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Office of Labor-Management Standards
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Office of Labor-Management Standards (OLMS)

Emp!oyment Standards Adrrlinistrstion
Office of Labor-Management Standards
Cleveland District Office
1240 East Ninth Street
Room 831
Cleveland, OH 441 99
(216)357-5455 Fax: (216)357-5425

May 27, 2008

Mr. John Baker, Jr., President
Longshoremens ASN AFL-CIO
Great Lakes District Council
101 Erieside Avenue
Cleveland, Ohio 44114-1005

LM File Number 530-135
Case Number: -

Dear Mr. Baker:

This office has recently completed an audit of Great Lakes District Council under the Compliance Audit Program (CAP) to determine your organization's compliance with the provisions of the Labor-Management Reporting and Disclosure Act of 1959 (LMRDA). As discussed during the exit interview with you, John Baker, Sr., Rosalee Strachan, and Joe Hoffman on May 15,2008, the following problems were disclosed during the CAP. The matters listed below are not an exhaustive list of all possible problem areas since the audit conducted was limited in scope.

Recordkeeping Violations

Title II of the LMRDA establishes certain reporting and recordkeeping requirements. Section 206 requires, among other things, that labor organizations maintain adequate records for at least five years by which each receipt and disbursement of funds, as well as all account balances, can be verified, explained, and clarified. As a general rule, labor organizations must maintain all records used or received in the course of union business.

For disbursements, this includes not only original bills, invoices, receipts, vouchers, and applicable resolutions, but also documentation showing the nature of the union business requiring the disbursement, the goods or services received, and the identity of the recipient(s) of the goods or services. In most instances, this documentation requirement can be satisfied with a sufficiently descriptive expense receipt or invoice. If an expense receipt is not sufficiently descriptive, a urior, officer or employee should write a note on it providiilg the additional information. For money it receives, the labor organization must keep atieast one record showing the date, amount, purpose, and source of that money. The labor organization must also retain bank records for all accounts.

The audit of the Great Lakes District CounciTs December 31 2UM records revealed the following recordkeeping violation:

Meal Expenses

The Great Lakes District Council must maintain itemized receipts provided by restaurants to officers and employees. These itemized receipts are necessary to determine if such disbursements are for union business purposes and to sufficiently fulfill the recordkeeping requirement of LMRDA Section 206. Great Lakes District Council's records of meal expenses did not always include written explanations of union business conducted or the names and titles of the persons incurring the restaurant charges. Union records of meal expenses must include written explanations of the union business conducted and the full names and titles of all persons who incurred the restaurant charges. Also, the records retained must identify the names of the restaurants where the officers or employees incurred meal expenses.

Based on your assurance that Great Lakes District Council will retain adequate documentation in the future, OLMS will take no further enforcement action at this time regarding the above violation.

Reporting Violations

The audit disclosed a violation of LMRDA Section 201(b), which requires labor organizations to file annual financial reports accurately disclosing their financial condition and operations. The Labor Organization Annual Report Form LM-3 filed by Great Lakes District Council for fiscal year ending December 31,2006, was deficient in the following areas:

1. Disposal of Property

Item 13 (During the reporting period did your organization acquire or dispose of any assets in any manner other than by purchase or sale?) should have been answered, "Yes," because the union disposed of a computer that was damaged by water from a leaking roof. The union must identify the type and value of any property disposed of in the additional information section of the LM report.

2. Disbursements to Officers

Great Lakes District Council did not include some reimbursements to officers totaling at least $17,301 in the amounts reported in Item 24 (All Officers and Disbursements to Officers). These reimbursements include all expenses related to the automobile lease and reimbursements for the daily lunches. It appears the union erroneously reported these payments in Item 48.

The union must report most direct disbursements to Great Lakes District Council officers and some indirect disbursements made on behalf of its officers in Item 24. A "direct disbursement" to an officer is a payment made to an officer in the form of cash, property, goods, services, or other things of value. See the instructions for Item 24 for a discussion of certain direct disbursements to officers that do not have to be reported in Item 24. An "indirect disbursement" to an officer is a payment to another party (including a credit card company) for cash, property, goods, services, or other things of value received by or on behalf of an officer. However, indirect disbursements for temporary lodging (such as a union check issued to a hotel) or for transportation by a public carrier (such as an airline) for an officer traveling on union business should be reported in Item 48 (Office and Administrative Expense).

3. Failure to File Bylaws

The audit disclosed a violation of LMRDA Section 201(a), which requires that a union submit a copy of its revised constitution and bylaws with its LM report when it makes changes to its constitution or bylaws. Great Lakes District Council amended its constitution and bylaws in 1995, but did not file a copy with its LM report for that year.

Great Lakes District Council has now filed a copy of its constitution and bylaws. Great Lakes District Council must file an amended Form LM-3 for fiscal year ending December 31, 2006, to correct the deficient items discussed above. I provided you with instructions and advised you that the reporting forms and instructions are available on the OLMS website (www.olms.dol.gov). The amended Form LM-3 should be submitted to this office at the above address as soon as possible, but not later than June 30,2008. Before filing, review the report thoroughly to be sure it is complete, accurate, and signed properly with original signatures.

Other Violations

The audit disclosed the following other violation(s):

Inadequate Bonding

The audit revealed a violation of LMRDA Section 502 (Bonding), which requires that union officers and employees be bonded for no less than 10 percent of the total funds those individuals or their predecessors handled during the preceding fiscal year.

The audit revealed that Great Lakes District Council's officers and employees were not bonded for the minimum amount required at the time of the audit. However, the union obtained adequate bonding coverage and provided evidence of this to OLMS during the audit. As a result, OLMS will take no further enforcement action regarding this issue.

Other Issues

The audit disclosed that several of the checks did not have proper signatures of both the president and secretary-treasurer. OLMS recommends in the future that both parties sign all checks before they are disbursed. Achieving this is an effective internal control of union funds.

I want to extend my personal appreciation to Great Lakes District Council for the cooperation and courtesy extended during this compliance audit. I strongly recommend that you make sure this letter and the compliance assistance materials provided to you are passed on to future officers. If we can provide any additional assistnace p lease do not hesitate to call.

Investigator
cc: Michael Baker, Secretary-Treasurer