Kroger v. Blassie, 225 F.Supp. 300, 55 LRRM 2224 (E.D. Mo. 1964).

NOTE:
The Court of Appeals sustained the District Court’s holding that (1) the acquisition and development of land to be used primarily for recreation purposes and (2) the operation of a pharmacy where drugs and medicines were available at discount prices to persons not covered under the trust, were not proper purposes on which to expend trust funds.

      (Technical Revisions: Dec. 2016)

PAYMENTS EXCEPTED UNDER TAFT-HARTLEY:
PAYMENTS TO A FRINGE BENEFIT TRUST

253.801 LMRA, SECTION 302(c) (6)

      . . . with respect to money or other thing of value paid by any employer to a trust fund established by such representative for the purpose of pooled vacation, holiday, severance or similar benefits, or defraying costs of apprenticeship or other training programs: Provided, That the requirements of clause (B) of the proviso to clause (5) of this subsection shall apply to such trust funds. . .

253.805 PAYMENTS TO JOINT APPRENTICESHIP COMMITTEE

      Payments by employers to a Joint Apprenticeship Training Program, which has been created under the conditions set forth in section 302(c)(6) of the Labor Management Relations Act (section 505 of LMRDA), are not required to be reported under section 203(a) (1) of LMRDA. 
See also Manual Entry 248.300.

PAYMENTS EXCEPTED UNDER TAFT-HARTLEY:
SCHOLARSHIP OR CHILD CARE CENTER TRUST

*253.900 LMRA, SECTION 302(c) (7)

      . . . with respect to money or other thing of value paid by any employer to a pooled or individual trust fund established by such representative for the purpose of (A) scholarships for the benefit of employees, their families, and dependents for study at educational institutions, or (B) child care centers for preschool and school age dependents of employees: Provided, That no labor organization or employer shall be required to bargain on the establishment of any such trust fund, and refusal to do so shall not constitute an unfair labor practice: Provided further, That the requirements of clause (B) of the proviso to clause (5) of this subsection shall apply to such trust funds.
      (NOTE: Section 302(c) of the LMRA was amended by Public Law 91-86 on October 14, 1969, to add subsection 7 set forth above in Manual Entry 253.900.)

PAYMENTS EXCEPTED UNDER TAFT-HARTLEY:
PAYMENTS TO LEGAL SERVICES TRUST

*253.950 LMRA, SECTION 302(c) (8)

      . . . with respect to money or any other thing of value paid by any employer to a trust fund established by such representative for the purpose of defraying the costs of legal services for employees, their families, and dependents for counsel or plan of their choice: Provided, That the requirements of clause (B) of the proviso to clause (5) of this subsection shall apply to such trust funds: Provided further, That no such legal service shall be furnished: (A) to initiate any proceeding directed (i) against any such employer or its officer or agents except in workman’s compensation cases, or (ii) against such labor organization or its parent or subordinate bodies, or their officers or agents, or (iii) against any other employer or labor organization, or their officers or agents, in any matter arising under the National Labor Relations Act, as amended, or this Act; and (B) in any proceeding where a labor organization would be prohibited form defraying the costs of legal services by the provisions of the Labor-Management Reporting and Disclosure Act of 1959.
      (NOTE:  Section 302(c) of the LMRA was amended by Public Law 93-95 on August 15, 1973, to add subsection 8, set forth above in Manual Entry 253.950.)

PAYMENTS EXCEPTED UNDER TAFT-HARTLEY:
PAYMENTS TO LABOR MANAGEMENT COMMITTEE

*253.960 LMRA, SECTION 302(c) (9)

      …with respect to money or other things of value paid by an employer to a plant, area or industrywide labor management committee established for one or more of the purposes set forth in section 5(b) of the Labor Management Cooperation Act of 1978.

      (NOTE: Subsection (b)(7) of section 302 of the Labor Management Relations Act, 1947 was added by Public Law 91-86, Oct. 14, 1969; subsection (b)(8) by Public Law 93-95, Aug. 15, 1973; and subsection (b)(9) by section 6(d) of Public Law 95-524, Oct. 27, 1978.  ADDITIONAL NOTE: Section 5(b) of the Labor Management Cooperation Act of 1978 probably means section 6(b) of Public Law 95-524 (92 Stat. 2020; 29 U.S.C. 175a note).)

December, 2016

PAYMENTS TO EMPLOYEES

254.001 LMRDA, SECTION 203(a) (2)

      ...any payment (including reimbursed expenses) to any of his employees, or any group or committee of such employees, for the purpose of causing such employee or group or committee of employees to persuade other employees to exercise or not to exercise, or as the manner of exercising, the right to organize and bargain collectively through representatives of their own choosing unless such payments were contemporaneously or previously disclosed to such other employees;…

LMRDA, SECTION 203(e)

      Nothing contained in this section shall be construed to require any regular officer, supervisor, or employee of an employer to file a report in connection with services rendered to such employer nor shall any employer be required to file a report covering expenditures made to any regular officer, supervisor, or employee of an employer as compensation for services as a regular officer, supervisor, or employee of such employer.
      See REGULAR WAGE EXCEPTION, Manual Entries 253.300 ff.

254.005 EMPLOYER ASSISTANCE TO “GRIEVANCE COMMITTEE”

      Where in connection with an organizational drive run by a national union to organize the employees of a particular employer, there is established a “Grievance Committee” to which the employer furnishes assistance by permitting production workers to cease their normal duties and engage in electioneering during regular working hours in favor of the “Grievance Committee” as against the “outside union,” a report is required of the employer under section 203(a)(2) if the employer does not make a contemporaneous disclosure in some affirmative way that he is allowing the previously mentioned production workers to leave their normal work in order to "electioneer" for the "Grievance Committee."

254.100 NONEXEMPT PAYMENTS

      The exemption in section 203(e) applies only to expenditures made for services which are performed by employees in the regular and ordinary course of their employment. Such may be the case, depending on the particular circumstances, for payments falling under section 203(a) (2). For example, where an employer prepares a message to his employees which attempts to persuade employees as to the manner of exercising their right to organize, and the employer then has the message conveyed to all plant employees through his labor relations director who is a regular staff member, no report would be due under section 203(a) (2) because the director would be performing as a regular employee within the meaning of section 203(e). However, if the employer called in one of his old and trusted employees who was a drill press operator for example, and asked him (without disclosing the assignment to other employees) to persuade his fellow employees as to their right to organize, then a report would be due from the employer under 203(a)(2).

254.200 FURNISHING STRIKEBREAKERS

      The mere furnishing of replacements for strikers is not itself sufficient to require reporting. If the  object of the replacements is solely to keep the business going, then the arrangement would probably not come within section 203(a)(4) and 203(b), even though the replacements might incidentally have persuasive effect. The duties performed or assigned could be evidentiary. If the duties were limited to those of the persons replaced, that could be an indication of a purpose other than persuasion; but if they in fact included violence, missionary work and the like, this could be an indication that the original arrangement was within the reporting requirement.
      However, the employer would have to report under 203(a) (2), regardless of the original "object" of the arrangement for the furnishing of the men, if the men were in fact used to do missionary work or otherwise to persuade the employees to abandon the union or the strike, unless the fact that they were being paid for such duties were contemporaneously disclosed to the employees.

254.300 INDUSTRIAL RELATIONS COUNSELOR

      Several parts of the employer report form contain exclusion for payments and expenditures made to a regular officer, supervisor or employer as compensation for service as a regular officer, supervisor or employee. Accordingly, an employer will not be required to report in those parts payments made to an industrial relations counselor in his capacity as full-time director of industrial relations.

EXPENDITURE TO INTERFERE WITH-RESTRAIN
OR COERCE EMPLOYEES

255.001 LMRDA, SECTION 203(a) (3)

. . . any expenditure, during the fiscal year, where an object thereof, directly or indirectly, is to interfere with, restrain, or coerce employees in the exercise of the right to organize and bargain collectively through representatives of their own choosing.

LMRDA, SECTION 203(g)

      The term “interfere with, restrain, or coerce” as used in this section means interference, restraint, and coercion which, if done with respect to the exercise of rights guaranteed in section 7 of the National Labor Relations Act, as amended, would, under section 8 (a) of such Act, constitute an unfair labor practice.

255.002 See 29 CFR 405.7

255.005 COST OF LETTER CONTAINING THREATS

      An employer in the middle of a representation struggle between two unions, attempted to state its position by mailing a letter to its employees.  The letter urged employees to get rid of both unions and in effect promised them “a better job and better working conditions.”
      The NLRB found that in context with the rest of the letter this constituted a promise of a benefit.  The Board also found that other parts of the letter “constitute a threat to close up the plant and move to another town where the company could operate without union trouble.”  The Board found that by mailing this letter to its employees the employer had interfered with, restrained or coerced the employees in the exercise of rights guaranteed in section 7 of the Labor Management Relations Act, 1947, as amended, and had engaged in unfair labor practices within the meaning of section 8(a)(1) of that Act.
      Since the object of the letter in question was “to interfere with, restrain, or coerce employees in the exercise of the right to organize and bargain collectively through representatives of their own choosing,” and since the cost of preparing and mailing the letter in question was an expenditure to further this objective, a report is required from the employer pursuant to section 203(a) (3) of LMRDA.

255.100 “INTERFERENCE” WITH REPRESENTATION ELECTION NOT NECESSARILY UNFAIR LABOR PRACTICE

      An important distinction should be noted insofar as the work “interference” is concerned vis-à-vis the Labor-Management Relations Act, 1947 (Taft-Hartley).  There are certain situations where particular statements or activities of an employer in connection with a representation election being held in his plant under the aegis of the NLRB may result in the election being set aside for “interference” or “any conduct which prevents free and untrammeled choice of a bargaining representative” without the activity amounting to an unfair labor practice within the meaning of section 8(a) (1) of the Taft-Hartley Act.  That section provides; “It shall be an unfair labor practice for an employer (1) to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in section 7.”  Note the use of the word “interfere” in the extract of the statute.

In connection with the above, the National Labor Relations Board in the case of In re Metropolitan Life Insurance Company, 1950 WL 9327, **4, 90 NLRB 935, 26 LRRM 1294, (Jul. 12, 1950) stated:

Section 8(c) prevents the Board from treating as evidence of unfair labor practices any expression of views, argument, or opinion which contains no threat of reprisal or force or promise of benefit.  Section 8(c) does not, however, prevent the Board from finding in a representation case that an expression of views, whether or not protected by section 8(c), has, in fact, interfered with the employees’ freedom of choice in an election, so as to require that such election be set aside.

      In short, where the “interference” is related solely to the conduct of the election and does not constitute an “unfair labor practice” under precedents set by the courts or the National Labor Relations Board, or alternatively the Board finds that the activity in question does not constitute an unfair labor practice, the activities or speeches or statements by the employer will be considered to have been made within his “free speech” rights set forth in section 8(c) of the Taft-Hartley Act insofar as section 8(a)(1) of that Act is concerned.  Under such circumstances, no report is required under section 203(a)(3) of the LMRDA for expenditures involving that type of “inference” having in mind section 203 (f) and (g) of the LMRDA of 1959.

      An example involves the decision of the National Labor Relations Board v. Plochman and Harrison--Cherry Lane Foods, Inc., 1962 WL 16119, 140 NLRB 130, 51 LRRM 1558 (Dec. 13, 1962).  The facts were the following:

The day before a representation election, the employer called together the employees and presented them with a showing of the movie “And Women Must Weep.”  The union lost the election by a very close margin and filed objections to the results and conduct of the election alleging that the showing of the movie “And Women Must Weep” amounted to misrepresentation and “interference” with the employees’ rights to an objective election. 

      The NLRB overruled its Regional Director and held that the showing of that emotional anti-union movie immediately prior to the date of the election was sufficient “interference” with the objectivity of the election so as to justify the election being set aside and the holding of anew election.  The Board made no finding at all that the showing of the movie constituted “interference” of the type referred to in section 8(a)(1) of Taft-Hartley (i.e. unfair labor practice). Consequently, the Department holds that no report is required in this case, as the employer was exercising his “free speech” rights set forth in section 8(c) of the Taft-Hartley Act so far as section 8(a)(1) of that Act is concerned having in mind the language of section 203(f) and (g) of LMRDA.

      (Technical Revisions: Dec. 2016)

255.110 ACTIVITIES WHICH “INTERFERE” WITH REPRESENTATION ELECTION MAY ALSO BE UNFAIR LABOR PRACTICES

            In the case of the National Labor Relations Board v. Trades Winds Motor Hotel & Restaurant, 1963 WL 16333, 140 NLRB 567, 52 LRRM 1063 (Jan. 9, 1963), the National Labor Relations Board, through its Regional Director found that the employer through its supervisors, (1) interrogated certain employees concerning their union membership and anticipated vote, and (2) threatened certain employees that if the union won the election it would close down its plant.  These acts took place in connection with a representation election involving the employees of the Trade Winds Hotel.  The NLRB set aside the election and ordered a new one on the basis that the acts in question constituted “improper interference with the election.”
            Though the union did not charge the employer with an unfair labor practice in this case, the type of conduct which the Board found the employer to be guilty of, has, under prior court rulings and board decisions, been held to be an unfair labor practice.  See National Labor Relations Board v. Armstrong Tire and Rubber Co., 228 F.2d 159, 161, 37 LRRM 2244 (5th Cir. 1955); W.W. Chambers Co., Inc., 1959 WL 14834, 125 NLRB 78, 45 LRRM 1176 (Dec. 8, 1959), aff’d per curiam, National Labor Relations Board v. W.W. Chambers Co., Inc., 279 F.2d 817 (D.C. Cir. 1960).
      The Department of Labor concluded that reports were required from the employers pursuant to section 203(a)(3) of the LMRDA, since the foregoing acts constituted “interference,” “restraint” and “coercion” under section 203(g).

      (Technical Revisions: Dec. 2016)

255.120 BOARD’S “JURISDICTIONAL YARDSTICK” NOT GERMANE

            Although the National Labor Relations Board could exercise its powers to enforce the LMRA in all cases involving enterprises whose operations affect commerce, the Board, in its discretion, limits the exercise of its powers to cases involving enterprise whose effect on commerce is substantial.  The board’s requirements for exercising its power or jurisdiction are called “jurisdictional standards.”  These standards are based on the early amount of business done by the enterprise, or on the yearly amount of its sales or of its purchases.  They are stated in terms of total dollar volume of business and are different for different kinds of enterprises.
      However, insofar as the LMRDA, is concerned, a report may be required pursuant to section 203(a)(3) from an employer who comes within the definition in section 3(e) and who has undertaken activities which amount to unfair labor practices within the meaning of section 8(a)(1) of LMRA, provided there were expenditures in connection therewith, notwithstanding the fact that the Regional Director of a given NLRB region could not entertain a union “charge” of such unfair labor practice activities due to the Board’s “jurisdictional yardstick.”

      (Revised: Dec. 2016)

255.300 EMPLOYER ASSISTANCE TO “GRIEVANCE COMMITTEE”

      Where in connection with an organizational drive run by a national union to organize the employees of a particular employer, there is established a “Grievance Committee” to which the employer furnishes assistance, financially or otherwise, and with which he undertakes to negotiate, payments in connection with the assistance constitute payments which interfere with employees’ right to organize and bargain collectively through representatives of their own choosing and consequently must be reported by the employer under section 203(a)(3) of the Act.

“FREE SPEECH” RIGHT OF EMPLOYER

255.501 LMRDA, SECTION 203(f)

      Nothing contained in this section shall be construed as an amendment to, or modification of the rights protected by, section 8(c) of the National Labor Relations Act, as amended

255.502 See 29 CFR 405.7

255.505 REPORTABILITY OF FREE SPEECH ACTIVITIES

      It is stated in Part III of the instructions for the employer Form LM-10 report on page 2 for use in preparing the employer report that, while section 203 of the Act does not amend or modify the rights protected by section 8(c) of the National Labor Relations Act, as amended, the Act contains no provisions exempting the activities protected by that section from the reporting requirements.  Accordingly, activities covered by section 203 must be reported since such reports are required by law, regardless of whether they are protected by the free speech provisions.  While these instructions pertain exclusively to employer reports, the same principle, so far as the free speech provisions are concerned, is applicable to reports required of consultants.

      (Technical Revisions: Dec. 2016)

255.600 NEWSPAPER ADS OF EMPLOYERS’ VIEWS

      1.  Where an employer, in connection with a labor dispute, places an ad under his own name in a newspaper in which he sets forth his viewpoints on the dispute without threat of reprisal, or force, or promise of benefit, and the ad may objectively and fairly be stated not to constitute any interference with, restraint of or coercion by the employer in connection with the employees’ rights to bargain collectively through representatives of their own choosing, no report under section 203(a) of the Act is required by virtue of section 203(f) inasmuch as the placing of such an ad constitutes the exercise of the employer’s “free speech” rights under section 8(c) of the National Labor Relations Act of 1947, as amended.

      2.  On the other hand, where the employer places an ad in a newspaper and the substance of that ad amounts to “interference with, restraint, or coercion” in connection with the employees’ rights to bargain collectively through representatives of their own choosing, a report is required under section 203(a) (3) of the Act with regard to the expenditures for the advertisement. The protected “free speech” rights under section 203(f) of the LMRDA (section 8(c) of LMRA) are not applicable in such a situation since threats, etc. cetera, do not constitute “free speech.”  For example, if the ad contains a statement as direct and blunt as the following, “If the union wins the representation election, you have my solemn promise that I will close this plant and move it to another State”; it would normally be considered a threat.

      3.  Where a labor relations “consultant” or other person, pursuant to an agreement with the employer prepares the copy for the ad referred to in (1) above, no report is required from the “consultant” under section 203(b) or from the employer since the “consultant” is deemed to be giving “advice” to the employer within the exception set forth in section 203(c) of the LMRDA.

      4.  Where a “consultant” or other person prepares the same copy, referred to in (1) above for an employer and that ad is place in a newspaper by the “consultant” or other person and does not appear as being the statement of the employer, as for example, the ad appears under the name of a fictitious committee entitled “Citizen Committee for Industrial Peace in our Town,” then the ad may be fairly considered to constitute persuasion of the employees of the employer by the consultant (and not merely furnishing of advice to the employer) as to matters involving their rights to bargain collectively through representatives of their own choosing.  In that case, reports are required from the “consultant” or other person pursuant to section 203(b)(1) and from the employer with regard to his agreement with the “consultant” or such other person pursuant to section 203(a)(4).  If the employer makes any expenditure under the latter agreement, a report is required from his pursuant to section 203(a) (5) of the Act.

      5.  If the material in the ad referred to in (4) above constitutes “interference with, restraint, or coercion,” then the employer is also required to file a report pursuant to section 203(a)(3) with regard to any expenditures he makes in connection with that advertisement.

      6. The “consultant” must also file pursuant to section 203(b) (1) in the situation outlined in (5) above since “interference with, restraint, or coercion,” amounts to persuasion, albeit illegal.

      7.  In the absence of special factors the publisher of the newspaper will not normally be
required to file a report with regard to his having published any of the ads referred to above.

EXPENDITURES TO OBTAIN INFORMATION

256.001 LMRDA, SECTION 203(a) (3)

      . . . or is to obtain information concerning the activities of employees or a labor organization in connection with a labor dispute involving such employer, except for use solely in conjunction with an administrative or arbitral proceeding or a criminal or civil judicial proceeding; . . .

256.005 INFORMATION SOLELY FOR LEGAL PROCEEDINGS

      The instructions for Part X, Part A, Item 8 of the Form LM-10, on page 4, contain an exclusion relating to agreements and arrangements to obtain information solely for use in conjunction with administrative, arbitral, or judicial proceedings.  Thus, if the information is obtained and used solely in conjunction with such proceedings (which would include for example, a representation hearing before the National Labor Relations board) it is not required to be reported.  If the information is obtained or used also for purposes extraneous to such proceedings, it must be reported.

      (Technical Revisions: Dec. 2016)

256.100 LABOR SPYING

      Instead of hiring a middleman, some employers pay a bonus to one of their regular officers, supervisors, or employees to spy.  Here the “spy” may simply sit outside the place where the union organizers are meeting with other employees of the same business and record the names of the employees who are going in and coming out.  He then turns this information over to the employer.  This type of activity is also, reportable, unless the information is to be used solely in connection with an administrative, arbitral or judicial proceeding.  An example of such a proceeding would be a representation hearing before the NLRB.

AGREEMENT WITH CONSULTANT

257.001 LMRDA, SECTION 203(a) (4)

      . . . any agreement or arrangement with a labor relations consultant or other independent contractor or organization pursuant to which such person undertakes activities where an object thereof, directly or indirectly, is to persuade employees to exercise or not to exercise, or persuade employees as to the manner of exercising, the right to organize and bargain collectively through representatives of their own choosing, or undertakes to supply such employer with information concerning the activities of employees or a labor organization in connection with a labor dispute involving such employer, except information for use solely in conjunction with an administrative or arbitral proceeding or a criminal or civil judicial proceeding; or . . .

257.002 See 29 CFR 405.5

257.005 PERSUASION, EVEN THOUGH LEGAL, MUST BE REPORTED

      The purposes which would make an arrangement subject to the reporting requirements of section 203(a) (4) and (b) need not be unfair labor practices otherwise in violation of law.  These subsections speak of activities to “persuade” employees in the exercise of their collective bargaining rights, in significant contrast with section 203(a) (3) which requires reporting by employers of expenditures where the object is “to interfere with, restrain, or coerce employees in the exercise of” these rights.  The legislative history supports this conclusion.  The provision corresponding to section 203(a)(4) in the House Bill as reported (section 203 House Bill as reported (section 203(a)(4) of H. R. 8342) would have required reporting only in the case of an agreement to provide an employer with the services of a person or firm engaged in the business of “interfering with, restrain, or coercing employees in the exercise of rights guaranteed” by the LMRDA, the National Labor Relations Act, or the Railway Labor Act.  This provision was replaced by the present section 203(a) (4) with its test of persuasion.

      (Technical Revisions: Dec. 2016)

257.010 ADVICE TO EMPLOYER

      See Manual Entries 265 ff.

257.100 AGREEMENTS BETWEEN EMPLOYERS AND EMPLOYER COUNCIL

      It is not necessary that an agreement or arrangement be formal or in writing in order to be within the scope of section 203(b).  There may be no more than an understanding between an employer and an employer council that reportable services will be performed as necessary by the council.  For example, both parties may understand perfectly that if an attempt is made to organize the employees of the employer, the council will provide material assistance (beyond the mere giving of advice) in persuading employees as to the manner of exercising their collective bargaining rights.  Where such an understanding exists, both parties are required to report the terms of their arrangement or agreement, the employer’s report being required by section 203(a)(4) of the Act.  If periodic membership dues are paid by the employer to the association, annual reports would be required from each party for as long as the understanding continued to exist.

257.200 LABOR “SPIES”

      The furnishing of persons to perform espionage or reporting work in connection with the strike, as part of their duties, would have to be reported under section 203(a)(4) and 203(b)(2) covering undertakings to supply the employer with information about the activities of the employees or the union in a labor dispute.

      (Technical Revisions: Dec. 2016)

257.205 EXAMPLE OF CONSULTANT “SPYING”

      Example: A union is trying to organize the employees of an employer.  The employer hires a “consultant” to find out for him what the union is promising his employees and which of the employees are attending the union meetings.  This can be done in many ways.  In the McClellan Committee hearings there was testimony showing cases where the consultant had “planted” one of his employees in the union.  This man was able to let the employer know exactly what the union was doing and planning as well as its strength and weaknesses.  This type of activity on the part of employers and middlemen led to the inclusion of this reporting provision in the Act.

257.210 SURVEILLANCE IN CONNECTION WITH LABOR DISPUTE

      In order to be reportable under sections 203(a)(4) and 203(b)(2) of LMRDA, an agreement or arrangement between an employer and an independent contractor for obtaining information must be made “in connection” with an existing labor dispute.  Thus, where an employer in the railroad industry (within which a continuing major dispute over work rules and so-called “featherbedding” exists between the companies and the unions) hires a detective agency to obtain information concerning the conduct of his employees and such information is obtained by surveillance, it must be shown that the surveillance is reasonably connected with that dispute before a report is required.  A later disagreement between the employer and the union as to whether the evidence developed by the surveillance justified disciplinary action against the particular employees involved is not germane since the dispute was not one existing at the time of the surveillance.

257.220 INFORMATION ON PREVIOUS UNION ACTIVITIES

      An employer report on Form LM-10 is required under sections 203(a) (4) and 203(a) (5) whenever an employer enters into an agreement with a labor consultant, or other independent contractor or organization, to supply him with information about activities of a union or its officers where the union involved is engaged in a current labor dispute with the employer.  A report is required even if the information to be supplied concerns activities of the union or its officers during a previous organizing drive or a labor dispute involving a different employer in another location.

257.300 EMPLOYER “AGREEMENTS OR ARRANGEMENTS” WHERE EMPLOYEES ARE NOT “HIS EMPLOYEES”

      Some employees of A Plant decided to resist an organizing drive by B union.  They engaged C consultant to advise them and help organize anti-union activities.  C suggested the organization of an employees’ anti-union committee and acted directly to persuade employees against joining the union by making speeches to the employees, preparing and distributing letters to the employees which were signed by members of the employees’ committee.  The activities of the committee were financed by X, an auto dealer, and Y, a doctor, under the name of “Citizens of Z Town.”  These men had approached C and offered to pay the costs of the anti-union committee.  No evidence was developed to indicate that either had any connection with A Plant or any financial interest in it.  They attributed their contributions to a desire to promote the best interests of their town and their names were never revealed publicly.  Likewise, no evidence was developed that A Plant was involved with the activities of the anti-union committee in any manner.  When the organizing drive was defeated, the committee disbanded.
      Section 203(a) (4) of LMRDA requires reports from “every employer” who arranges with a labor relations consultant to persuade “employees” concerning the exercise of their right to organize.  By its terms it is not limited to any particular employees, but applies to all.  Therefore, it is not material that the employees were employed by A Plant and not by X and Y, since section 203(a) (4) does not limit the reporting obligation to agreements or arrangements of employers whose employees are affected by the agreements or arrangements.  Section 203(a) (2), in contrast, does limit reporting to payments made by an employer to “his employees.”
      Accordingly, if X and Y are employers within the meaning of section 3(e) of the Act, they are required to report the “agreement or arrangement” with C pursuant to section 203(a)(4) and, as a consequence, C would be required to report pursuant to section 203(b)(1).

257.400 CO-EXTENSIVE REPORTING OBLIGATION

      The agreements and arrangements covered by section 203(a) (4) and (5) and those covered by section 203(b) are substantially co-extensive.  Also the provisions of section 203(c) are applicable in equal fashion under section 203(a) and (b).  Thus, to the extent that an employer is under the obligation to file a report under section 203(a) (4) and (5), a labor relations consultant who is a party to those activities would have to file the reports required by section 203(b).

257.500 AGREEMENT WITH ARTIST TO PREPARE ANTI-UNION CARTOONS

      X Employer was engaged in labor dispute with Y Union.  X commissioned an artist to prepare a series of cartoons which he (X) adopted as his own and used to express his views in connection with the labor dispute.  These anti-union cartoons appeared as advertisements under the employer’s name in local newspapers during the period of the dispute.
      Since the sentiments conveyed by the advertisements are those of the employer, not the artist, no report is required from the employer pursuant to section 203(a) (4) and (5) with respect to the agreement between the employer and the artist.
      Similarly, no report is required from the artist pursuant to section 203(b)(1) with respect to said agreement because his services are ministerial in nature and represent only a technical step in the progress of the employer’s message from his own mind to the finished advertisement.

PAYMENT TO CONSULTANT

258.001 LMRDA, SECTION 203(a)(5)

      . . . any payment (including reimbursed expenses) pursuant to an agreement or arrangement described in subdivision (4); . . .

258.005 EMPLOYER ASSOCIATIONS

      Employers who are members of an employer association must report money paid to such an association only if the association undertakes to perform any of the activities set forth in section 203(a)(4) and (5) of the Act.
           
            An employer association whose purpose is to represent, aid and advise its members in connection with labor problems and to negotiate and arbitrate grievances under agreements with labor organization must file a report if, in carrying out its responsibilities, it undertakes any of the activities set forth in section 203(b) of the Act.
     
            When the association undertakes to assist employers in presenting their point of view to employees in connection with organizational activities by labor organization, and this assistance involves persuading employees to exercise or not exercise, or as to the manner of exercising their rights to organize or bargain collectively, the employer association must file a report.

EMPLOYER REPORT FORM - LM-10

259.001 LMRDA, SECTION 203(a)

      . . . shall file with the Secretary a report, in a form prescribed by him, signed by its president and treasurer or corresponding principal officers showing in detail the date and amount of each such payment, loan, promise, agreement, or arrangement and the name, address, and position, if any, in any firm or labor organization of the person to whom it was made and a full explanation of the circumstances of all such payments, including the terms of any agreement or understanding pursuant to which they were made.

259.002 See 29 CFR 405.3, 405.4, 405.6, 405.2

259.005 PROPER OFFICIALS REQUIRED TO SIGN EMPLOYER REPORTS

            A vice president and assistant treasurer of a plant distant from the main office of a corporation requested that they be permitted to sign employer reports with respect to that plant since they were in a better position to verify the facts contained in the report.

            Section 203(a) of LMRDA specifically requires the president and treasurer or corresponding principal officers of the reporting organization to sign employer reports.

            In view of the specific requirement of the Act, it is our position that reports required by section 203(a) must be signed by the officer named in the Act or by that principal officer who most nearly corresponds to the named officer without regard to titles.

            Accordingly, a report signed by the vice president and assistant treasurer would not be properly executed.

259.100 CERTIFICATION REQUIRED IN INDIVIDUAL PROPRIETORSHIP

            Reports submitted by individual proprietors pursuant to section 203 may be signed by such individual proprietor, since he corresponds to the president and treasurer of the organization or by the person or persons who actually perform the duties of president and treasurer or are authorized to do so.
           
            If the Form LM-10 is signed by someone other than the actual owner, the following certification will be required:
     
“I______________perform the principal executive functions corresponding to those of the president and treasurer, or I am authorized to perform such functions.  I am aware of the section 209(d) provision of the Labor-Management Reporting and Disclosure Act of 1959 regarding false reporting.”

CONSULTANT REPORTS IN GENERAL

260.001 LMRDA, SECTION 203

(b) Every person who pursuant to any agreement or arrangement with an employer undertakes activities where an object thereof is, directly or indirectly--

(1) to persuade employees to exercise or not to exercise or persuade employees as to the manner of exercising, the right to organize and bargain collectively through  representatives of their own choosing; or

(2) to supply an employer with information concerning the activities of employees or a labor organization in connection with a labor dispute involving such employer, except information for use solely in conjunction with an administrative or arbitral proceeding or a criminal or civil judicial proceeding;

shall file within thirty days after entering into such agreement or arrangement a report with the Secretary, signed by its president and treasurer or corresponding principal officers, containing the name under which such person is engaged in doing business and the address of its principal office, and a detailed statement of the terms and conditions of such agreement or arrangement. 

Every such person shall file annually, with respect to each fiscal year during which payments were made as a result of such an agreement or arrangement, a report with the Secretary, signed by its president and treasurer or corresponding principal officers, containing a statement (A) of its receipts of any kind from employers on account of labor relations advice or services, designating the sources thereof, and (B) of its disbursements of any kind, in connection with such services and the purposes thereof.  In each such case such information shall be set forth in such categories as the Secretary may prescribe.

260.002 REGULATIONS

As provided in 29 CFR 406.1(c),

       “Undertake” means not only the performing of activities, but also the agreeing to
      perform them or to have them performed.

As provided in 29 CFR 406.1(d),

      “A direct or indirect party to an agreement or arrangement” includes persons who have
secured the services of  another  or of others in connection with an agreement or arrangement of the type referred to in 406.2, as well as, persons who have undertaken activities at the behest of another  or of others with knowledge or reason to believe that they are undertaken as a result of an agreement or arrangement between an employer and any other person, except bona fide regular officers, supervisors or employees of their employer to the extent to which they undertook to perform services as such bona fide regular officers, supervisors or employees of their employer.

(Technical Revisions: Dec. 2016)                                                                                                

260.005 CONSULTANT FOR LABOR ORGANIZATION

            Activities of an attorney on behalf of a labor organization (and not for an employer) would not be required to be reported, even though the attorney meets the definition of “labor relations consultant” 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.

260.100 ACTIVITIES TO IMPROVE EMPLOYER-EMPLOYEE RELATIONS

      The development or performance of certain services intended to improve employee-employer relations may not, alone and in itself, bring those services under the reporting requirements of section 203; however, if the purpose of the services was in fact--directly or indirectly--to persuade employees in relation to collective bargaining, then they would fall within the reporting requirements of this section.

260.200 AGREEMENTS PRIOR TO THE ACT

            When a person (a labor consultant, attorney, etc.) entered into a contract to undertake activities specified in section 203(b) of the Act prior to the effective date thereof, no 30-day report is required from that person.  On the other hand if, subsequent to the effective date of the Act, that same person receives or makes any payments pursuant to the agreement, he is required to file the annual report called for in the second sentence of section 203(b) notwithstanding the fact that an initial report of the agreement was not required.

260.300 SCOPE OF ANNUAL REPORT

            Where a person “undertakes activities” of the type referred to in section 203(b) of the Act and Part 406 of the Regulations and as a result thereof is required to file the LM-20 report (Agreement and Activities Report), he is also required to file the LM-21 report (Receipts and Disbursements Report) within 90 days after the end of his fiscal year provided any receipt or disbursement was made pursuant to the agreement reported in the LM-20 report.  There must be included in the Receipts and Disbursements Report all receipts and disbursements from any employers for whom “labor relations advice and services” have been rendered including payments received for such services and advice which would not in and of themselves have required the LM-20 report in the first instance.  (29 CFR 406.3)

      For example, Consultant A, an attorney whose practice is limited to “labor law,” has 20 clients (including B) on retainer.  He renders labor relations advice and services (i.e., representation, bargaining, etc.) to all of them.  During the course of his year’s practice, A undertakes to deliver a persuasive speech for one of his clients, B, in connection with a union organization drive in B’s plant.

      As a result of this activity, A is required to report:

(1) The persuasion activity he undertook for B (on Form LM-20);

(2) Receipts and disbursements from all 20 of his clients to whom he has rendered labor relations advice and services during his fiscal year (on Form LM-21).

It should be noted that if A had not delivered the “persuasive” speech, no reports would have been required of him.

However, since April 2016, OLMS has applied a Special Enforcement Policy to consultants’ annual Receipts and Disbursements Report, Parts B and C, which provides that filers need not report any receipts for “labor relations advice and services” and also need not report disbursements for such services except where the object of the disbursement is one or both of those described in LMRDA §203(b)(1) and (2).  See Form LM-21 Special Enforcement Policy and Manual Entry §260.001.

Douglas v. Wirtz, 353 F.2d 30, 32, 60 LRRM 2264 (4th Cir. 1965), cert. denied, 383 U.S. 909 (1966).

      (Revised: Dec. 2016)

260.400 TRAINING OR SURVEYS

            A person would not be required to file reports as a labor relations consultant on the basis of either the supervisory training or the employee-attitude surveys he conducts, unless any of these activities has, directly or indirectly, an objective described in section 203(b)(1) and (2) of the Act.

260.500 WRITTEN AGREEMENT NOT NECESSARY

            It is not necessary that an agreement or arrangement be formal or in writing in order to be within the scope of section 203(b).  There may be no more than an understanding between an employer and an employer council that reportable services will be performed as necessary by the council.  For example, both parties may understand perfectly that if an attempt is made to organize the employees of the employer, the council will provide material assistance (beyond the mere giving of advice) in persuading employees as to the manner of exercising their collective bargaining rights.  Where such an understanding exists, both parties are required to report the terms of their arrangement or agreement, the employer’s report being required by section 203(a)(4) of the Act.  If periodic membership dues are paid by the employer to the association, annual reports would be required from each party for as long as the understanding continued to exist.

260.600 ASSOCIATIONS AS CONSULTANTS

            Reports must be filed by an employers council which provides, as a regular service to its members, discussion meetings with the employees of the member employers which are intended to persuade such employees in the exercise of their bargaining rights.  A report must be submitted by the council within 30 days after each employer entered into membership with the council, since the discussion meeting service is part of the membership agreements of the council.  In addition the council would have to file an annual financial report within 90 days after the end of the council’s fiscal year.  The employers who are members of the council would also be required to report the arrangement under section 203(a)(4).

WHO MUST REPORT

261.003 SEE INSTRUCTIONS, FORMS LM-20, LM-21

261.005 EXISTENCE OF A LABOR DISPUTE

For definition of Labor Dispute, see Manual Entry 040.701.
           
            Any agreement or arrangement a labor relations consultant has with an employer in which he agrees to undertake activities with either of the objectives described in sections 203(b)(1) or (2) of the Act, should be reported.  The existence of a labor dispute is pertinent only to section 203(b)(2).  In the context of that section, however, the labor dispute need not necessarily be in progress at the time a consultant supplies an employer with information concerning the activities of his employees or a labor organization in connection with such dispute.  Agreements with an employer to persuade his employees as to their rights to bargain collectively should be reported irrespective of whether there is a labor dispute.

261.010 COEXTENSIVENESS OF REPORTING OBLIGATION

            The agreements and arrangements covered by section 203(a)(4) and (5) and those covered by section 203(b) are substantially coextensive.  Also, the provisions of section 203(c) are applicable in equal faction under section 203(a) and (b).  Thus, to the extent that an employer is under the obligation to file a report under section 203(a)(4) and (5), a labor relations consultant who is a party to those activities would have to file the reports required by section 203(b).

261.120 MANAGEMENT CONSULTING SERVICE

            While the fact that a management consulting service is engaged in the development of “Company Policy Manuals” and “Job Evaluation and Classification” and “Wage Administration Plans” intended to improve employee-employer relations does not, alone and in itself, bring that service within the reporting requirements of section 203(b), if the purpose of the service were in fact, directly or indirectly, to persuade employees in relation to collective bargaining, then it would fall within the reporting requirements of section 203(b) of the Act.

261.200 ARBITRATING, BARGAINING, AND ADVISING ACTIVITIES

            Under ordinary circumstance, acting as an arbitrator would not result in any reportable activity.  Neither would engagement in collective bargaining on behalf of an employer, nor the giving of advice to industrial management regarding job evaluation, wage and salary administration, personnel administrator or similar fields ordinarily require a report.  The law specifically requires reports from persons including labor consultants, only when the activities they undertake have as an object thereof, either directly or indirectly, “to persuade employees to exercise or not to exercise, or persuade employees as to the manner of exercising, the right to organize and bargain collectively through representatives of their own choosing; or to supply an employer with information concerning the activities of employees or a labor organization in connection with a labor dispute involving such employer, except information for use solely in conjunction with an administrative or arbitral proceeding or a criminal or civil judicial proceeding.”

261.300 ORAL OR SUPPLEMENTARY AGREEMENT OR ARRANGEMENT

            Any decision or mutual accord between a firm and its attorney that the attorney was to render services which are described by section 203(b) of the Act would be reportable.  Such an arrangement may be oral and may supplement a previous arrangement establishing the attorney’s relationship with his client.

WHEN AND WHERE TO FILE CONSULTANT REPORTS

262.001 LMRDA, SECTION 207(b)

            Each person required to file a report under section 201(b), 202, 203(a), or the second sentence of 203(b) shall file such report within ninety days after the end of each of its fiscal years; except that where such person is subject to section 201(b), 202, 203(a), or the second sentence of 203(b) as the case may be, for only a portion of such fiscal year (because the date of enactment of this Act occurs during such person’s fiscal year or such person becomes subject to this Act during its fiscal year) such person may consider that portion as the entire fiscal year in making such report.

262.002 See 29 CFR 406.1(b), 406.4, 406.7, 402.2, 406.3, 406.1(a).

      See also Instructions for LM-20, LM-21.

262.005 TIME FOR FILING REPORTS

      Labor relations consultants, and other persons, who enter into an agreement or arrangement of the kind described by section 406.2 of the Regulations must file a report within 30 days after making such agreement or arrangement.  Thus, the date of submission of the report is determined by the date of the agreement or the arrangement, rather than the date on which certain activities were performed.

PERSUASION BY CONSULTANT

263.001 LMRDA, SECTION 203(b)(1)

      . . . to persuade employees to exercise or not to exercise or persuade employees as to the manner of exercising, the right to organize and bargain collectively through representatives of their own choosing; or . . .

263.005 PURPOSES OF ARRANGEMENT

            The purposes which would make an arrangement subject to the reporting requirements of section 203(a)(4) and 203(b)(1) need not be unfair labor practices or otherwise in violation of law.  These suggestions speak of activities to “persuade” employees in the exercise of their collective bargaining rights, in significant contrast with section 203(a)(3) which requires reporting by employers of expenditures where the object is “to interfere with, restrain, or coerce employees” in the exercise of these rights.  The legislative history supports this conclusion.  The provision corresponding to section 203(a)(4) in the House Bill as reported (section 203(a)(4) of H.R. 6342) would have required reporting only in the case of an agreement to provide an employer with the services of a person or firm engaged in the business of “interfering with, restraining, or coercing employees in the exercise of rights guaranteed by the LMRDA, the National Labor Relations Act, or the Railway Labor Act.  This provision was replaced by the present section 203(a)(4) with its test of persuasion.

      (Technical Revisions: Dec. 2016)

263.100 SPEECH BY CONSULTANT

            When a labor relations consultant addresses the employees of an employer and expresses to the employees the employer’s views, argument, or opinion under the free speech provision (section 8(c) of the NLRA, as amended), such an activity constitutes persuasion within the meaning of the Act.

            Accordingly, the labor relations consultant should file a report in accordance with the requirements of section 203(b) of the Act.  As indicated in section 406.2 of the Regulation on labor relations consultants reports, the report must be filed within 30 days after the agreement or arrangement is made.

263.102 SPEECH IN SPANISH

            A consultant prepared a speech to be given by an employer in connection with a union organization drive in the employer’s plant.  Since most of the employees to whom the speech was to be delivered did not understand English well, the consultant translated the speech into Spanish and delivered it himself.  The object of the speech was to persuade the employees concerning their organizing and bargaining rights.

            The delivery by a consultant of a speech in Spanish is no different than the delivery of such a speech in English (which has been held to be outside of the section 203(c) “advice” exemption) and therefore constitutes a reportable activity by the consultant under section 203(b).

            However, a truly “neutral” translation into Spanish of a “persuasive” speech delivered by the employer in English is not a reportable activity.  In this connection, alleged translation might be reportable where there is substantial evidence that the translation was not "neutral," e.g., where the translator significantly added to the persuasive impact of the employer's speech.

263.200 JOB APPLICANTS CONSIDERED "EMPLOYEES"

            Attorney X was employed by Employer Y to inform prospective employees being given pre-employment interviews of the employer's policy of maintaining an open shop. Attorney X's talk to these job applicants tended to persuade them concerning the manner of exercising their collective bargaining rights.

            It is the Department's view that when prospective employees or job applicants are exposed to this type of persuasion, a report is required from the employer pursuant to section 203(a)(4) and from the attorney pursuant to section 203(b)(1), even though the section 3(f) definition of "employees" does not specifically include applicants as employees, for the following reasons:

1. The court decisions under the LMRA have held that job applicants are "employees" under certain provisions of that Act, holding this conclusion to be necessary to carry out the policy of that Act. Similarly, the policy of the LMRDA requires such a conclusion in relation to the reporting requirements of section 203(a)(4) and 203(b)(1). A restrictive reading of section 3(f) that eliminated reporting of this type of activity would frustrate the policy of the Act and might give the employer an unwarranted advantage if the persuasive activities of the consultant were not identified as employer-inspired. The legislative history of the LMRDA also supports this view.
2. Since the Act does not limit reports to situations where a consultant speaks directly to employees, but reporting depends rather on whether the activity in question has as an object to persuade employees, it can be said that the consultant's persuasive activities directed at potential employees had as its object the persuasion of an (subsequently hired) employee.

SUPPLYING OF INFORMATION BY CONSULTANT

264.001 LMRDA, SECTION 203(b)(2)       

      . . . to supply an employer with information concerning the activities of employees or a labor organization in connection with a labor dispute involving such employer, except information for use solely in conjunction with an administrative or arbitral proceeding or a criminal or civil judicial proceeding;        

264.005 KNOWLEDGE OF PURPOSE FOR INFORMATION IS IRRELEVANT

            An organization which supplies information to an employer in connection with a labor dispute is required to file a report even when it has no knowledge of the purpose for which the information is wanted.

            Any doubt as to the purpose should be resolved by reporting.  Even if a judicial proceeding were pending, a report would be needed if the employer had a dual purpose.

264.006 EMPLOYEE SURVEY

            During an effort by a union to organize his employees, an employer hired an "Employee Opinion Survey" firm to take a survey of his employees.  Each employee was asked one question: "Do you feel a union here would help or harm you?"  "Why?" Employees did not put their names on the forms. After the forms where returned, the survey firm tabulated the results.  After tabulation, the forms were destroyed by one of the employees of the survey firm.  The results were then turned over to management.

            Since these activities were designed to gather information and to supply it to the employer for use in connection with a labor dispute, the survey organization must file reports under the provisions of section 203(b)(2).

See Manual Entry 257.400 concerning the requirement for the employer to report.

264.100 LABOR "SPIES"
     
            The furnishing of persons to perform espionage or reporting work in connection with a strike, as part of their duties, would have to be reported under sections 203(a)(4) and 203(b)(2) covering undertakings to supply the employer with information about the activities of the employees or the union in a labor dispute involving the employer.

      (Technical Revisions: Dec. 2016)

264.200 SURVEILLANCE "IN CONNECTION" WITH LABOR DISPUTE

            In order to be reportable under sections 203(a)(4) and 203(b)(2) of LMRDA, an agreement or arrangement between an employer and an independent contractor for obtaining information must be made "in connection" with an existing labor dispute.  Thus, where an employer in the railroad industry (within which a major dispute over work rules and so-called "featherbedding" exists between the companies and the unions) hires a detective agency to obtain information concerning the conduct of his employees and such information is obtained by surveillance, it must be shown that the surveillance is reasonably connected with that dispute before a report is required.  A later disagreement between the employer and the union as to whether the evidence developed by the surveillance justified disciplinary action against the particular employees involved is not germane since the dispute was not one existing at the time of the surveillance.

“ADVICE” EXEMPTION

265.001 LMRDA, SECTION 203(c)

            Nothing in this section shall be construed to require any employer or other person to file a report covering the services of such person by reason of his giving or agreeing to give advice to such employer or representing or agreeing to represent such employer before any court, administrative agency, or tribunal of arbitration or engaging or agreeing to engage in collective bargaining on behalf of such employer with respect to wages, hours, or other terms or conditions of employment or the negotiation of an agreement or any question arising thereunder.

265.002 SEE 29 CFR 406.5

265.005 SCOPE OF THE “ADVICE” EXEMPTION

            Section 203(b) provides for reports from every person who pursuant to an agreement or arrangement with an employer undertakes the type of activities described therein.  Section 203(c) provides that nothing in section 203 shall be construed to require any person to file a report “. . . by reason of his giving or agreeing to give advice to such employer. . .”

            The question of application of the “advice” exemption requires an examination of the intrinsic nature and purpose of the arrangement to ascertain whether it essentially calls exclusively for advice or for other services in whole or in part. Such a test cannot be mechanically or perfunctorily applied.  It involves a careful scrutiny of the basic fundamental characteristics of any arrangement to determine whether giving advice or furnishing some other services is the real underlying motivation for it.

            As to specific kinds of activity, it is plain that the preparation of written material by a lawyer, consultant, or other independent contractor which he directly delivers or disseminates to employees for the purpose of persuading them with respect to their organizational or bargaining rights is reportable.  Moreover, the fact that such material may be delivered or disseminated through an agent would not alter the result.  Such undertakings obviously do not call for the giving of advice to an employer.

            However, it is equally plain that where an employer drafts a speech, letter or document which he intends to deliver or disseminate to his employees for the purpose of persuading them in the exercise of their rights, and asks a lawyer or other person for advice concerning its legality, the giving of such advice, whether in written or oral form, is not in itself sufficient to require a report.  Furthermore, we are now of the opinion that the revision of the material by the lawyer or other person is a form of written advice given the employer which would not necessitate a report.

            A more difficult problem is presented where the lawyer or middleman prepares an entire speech or document for the employer.  We have concluded that such an activity can reasonably be regarded as a form of written advice where it is carried out as part of a bona fide undertaking which contemplates the furnishing of advice to an employer.  Consequently, such activity in itself will not ordinarily require reporting unless there is some indication that the underlying motive is not to advise the employer.  In a situation where the employer is free to accept or reject the written material prepared for him and there is no indication that the middleman is operating under a deceptive arrangement with the employer, the fact that the middleman drafts the material in its entirety will not in itself generally be sufficient to require a report.

265.100 RECOMMENDATIONS ON HIRING

            Activities such as recommending the names of manufacturers’ agents and salaried personnel would not normally need to be reported under the provisions of the Act.  However, if, in recommending an individual to a client for approval, the intention of a labor consultant is to provide the employer with an employee who will perform any of the activities set forth in section 203(b), such an activity must be reported.

265.200 ADVICE ON APPLICABILITY OF LMRA

            A situation in which an attorney gives advice with respect to the provisions of the LMRA of 1947 to an employer involved in an organizational drive need not be reported, since such a case would be encompassed by the exemption for advice contained in section 203(c).

265.300 REVEALING SUBSTANCE OF ADVICE

            There is no requirement that an attorney shall disclose in his report the advice he gave to an employer though he is called upon to report, in his LM-21 report, the sums of money he was paid for labor relations advice and services.

265.400 APPLICABILITY OF THE EXCLUSION TO ADDITIONAL ACTIVITIES

            Section 203(c) of the Act does not require the filing of reports when an attorney is solely advising a client and representing him in judicial, administrative or arbitral proceedings or in collective bargaining.  However, if any agreement or arrangement with an employer covers, besides these services, other activities which are covered by the reporting requirements of section 203, the exclusion of section 203(c) does not apply, and the information for the entire agreement or arrangement must be reported.

ATTORNEY-CLIENT EXEMPTION

265.501 LMRDA, SECTION 204    

Nothing contained in this Act shall be construed to require an attorney who is a member in good standing of the bar of any State to include in any report required to be filed pursuant to the provisions of this Act any information which was lawfully communicated to such attorney by any of his clients in the course of a legitimate attorney-client relationship.

(State in the above section also includes any Territory or the District of Columbia.  See 29 CFR 401.2.)

      (Revised: Jan. 2021)

265.502 See 29 CFR 406.5

265.505 ADVICE BY ATTORNEY

            If an attorney’s services are limited to advising the employer or to representing him before any court, administrative agency or tribunal of arbitration, such as the National Labor Relations Board, no report would be required by the Act.  These activities are excluded from the reporting requirements by section 203(c) which also exempts reports of a consultant’s services by reason of his “engaging or agreeing to engage in collective bargaining on behalf of such employer with respect to wages, hours, or other terms or conditions of employment or the negotiation of an agreement or any question arising thereunder.”

265.510 ATTORNEY SPEECHES TO EMPLOYEES

            Where an attorney is specifically hired to address employees and persuade them as to the manner of exercising their vote in a representation election, the agreement seems plainly to go beyond the giving of advice to an employer.  The free speech provisions of the Taft-Hartley Act are not impaired by the LMRDA; however, a report of such arrangements, notwithstanding their legality, would be required from the employer under section 203(a)(4) of the Act for employers, and under section 203(b)(1) of the Act for the attorney.

265.520 ATTORNEY ENGAGING IN 203(b) ACTIVITIES

            Section 204 of the Act exempts any attorney from including in any report required to be filed pursuant to the terms of the Act, information which was lawfully communicated to him by any of his clients in the course of a legitimate attorney-client relationship.  This does not, however, exempt any attorney from filing a report pursuant to section 203(b) of the Act if he undertakes any of the activities referred to therein.

SUPERVISORS AND EMPLOYEES

266.001 LMRDA, SECTION 203(e)

            Nothing contained in this section shall be construed to require any regular officer, supervisor, or employee of an employer to file a report in connection with services rendered to such employer, nor shall any employer be required to file a report covering expenditures made to any regular officer, supervisor, or employee of an employer as compensation for service as a regular officer, supervisor, or employee of such employer.

266.002 See 29 CFR 406.5

266.005 INDEPENDENT CONTRACTORS

            Under section 203(e), a regular officer of an employer and the employer are exempted from filing a report on services rendered by the officer and payments made to the officer and in the regular course of business.  The exemption does not apply to independent contractors.  Whether or not a person is acting as an officer in the regular course of business or an independent contractor is a question of fact and the title assigned to the person performing duties on behalf of an employer is not controlling.  Additional pay for the duties would be strong evidence that such activities are not part of the regular duties of the officer, but it would not necessarily be conclusive.

266.010 ATTORNEY AS INDEPENDENT CONTRACTOR

      Whether or not an attorney who is engaged in activities which would require him to report under section 203(b) is exempt from these requirements under section 203(e), by virtue of being a regular employee, would depend on the facts of the relationship in each case.  Normally, however, an attorney, who is not employed on a full-time basis by the employer, would be considered to be an “independent contractor” rather than “employee.”

266.100 NONEXEMPT PAYMENTS

            The exemption in section 203(e) applies only to expenditures made for services which are performed by employees in the regular and ordinary course of their employment.  Such may be the case, depending on the particular circumstances, for payments falling under section 203(a)(2). For example, where an employer prepares a message to his employees which attempts to persuade employees as to the manner of exercising their right to organize, and the employer then has the message conveyed to all plant employees individually through his labor relations director who is a regular staff member, no report would be due under section 203(a)(2) because the director would be performing as a regular employee within the meaning of section 203(e).  However, if the employer called in one of his old and trusted employees who was a drill press operator, for example, and asked him (without disclosing the assignment to other employees) to persuade his fellow employees as to their right to organize, then a report would be due from the employer under 203(a)(2).

CONSULTANT:
AGREEMENT AND ACTIVITIES REPORT - LM-20

269.001 LMRDA, SECTION 203(b)

            Every person who pursuant to any agreement or arrangement with an employer undertakes activities where an object thereof is, directly or indirectly--

(1) to persuade employees to exercise or not to exercise or persuade employees as to the manner of exercising, the right to organize and bargain collectively through representatives of their own choosing; or

(2) to supply an employer with information concerning the activities of employees or a labor organization in connection with a Labor dispute involving such employer, except information for use solely in conjunction with an administrative or arbitral proceeding or a criminal or civil judicial proceeding;

shall file within thirty days after entering into such agreement or arrangement a report with the Secretary, signed by its president and treasurer or corresponding principal officers, containing the name under which such person is engaged in doing business and the address of its principal office, and a detailed statement of the terms and conditions of such agreement or arrangement.

269.002 See 29 CFR 406.2, 406.4

      See Instructions for LM-20.

      (Technical Revisions: Dec. 2016)

CONSULTANT: 
RECEIPTS AND DISBURSEMENTS REPORT - LM-21

269.501 LMRDA, SECTION 203(b)

            Every such person shall file annually, with respect to each fiscal year during which payments were made as a result of such an agreement or arrangements, a report with the Secretary, signed by its president and treasurer or corresponding principal officers, containing a Statement (A) of its receipts of any kind from employers on account of labor relations advice or services, designating the sources thereof, and (B) of its disbursements of any kind, in connection with such services and the purposes thereof.  In each such case such information shall be set forth in such categories as the Secretary may prescribe.

269.502 SEE CFR 406.3, 406.4

269.510 SEE INSTRUCTIONS for Form LM-21, B, C, D.  See also Manual Entry §260.300 (regarding Special Enforcement Policy for Section B and C of Form LM-21).

      (Revised: Dec. 2016)

*269.520 LABOR RELATIONS ADVICE

            “Labor relations advice or services” as that term is used in section 203(b) of the Act, would include all advice and services on matters having a bearing on the relations between an employer and his employees, including advice which is informally given as part of a service where a retainer fee is paid.  Advice on contract negotiations, employee training programs, development of vacation, overtime, and job evaluation policies, and employee education programs, for example, would fall within this definition as would advice on the various Federal and state laws bearing on the employer-employee relationship.  It is not necessary that a union organization drive be in process or that there be a dispute in order for “labor relations advice and services” to be rendered.

PRIVATE DISCLOSURE:  UNIONS TO MEMBERS

270.001 LMRDA, SECTION 201(c)

            Every labor organization required to submit a report under this title shall make available the information required to be contained in such report to all of its members, and every such labor organization and its officers shall be under a duty enforceable at the suit of any member of such organization in any State court of competent jurisdiction or in the district court of the United States for the district in which such labor organization maintains its principal office, to permit such member for just cause to examine any books, records, and accounts necessary to verify such report. . .

270.002 See 29 CFR 402.10, 403.8, 408.11

*270.003 RIGHTS ONLY FOR MEMBERS

            The rights under section 201(c) are granted only to members of the labor organization, not to employers or others who are not members.

      (Technical Revisions: Dec. 2016)

270.005 DEFINITION OF “VERIFY”

            As used in section 201(c), “verify” means to check generally on the accuracy or completeness of a statement or statements.
           
Rekant v. Rabinowitz, 194 F.Supp. 194, 195 (E.D. Pa. 1961), 48 LRRM 2157.
 
     (Technical Revisions: Dec. 2016)

WHAT UNION MUST MAKE AVAILABLE TO MEMBERS

*272.005 INSPECTION OF CONSTITUTION AND BYLAWS

            Section 201(a) of the LMRDA requires every labor organization covered by the Act to adopt a constitution and bylaws and to file a copy thereof with the Secretary of Labor together with a report containing specified information.  Section 402.2 of the regulations (29 CFR 402.2) requires that this information be submitted on Form LM-1, Labor Organization Information Report, and makes the constitution and bylaws a part of this report.

            The information contained in this report is required to be made available to all members of the labor organization pursuant to section 201(c) of the LMRDA.  Since the constitution and bylaws of a labor organization are a part of that report, they must be made available to all of the labor organization’s members.  (See 29 CFR 402.10).

            The LMRDA does not, however, require a union to furnish a copy of its constitution and bylaws to each member.  The law requires only that the union permit each member an opportunity to examine such documents at a reasonable time and place.

272.100 COPIES OF REPORTS

            Labor organizations are not required to supply copies of their reports to their members; it is sufficient for the unions to maintain copies of such reports at their principal office and to allow their members an equal opportunity to inspect and examine them.

272.200 METHODS OF DISSEMINATION

            The requirements of section 201(c) could be satisfied by various alternative methods including, among others, the mailing of copies of their reports to all members, publication of the report in the union paper, or (in the case of local unions) the posting of a copy in a conspicuous place at the union headquarters and meeting hall, and announcing at a regular meeting that copies are ready for distribution to all members.  It would appear, however, that a union that does not mail the information to all its members is required, at least, to make the information available at a reasonable time and place and to notify the membership that the information is available.

272.300 DISCIPLINED MEMBERS

            Since section 201(c) requires labor organizations to make certain information available to “all of its members,” a union may not deny requests by disciplined members to inspect these records or reports.

            (Revised: Dec. 2016)

272.400 MINUTES OF MEETINGS

            Section 201(c) requires that, “for just cause,” labor organizations must permit any member to examine any books, records and accounts necessary to verify the reports required by section 201. Consequently, the minutes of any meetings which contain statements bearing on the information contained in these reports must be available for inspection.

272.500 USE OF AUDITOR TO INSPECT BOOKS

            The United States Court of Appeals for the Fifth Circuit, in answering the union argument that the right of inspection of the books and records of the union is personal only to the members and that they may not be assisted by an auditor, states in pertinent part:

“The Act is silent on this question but the general law on the subject as it applies to the inspection of corporate books by a stockholder is both analogous and clear.  In Finance Co. of America at Baltimore v. Brock, 80 F. 2d 713 (5th Cir. 1936), this court pointed out:

. . . ‘It is well settled in Louisiana that stockholders have the right at reasonable times and places and for proper purposes to examine the books and papers of the corporation and to have the assistance of accountants in so doing. . . This is the law generally . . . . .’

80 F.2d at 714.

“This accords with the general rule set out in 13 Am. Jur. Corporations § 438:

‘While the right to inspect the books of a corporation is, in a sense, personal to the stockholder, it is very generally held to include the right to have the assistance of a skilled agent, such as an attorney, accountant, or stenographer, if the stockholder desires such assistance.  The possession of the right would be futile if the possessor through lack of knowledge necessary to its exercise were debarred of the privilege to procure in his behalf the services of one competent to exercise it.’

“Here those seeking the right of inspection are longshoremen, unversed in financial records and accounting methods.  The right to inspect would be utterly meaningless if it runs only to them.  This is remedial legislation and our view is that Congress intended to create both a right and a remedy, with the remedy to be fashioned by the courts, where as here controversy obtains, with the end in view of giving force and meaning to the right when, and only when, good cause is shown.”

Local No. 1419, ILA, General Longshore Workers Union v. Smith, 301 F.2d 791, 796 (5th Cir. 1962), 49 LRRM 3108.  See also Campbell v. Transport Workers Union of America, 1996 WL 131096. 151 LRRM 2837 (E.D.Pa.1996) (unpublished decision in which judge ordered local union and its officers to permit union member and his accountant to review the union’s financial records). For updated citation, see 18A Am. Jur. 2d Corporations § 331 (“While the right to inspect the books of a corporation is, in a sense, personal to the stockholder, it is very generally held to include the right to have the assistance of a skilled agent, such as an attorney, accountant, or stenographer, if the stockholder desires such assistance.  The corporation cannot dictate to the stockholder whom he or she will employ to assist him or her in inspecting the books; nor can it refuse to submit its books for inspection on the ground that the attorney employed to aid the stockholder is inimical to it. The right of the average stockholder to use an expert is undeniable because most stockholders are incapable of understanding the books and records of an extensive business without taking an unreasonable time to study them. However, if a stockholder understands the books and records that he or she seeks to inspect, then there is no need for expert assistance, and the burden is on the stockholder to show the necessity for such expert assistance.”).

      August, 1968 (Technical Revisions: Dec. 2016)

MEMBER MUST MAKE DEMAND

274.005 DEMAND REQUIRED

            The duty imposed upon a union and its officers under section 201(c) to permit examination by a member, for just cause, of the supporting records necessary to verify a report required to be submitted pursuant to sections 201(a) or (b) does not arise until there has been a demand setting forth just cause for the examination and relating the books, records and account to a specific report.  In the instant case, where such a demand was made by a union member and thirty days elapsed without a reply form the union, it was deemed sufficient to show a refusal of the demand by the union.
           
            Further, where union members seek to enforce their rights to inspect union books and records under section 201(c) in a State court, matters of pleading and procedure are determined by State law, though the right to be enforced is governed substantively by Federal law. 

Henderson v. Sarle, 197 N.Y.S.2d 920, 922-23 (Sup. Ct. N.Y. 1960), 45 LRRM 3037.

      (Technical Revisions: Dec. 2016)

274.100 SPECIFICITY AS TO RECORDS

            An action by a union member for access to union records under section 201(c), LMRDA, must fail where the request was in general terms for records extending over a period of time and insufficient for the court to identify the records sought to determine whether they have been denied or are the kind required to be disclosed under section 201(c), or whether the member has shown just cause for having them produced. 

McCraw v. United Association of Journeymen and Apprentices of Plumbing and Pipe Fitting Industry, 216 F.Supp. 655, 661 (E.D. Tenn. 1963), aff'd, 341 F.2d 705 (6th Cir. 1965), 52 LRRM 2516.

      (Technical Revisions: Dec. 2016)

REQUIREMENT OF “JUST CAUSE” TO EXAMINE UNION BOOKS

275.005 JUST CAUSE

            The United States District Court for the Northern District of Alabama set the following standards for determining the existence of “just cause” for the examination of records required to be kept under Title II of the LMRDA:

In order to establish just cause to examine any books, records and accounts necessary to verify any report of a labor organization submitted pursuant to 29 U.S.C.A. 431 (section 201 LMRDA), it is sufficient that a member of that organization show that there is reasonable ground to believe that such report is incomplete or inexact, or that it inadequately explains the information required to be submitted.  It is not necessary that it be shown, or that the Court make any findings and conclusions, that the labor organization or any of its officers has in fact violated any law or any provision of its Constitution or Bylaws.

Allen v. Local 92, International Association of Bridge, Structural, and Ornamental Iron Workers, 47 LRRM 2214 (N.D. Ala. 1960).

            Relying on Allen and other precedents, the D.C. Circuit held that just cause does not require a union member to “show outright error or grossly suspicious items” on a union’s financial report, and is met “when a union member demonstrates a sudden, apparently significant, and unexplained change in a [financial report] item.  See Mallick v. Intern. Brotherhood of Elec. Workers, 749 F.2d 771,782-84, 117 LRRM 3081,3085-90  (D.C.Cir.1984). 

Other federal appellate courts have been more general in describing the just cause standard.  See, e.g., Fruit and Vegetable Packers and Warehousemen Local 760 v. Morley, 378 F.2d 738, 744, 65 LRRM 2424, 2427 (9th Cir.1967)(just cause standard is met “if a reasonable union member would be put to further inquiry  . . . Irrespective of the nature of the asserted cause, the test must be whether reason would require substantiation.”); Gabauer v. Woodcock, 594 F.2d 662, 100 LRRM 2808, 2811 (8th Cir. 1979)(relying on Allen and Morley in finding just cause satisfied “if a reasonable union member would be put to further inquiry”).  See also Kinslow v. American Postal Workers Union, Chicago, 222 F.3d 269, 274 & n. 2, 164 LRRM 3025, 3028 & n. 2 (7th Cir.2000) (holding that “’just cause’ encompasses more than just a desire to confirm the information “ on the union’s annual report).

      (Revised: Dec. 2016)

275.006

            In order to show good cause under section 201(c), the union member need only show that the size and nature of certain expenditures were such that a reasonably prudent member having an interest in proper financial management of the union would naturally be put upon inquiry and, in the course of his inquiry, has been denied access to his union’s records.
Coratella v. Roberto, 56 LRRM 2668 (D. Conn. 1964).

Note: This decision was rendered on a motion for summary judgment which was later set aside on the basis that such a motion cannot be granted where there is a factual question, i.e., a question as to “good cause.”
56 LRRM 2668.

      (Technical Revisions: Dec. 2016)

WHEN MEMBER CAN SUE TO ENFORCE RIGHT

276.005 EXHAUSTION OF REMEDIES

      The right to sue for inspection of union books and records under section 201(c) is not subject to the limitation of prior exhaustion of internal union remedies contained in section 101(a)(4) of the Act.  To hold otherwise would defeat the purposes of section 201(c).  It should also be noted that the rights and remedies of section 201(c) and 101(a)(4) are of a fundamentally different nature.
Coratella v. Roberto, 56 LRRM 2668 (D. Conn. 1964).  But see Pierce v. Bahr, 1996 WL 33675196, at *3 (D.D.C. May 9, 1996) (holding that under section 101(a)(4) of the LMRDA, a union member seeking to examine union financial books and records, under section 201(c), has an obligation to exhaust reasonable union hearing procedures before seeking relief from the court),

(Revised: Dec. 2016)

PUBLIC DISCLOSURE IN GENERAL

280.001 LMRDA, SECTION 205

1. The contents of the reports and documents filed with the Secretary pursuant to section 201, 202, and 203 shall be public information, and the Secretary may publish any information and data which he obtains pursuant to the provisions of this title.  The Secretary may use the information and data for statistical and research purposes, and compile and publish such studies, analyses, reports, and surveys based thereon as he may deem appropriate.
2. The Secretary shall by regulation make reasonable provision for the inspection and examination, on the request of any person, of the information and data contained in any report or other document filed with him pursuant to sections 201, 202, or 203.
3. The Secretary shall by regulation provide for the furnishing by the Department of Labor of copies of reports or other documents filed with the Secretary pursuant to this title, upon payment of a charge based upon the cost of the service.  The secretary shall make available without payment of a charge, or require any person to furnish, to such State agency as it designated by law or by the Governor of the State in which such person has his principal place of business or headquarters, upon request of the Governor of such State, copies of any reports and documents filed by such person with the Secretary pursuant to sections 201, 202, or 203, or of information and data contained therein.  No person shall be required by reason of any law of any State to furnish to any officer or agency of such State any information included in a report filed by such person with the Secretary pursuant to the provisions of this title, if a copy of such report, or of the portion thereof containing such information, is furnished to such officer or agency.  All moneys received in a payment of such charges fixed by the Secretary pursuant to this subsection shall be deposited in the general fund of the Treasury.

280.002 See 29 CFR 402.12, 403.10, 404.8, 405.10. 406.9, 408.12

280.003 REPORTS AVAILABLE FROM OLMS

            The reports filed pursuant to the LMRDA are public information and are available from the Office of Labor-Management Standards.  Pursuant to 29 C.F.R. §70.53, these reports are public records and, as such, individuals can exercise the right to examine any such reports at, and/or purchase copies from, the OLMS through its Internet Public Disclosure Room at www.unionreports.gov and its Public Disclosure room at: U.S. Department of Labor, Office of Labor-Management Standards, 200 Constitution Avenue, NW, Room N-1519, Washington, DC 20210.  The telephone number is (202) 693-0125, and the fax number is (202) 693-1344.  Any person may inspect these reports or may purchase copies for 15 cents per page; requests for 30 or fewer pages are provided free of charge. 

            Freedom of Information Act (FOIA) requests for public records that are available pursuant to 29 C.F.R. §70.53 are considered improper requests.  The Public Disclosure room will provide the documents to requestors, if they exist, if the requestor is unable to locate them on the website. 

      (Revised: Dec. 2016)

280.004 PUBLIC USE OF MATERIAL IN REPORTS

            Section 205 of the Act makes reports and documents filed with the Secretary of Labor pursuant to Title II public information.  Any person has the right to obtain copies of such reports upon payment of the prescribed fees.  The Department of Labor has no authority over the subsequent use of any such reports and documents.

EFFECT OF ACKNOWLEDGMENT AND FILING OF REPORTS BY OLMS

281.002 See 29 CFR 402.7

      (Technical Revisions: Dec. 2016)

CANCELLATION AND REMOVAL OF REPORTS FROM OLMS FILES

282.005 IMPROPERLY FILED REPORTS

            When an organization or individual upon demand and/or under protest files a report pursuant to Title II, or when such report is voluntarily submitted, although it is questionable that it is required, if it is thereafter definitely determined that the report is not called for by the Act, the report shall be canceled and removed from the disclosure file. Upon request, OLMS will return the original report to the person who submitted it.

      (Technical Revisions: Dec. 2016)

RETENTION OF REPORTING RECORDS

285.001 LMRDA, SECTION 206

            Every person required to file any report under this title shall maintain records on the matters required to be reported which will provide in sufficient detail the necessary basic information and data from which the documents filed with the Secretary may be verified, explained or clarified, and checked for accuracy and completeness, and shall include vouchers, worksheets, receipts, and applicable resolutions, and shall keep such records available for examination for a period of not less than five years after the filing of the documents based on the information which they contain.

285.002 See 29 CFR 402.9, 403.7, 404.7, 405.9, 406.8, 408.10

285.100 RECORD KEEPING AND SELF-INCRIMINATION

            An individual member of a company or organization cannot make a valid claim of privilege under the 5th amendment with respect to the records of an organization, even though the records might tend to incriminate him, because the records are the property of the organization (Wilson v. United States, 221 U.S. 361, 384-85(1911); United States v. White, 322 U.S. 694, 698-99 (1944)).  The privilege which exists as to private papers cannot be maintained in relation to records required by law to be kept (Shapiro v. United States, 335 U.S. 1, 17 (1948)), even though the intention of the law is to make the records available for enforcement purposes (United States v. Darby, 312 U.S. 100, 125 (1941)).  The doctrine extends to reports which are required by law (Pulford v. United States, 155 F.2d 944, 947 (6th Cir. 1946); Communist Party of United States v. Subversive Activities Control Board, 367 U.S. 1, 115 (1961)).

      (Technical Revisions: Dec. 2016)

285.200 ELECTRONIC RECORDS

            There is nothing either in the Act or the Regulation regarding the required reports which prohibits the use of electronic records as a means of maintaining files of the information required by section 206.  See the OLMS Compliance Tip on Electronic Recordkeeping for further information.

      (Revised: Dec. 2016)

285.300 LOSS OR DESTRUCTION OF RECORDS

            The Act does not require that the loss or destruction of a labor organization’s records be reported.  However, in view of the explicit language of the Act with respect to the retention of records, it is suggested that such loss or destruction be promptly reported.

*285.400 DOCUMENTS NECESSARY TO SUPPORT EXPENDITURES

            Section 206 of the Act specifies that every person who is required to file a report pursuant to Title II shall maintain records providing in sufficient detail the necessary basic information from which the reports filed may be verified, explained or clarified and checked for accuracy and completeness.  In the case of disbursements required to be reported in the aggregate, sufficient detail would include identification of persons to whom payments are made and a description or explanation of the items or services received for the payments.  Such records, normally in the form of signed receipts, invoices, vouchers or canceled checks, must be retained by the union and kept available for examination for a period of five years.
     
            The LM-2 form contains supporting schedules in which certain aggregate disbursements must be particularized (see Schedules 15 through 20).  However, the records referred to above must be kept for all disbursements required to be reported in the aggregate, whether or not particularization is called for in a supporting schedule.  For example, adequate records, including vouchers, invoices, receipts from payees, or canceled checks, indicating the items covered and to whom payment was made, must be maintained to verify or explain any non-itemized disbursements, as well as for disbursements required to be itemized.  Thus, for non-itemized disbursements, when a union officer has authority to expend union funds, documents must be retained by that officer and turned over to the union, identifying the recipient and reflecting the service or goods received for each separate expenditure.

      (Revised: Dec. 2016)

SURETY COMPANY REPORTING

290.001 LMRDA, SECTION 211

            Each surety company which issues any bond required by this Act or ERISA shall file annually with the Secretary, with respect to each fiscal year during which any such bond was in force, a report, in such form and detail as he may prescribe by regulation, filed by the president and treasurer or corresponding principal officers of the surety company, describing its bond experience under each such Act, including information as to the premiums received, total claims paid, amounts recovered by way of subrogation, administrative and legal expenses and such related data and information as the Secretary shall determine to be necessary in the public interest and to carry out the policy of the Act. 

            Notwithstanding the foregoing, if the Secretary finds that any such specific information cannot be practicably ascertained or would be uninformative, the Secretary may modify or waive the requirements for such information.

      (Technical Revisions: Dec. 2016)

290.002 SEE 29 CFR 409

290.005 SECRETARY MAY NOT WAIVE ENTIRE REPORT

            Section 211 of the LMRDA requires an annual report from each surety company which issues any bond under the LMRDA or ERISA.  While the Secretary is empowered to modify or waive the requirement for any specific information, this authority is not construed to be applicable to the waiving of the report as a whole.

      (Technical Revisions: Dec. 2016)

290.100 ALL LOSS EXPERIENCE MUST BE REPORTED

            Instructions for completing and filing Form S-1 indicate that, in Parts II and III, the information is to be reported on the basis of the five listed code classifications.  However, with respect to part IV, all losses involving a welfare or pension plan covered by ERISA or involving any labor organization or trust in which a labor organization is interested which is covered by the LMRDA are to be reported regardless of whether or not such plan, labor organization or trust is insured under a contract reported in Parts II and III.

      (Technical Revisions: Dec. 2016)

Last Updated: 10-05-22