The Labor Department in The Carter
A Summary Report January 14, 1981
By Ray Marshall
The Labor Management Services Administration (LMSA)
As the President's principal advisor on labor matters, the Secretary of Labor is responsible for overall industrial relations policy. In this capacity he makes recommendations to the President for appointments to related agencies like the National Labor Relations Board, the Federal Mediation and Conciliation Service, the National Mediation Board and the Federal Labor Relations Authority. I believe one of our most important achievements has been to appoint outstanding people to these agencies and to very successfully coordinate dispute settlement and other labor relations policies. Our basic policy has been to strengthen collective bargaining by not interfering with the bargaining process and by strengthening public support for collective bargaining. I believe we have succeeded with this. Our basic policy was to leave dispute settlement mainly to the FMCS and the NMB except for national emerging disputes, of which we really only had two: the coal strike and the N & W railroad strike, both of which were successfully resolved through collective bargaining, though not without considerable effort on our part.
As a result of the confusion and exaggeration in Congress and the public media surrounding the coal strike, we initiated the practice of making detailed strike impact studies, which we have shared with the media, making it possible to avoid public and political panic in strike situations.
Coordination with various labor relations agencies has been achieved by regular meetings and other exchanges of information.
Our greatest legislative disappointment in this area was the failure to pass labor law reform; our greatest legislative accomplishment was Civil Service reform, which greatly strengthened collective bargaining in the Federal Government. The Department worked closely with other agencies and the White House in the passage of this legislation.
Spurred by growing interest on the part of labor and management in major industries, LMSA sought to encourage and assist development of cooperative or tripartite approaches to dealing with problems going beyond the bargaining table.
Considerable strides were made in improving labor-management relations in the coal industry through the work of the President's Commission on the Coal Industry, and later the White House Coal Advisory Council. Grievance mediation was tried on an experimental basis to see if this process could reduce costs or speed the resolution of disputes. The tripartite groups also succeeded in stimulating interest in safety issues and collective bargaining procedures. Management restructured its bargaining approach and, as recommended by the President's Commission, labor and management began early bargaining on the contract, due to expire in 1981.
The Automobile Industry Committee was formed in the summer of 1980 and succeeded in bringing together the major parties in this vast and diverse industry to begin discussing matters of mutual interest and concern.
Another successful tripartite activity was the steel industry where this approach helped establish a comprehensive steel policy. Steel industry talks took place under the burden of two crucial issues: competition from imports and the need for plant modernization. The new steel policy of 1980 strengthened the trigger price mechanism developed earlier and recommended measures to deal with the modernization problem. Although there are no quick and easy answers to the steel industry's problems, all parties in the tripartite process labor, management and the government agree that a good beginning has been made. Efforts to use the tripartite approach in the airline industry were hobbled by disagreements between industry and government participants.
LMSA's interest in and support for cooperative approaches was not limited to the national level. Construction coordinating committees composed of representatives of labor, management and government (federal, state and local) were established in Kansas City, San Francisco, Boston and Denver. These groups sought to improve productivity and hold down inflationary pressures in construction by promoting programs to spread building activity more evenly throughout the year.
In collective bargaining negotiations and disputes, the Labor Department followed a general policy of keeping direct government involvement at the lowest possible level. This policy of restricting government's role to the Federal Mediation and Conciliation Service was maintained even when concern over the wage-price guidelines resulted in pressure to escalate federal involvement to a higher level. However, LMSA continues its traditional role of monitoring collective bargaining and labor relations and reporting significant developments and issues to the Secretary of Labor and other top federal officials.
Training and related activities in public sector labor relations expanded significantly. LMSA conducted 326 seminars for 9,774 trainees, reaching participants from all but two states. An annual seminar conducted for new appointees to State Public Employment Relations Boards involved 79 members and executive directors from 26 states.
A major accomplishment was the passage of the Civil Service Reform Act of 1978, which provided a statutory basis for labor-management relations in the Federal Service. Similarly, a statutory program for labor relations in the Foreign Service was incorporated into the Foreign Service Act of 1980.
LMSA's labor relations research accomplishments included a landmark study of collective bargaining in selected key industries that was done under contract and published by the Industrial Relations Research Association. The Federal Mediation and Conciliation Service completed a study on the operation of health care amendments to the NLRA, and the bargaining structure in construction was the subject of another study.
Enforcement and administration of the Employee Retirement Income Security Act (ERISA), a complex law beset by start-up problems, was functioning smoothly at the end of 1980. One of the first ERISA priorities of the Carter Administration was elimination of the delays and confusion caused by the overlapping jurisdictions of the Departments of Labor and Treasury. A presidential reorganization plan, which took effect on December 31, 1978, divided such authority between the two agencies.
In the four years preceding the reorganization, LMSA processed only 609 applications for exemptions to the prohibited transaction provisions of the law. In less than two years following the reorganization, the agency processed an additional 1,158 applications and cut the number of pending applications by almost 60 percent. The average time for handling an exemption request was cut from 15 months or more to three months. Compliance with the prohibited transaction rules also was made easier by development of a consistent exemption policy and issuance of a series of board class exemptions that affected whole industries and large numbers of plans. These improvements greatly alleviated the problems faced by plan fiduciaries in following the prohibited transaction rules.
Between January and September 1980, LMSA published 14 proposed or final regulations to help administrators comply with the complex pension plan statute. Several more regulations were scheduled to be published by the end of the year. The agency also took steps to reduce the reporting and disclosure requirements of ERISA, especially for small businesses, and actions were taken to encourage small business investments, as the agency issued a regulation clarifying its position on prudence.
In another action, proposed rules were issued defining assets of an employee benefit plan, removing the hesitation of pension plans to invest in venture capital companies, to accept pension funds.
One of the agency's top priorities was to develop an effective enforcement program to ensure that participants and beneficiaries of employee benefit plans received the benefits to which they were entitled. The field staff was directed to spend at least 85 percent of its time on fiduciary cases and investigations, and to concentrate on cases involving significant amounts of assets and the greatest number of plan participants, Coordinated enforcement agreements were made with other Federal agencies.
The agency also entered into a joint effort (the first of its kind) with IRS to monitor compliance with class exemptions. Three cities were chosen as targets.
The Department placed its highest priority on protecting the retirement benefits of the participants and beneficiaries of the Teamsters Central States Southeast and Southwest Pension Fund, The Department's efforts to safeguard and protect the retirement incomes of over half a million participants and beneficiaries of the Fund led to the resignation of all the Fund's trustees. The former trustees were sued by the Department to recover for the plan, and for its participants and beneficiaries, millions of dollars of misspent funds. In addition, the new trustees agreed to hire independent managers to control investment of the plan's assets.
The litigation was continuing at the end of 1980, as was investigation of the Fund. The actions of the new trustees were being carefully scrutinized to determine if their fiduciary responsibilities were being conducted in a manner consistent with the requirements of ERISA.
Stricter surveillance of the financial operation of unions and more vigorous enforcement of the reporting requirements for employers and labor relations consultants were major priorities for LMSA in meeting its responsibilities under the Landrum-Griffin Act.
A new strategy for auditing union financial records designed to identify and concentrate resources on cases most likely to involve major violations of the Labor Management Reporting and Disclosure Act was implemented in October 1980. The Compliance Audit Program (CAP), as the new system is called, was developed primarily to monitor financial operations of the more than 55,000 unions required to file reports each year under the LMRDA. Using the new system LMSA expected to send out investigators to check the financial records of about 950 unions during fiscal year 1981 many times the number routinely audited in the past.
Another indicator of LMSA's emphasis on investigation of violations of fiduciary responsibilities by union officials was the successful development of significant criminal cases. A federal grand jury in West Virginia indicted a former union business agent for the extortion of $28,000 from individuals seeking union memberships and jobs. This indictment resulted from an 18-month investigation by LMSA. In another significant case, an LMSA investigation led to the sentencing of E. E. Walla, retired president of Teamsters Local 682, to three consecutive five-year terms for illegally using union funds for personal use.
Although it emphasized enforcement of union fiduciary responsibilities, LMSA also sought to reduce burdensome reporting requirements under the law. Early in 1980, the agency increased from $30,000 to $100,000 the total annual receipts a union can have and still file a simplified annual report under the LMRDA.
On the management side of LMRDA enforcement, LMSA sharply stepped up efforts to obtain compliance with the provisions requiring employers and labor relations consultants to report activities aimed at influencing how workers exercise their collective bargaining rights. In Fiscal Year 1930 LMSA opened about 400 employer and consultant reporting cases, compared with about 35 in 1979. An important legal achievement was the success of a suit against the Master Printers of America, a trade organization of non unionized printing companies, to require it to file consultant reports.
Activity under the union election provisions of LMRDA was especially high in the 1977-1980 period. New highs were reached in the number of complaints received, cases closed, voluntary compliance elections achieved, elections supervised by LMSA, and civil actions filed.
The reemployment rights of veterans were expanded and strengthened during the Carter Administration by court decisions in cases initiated by LMSA. In Alabama Power v. Davis, the Supreme Court ruled that a veteran who returns to his former employer after military service is entitled to have his military service counted toward eligibility for a pension from his civilian job. This landmark case could affect hundreds of thousands of veterans.
In another case, the Supreme Court unanimously supported a veteran's claim that the time he spent in military service should be taken into account in calculating the supplemental unemployment benefits (SUB) he is entitled to receive under his union's contract with the steel industry.
During the four years of the Carter Administration, LMSA's office of Veterans' Reemployment Rights opened about 9,300 cases on behalf of veterans or members of the National Guard or military reserve units who felt their reemployment rights had been violated. Some 9,100 cases were closed during this period. In addition, about 950,000 men and women who were being discharged from the armed services were briefed on their reemployment rights at military separation centers.
Certification of employee protection arrangements under the urban mass transportation program increased sharply. During these four years LPISA completed more than half of the overall total of 5,025 certifications issued since inception of the program in 1964. In Fiscal Year 1980 alone, LMSA certified in excess of $2 billion in grant monies affecting approximately 200,000 employees. In addition, a formal program was established in 1978 in LPISA's Division of Employee Protections to resolve disputes under certified employee protection arrangements.
In November 1978, a new "Public Transportation for Non Urbanized Areas" program was added to the Urban Mass Transportation Act. After several months of complex and difficult negotiations, the Department of Labor, in consultation with the Department of Transportation and other interested parties, developed a Special Warranty arrangement to streamline certification of employee protections for rural projects. By the end of 1980 more than 700 projects in 43 states had been processed on the basis of the Special Warranty.
In another area, LMSA successfully implemented the employee protection program called for under the Redwood National Park Act. Under this statute, enacted in April 1978, special benefits totaling $23 million were paid to almost 3,500 unemployed timber industry workers by September 30 , 1980,