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Office of Labor-Management Standards (OLMS)

U.S. Department of Labor Employment Standards Administration
Office of Labor-Management Standards
Houston Resident Investigative Office
2320 La Branch Street
Room 1 107
Houston, TX 77004
(713) 718-3755 Fax: (71 3)718-3757

June 9, 2008

Mr. Russell C. Shelton, Business Manager
Plumbers AFL-CIO
Local 286
814 Airport Blvd.
Austin, Texas 78702
LM File Number 002-035
Case Number: -

Dear Mr. Shelton:

This office has recently completed an audit of Plumbers Local 286 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 on May 9,2008, 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 union officer or employee should write a note on it providing the additional information. For money it receives, the labor organization must keep at least one record showing the date, amount, purpose, and source of that money. The labor organization must also retain bank records for all accounts.

The audit of Local 286's 2007 records revealed the following recordkeeping violations:

1. Meal Expenses

Local 286 did not require officers and employees to submit sufficiently itemized receipts for meal expenses totaling at least $500. The union must maintain
itemized receipts provided by restaurants to officers and employees. These itemized receipts are necessary to determine if such disbursements are for union
business purposes and to sufficiently fulfill the recordkeeping requirement of LMRDA Section 206.

Local 286 records of meal expenses did not include written explanations of union business conducted or the names and titles of the persons incurring the restaurant
charges. For example, the meal receipts provided by you and Business Agent Antonio E. Galvan did not list anything on the receipt itself. The credit card
statements were annotated as "Lunch with Contractor" or "Lunch with Member", but there was no reference to the specific contractor or member or the union
business. 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.

2. Union Owned/Leased Vehicles

The union did not maintain records necessary to verify the accuracy of the information reported in Schedules 11 (All Officers and Disbursements to Officers)
and 12 (Disbursements to Employees) of the LM-2. Local 286 incurred expenses totaling at least $500 for automobiles during 2007. However, Local 286 did not maintain records documenting business versus personal use of the union vehicles.

The LM-2 instructions include specific rules for the reporting of automobile expenses. The union must report operating and maintenance costs for each of its
owned or leased vehicles in Schedules 11 and 12 of the LM-2, allocated to the officer or employee to whom each vehicle is assigned. For each trip they take using a union owned or leased vehicle, officers and employees must maintain mileage logs that show the date, number of miles driven, whether the trip was business or personal, and, if business, the purpose of the trip.

3. Disposition of Property

Local 286 did not maintain an inventory of hats, jackets, and other property it purchased, sold, or gave away. The union must report the value of any union
property on hand at the beginning and end of each year in Item 28 of the LM-2. The union must retain an inventory or similar record of property on hand to
verify, clarify, and explain the information that must be reported in Item 28.

4. Lack of Salary Authorization

Local 286 did not maintain records to verify that the salaries reported in Schedules 11 (All Officers and Disbursements to Officers) and 12 (Disbursements to
Employees) of the LM-2 was the authorized amount and therefore was correctly reported. The union must keep a record, such as meeting minutes, to show the
current salary authorized by the entity or individual in the union with the authority to establish salaries.

Based on your assurance that Local 286 will retain adequate documentation in the future, OLMS will take no further enforcement action at this time regarding the above violations.

Reporting- Violations

The audit disclosed a violation of LMRDA Section 201(b), which requires labor organizations to file annual financial reports accurately disclosing their financial
condition and operations. The Labor Organization Annual Report Form LM-2 filed by Local 286 for fiscal year ending May 31,2007, was deficient in the following areas:

1. Disbursements to Officers and Employees (LM-2)

Local 286 did not include some reimbursements to officers and employees / payments to officers and employees totaling at least $900 in Schedule 11 (All
Officers and Disbursements to Officers) and Schedule 12 (Disbursements to Employees). It appears that the local erroneously reported these payments in
Schedule 18 - General Overhead. The union must report in Column F of Schedules 11 and 12 (Disbursements for Official Business) direct disbursements to officers and employees for reimbursement of expenses they incurred while conducting union business. In addition, the union must report in Column F of Schedules 11 and 12 indirect disbursements made to another party (such as a credit card company) for business expenses union personnel incur. However, the union must report in Schedules 15 through 19 indirect disbursements for business expenses union personnel incur for transportation by public carrier (such as an airline) and for temporary lodging expenses while traveling on union business. The union must report in Column G (Other Disbursements) of Schedules 11 and 12 any direct or indirect disbursements to union personnel for expenses not necessary for conducting union business.

2. Automobile Expenses (LM-2)

Local 286 did not include in the amounts reported in Schedule 11 (All Officers and Disbursements to Officers) and Schedule 12 (Disbursements to Employees)
disbursements for the operation and maintenance of union automobiles totaling at least $500.

The LM-2 instructions provide two methods for reporting automobile-related expenses. The union must report in Schedules 11 and 12 direct and indirect
disbursements for the operation and maintenance of union owned and leased vehicles and the operation and maintenance of vehicles owned by union personnel
(including gasoline, repairs, and insurance). The union may divide the expenses and report them in Columns F and G based on miles driven for union business
(supported by mileage logs) compared with miles driven for personal use. Alternatively, rather than allocating the expenses between Columns F and G, if 50
percent or more of an officer's or an employee's use of a vehicle was for official business, the union may report all of the expenses relative to the vehicle assigned
to the officer or employee in Column F of Schedule 11 or 12 with an explanation in Item 69 (Additional Information) that the officer or employee used the vehicle part of the time for personal business. Similarly, if a vehicle assigned to an officer or employee was used less than 50 percent of the time for business, all of the expenses relative to that vehicle may be reported in Column G with an explanation in Item 69 that the officer or employee used the vehicle partly for official business.

Local 286 must file an amended Form LM-2 for fiscal year ending May 31,2007, to correct the deficient items discussed above. I explained to you the filing procedures and the availability of filing software on the OLMS website (www.olms.dol.gov). The amended Form LM-2 must be electronically filed as soon as possible, but not later than June 12,2008. Before filing, review the report thoroughly to be sure it is complete and accurate, and properly signed with electronic signatures.

Other Violations

The audit disclosed the following other violation:

Inadequate Bonding

The audit revealed a violation of LNIRDA 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 Local 286's officers and employees were not bonded for the minimum amount required for the audit period. 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.

I want to extend my personal appreciation to Plumbers Local 286 for the cooperation and courtesy extended during this compliance audit. I strongly recommend that you make sure this letter and the compliance assistance materials provided to you are passed on to future officers. If we can provide any additional assistance, please do not hesitate to call.

Sincerely,
Investigator
cc: Victor Schaatt, President