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



U.S. Department of Labor
Office of Labor-Management Standards
San Francisco District Office
90 7th Street, Suite 2825
San Francisco, CA 94103
(415) 625-2661 Fax: (415) 625-2662
July 25, 2011

Mr. Michael Yarbrough, Business Manager
IBEW Local 302
1875 Arnold Drive
Martinez, CA 94553

Case Number:
LM Number: 036765

Dear Mr. Yarbrough:

This office has recently completed an audit of IBEW Local 302 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, Bookkeeper June Rogers, Enrolled Agent Deborah Dreher, and Accountant
Daniel Hall on July 15, 2011, 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.


Mr. Michael Yarbrough
August 2, 2011
Page 2 of 4

The audit of Local 302’s 2010 records revealed the following recordkeeping violation:

Disposition of Property

Local 302 did not maintain an inventory of 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.

The union must record in at least one record the date and amount received from each sale

of union hats, jackets and other items.

Based on your assurance that Local 302 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-2) filed by Local 302 for the fiscal year ended
December 31, 2010, was deficient in the following areas:

1. Acquire/Dispose of Property
Item 15 [LM-2] (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 gave away gifts during the year. The union must identify the type
and value of any property received or given away in the additional information section of
the LM report along with the identity of the recipient(s) or donor(s) of such property. The
union does not have to itemize every recipient of such giveaways by name. The union can
describe the recipients by broad categories if appropriate such as “members” or “new
retirees.” In addition, the union must report the cost, book value, and trade-in allowance
for assets that it traded in.

2. Disbursements to Officers and Employees
Local 302 did not include some reimbursements to officers and employees totaling at least
$304.05 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 Schedules 15 through 19.

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


Mr. Michael Yarbrough
August 2, 2011
Page 3 of 4

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.

3. Automobile Expenses
Local 302 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.

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.

4. Investments Reported as Cash
Local 302 improperly included the value of its investments as cash in Statement A (Assets
and Liabilities). For LM reporting purposes, OLMS does not consider investment accounts
to be cash. U.S. Treasury Securities should be reported in Item 25, while other investments
should be reported in Item 26. The purchase or redemption of investments is not
considered a transfer of cash from one account to another and, therefore, the local should
report these transactions as receipts or disbursements.


Mr. Michael Yarbrough
August 2, 2011
Page 4 of 4

5. 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. Local 302 amended its constitution and bylaws in
2009, but did not file a copy with its LM report for that year.

Local 302 has now filed a copy of its constitution and bylaws.

I am not requiring that Local 302 file an amended LM report for 2010 to correct the deficient
items, but Local 302 has agreed to properly report the deficient items on all future reports it files
with OLMS.

The audit disclosed the following other violation:

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.

Local 302’s officers and employees are currently bonded for $400,000, but they must be
bonded for at least $500,000. Local 302 should obtain adequate bonding coverage for its
officers and employees immediately. Please provide proof of bonding coverage to this
office as soon as possible, but not later than August 25, 2011.

I want to extend my personal appreciation to IBEW Local 302 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:
Ms. June Rogers, Bookkeeper
Ms. Deborah Dreher, Enrolled Agent
Mr. Daniel Hall, President