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OLMS News

Number: 05-04

March 25, 2004

Updated FAQs

The Department of Labor’s Office of Labor-Management Standards (OLMS) has posted additional information to the Revised Form LM-2 and Form T-1 FAQs.

Below are new questions that we have recently posted to our Web site broken out by subject heading. This is in addition to the most recent update on March 11, 2004 (OLMS News 03-04). Should you have any follow-up questions please feel free to submit them via e-mail to OLMS at: olms-public@dol.gov.

Thank you for subscribing to the OLMS Mailing List. We hope that you find this mailing informative.

Form LM-2

General Questions

Q. Is the "new" form and software available to file a report if the union is currently under trusteeship?

A. The Department expects labor organizations to file the revised Form LM-2 and the Form T-1 for fiscal years beginning on or after July 1, 2004. See 68 Fed. Reg. 58374-58358, American Federation of Labor and Congress of Indus. Organizations v. Chao, __ F. Supp. 2d __, 174 L.R.R.M. 2097, 2004 WL 101605 (D.D.C. 2004). No report is required to be filed on the revised Form LM-2 or the Form T-1 until September 28, 2005. Prior to this date, the old Form LM-2 may be used to file terminal and trusteeship reports.


Questions on Schedules 1 – 10

Q. The revised LM-2 requires unions to report the value of the ownership interest it has in its trusts in Schedules 5 and 7 and hence Statement A. Does DOL acknowledge, therefore, that the start of report period assets reported on the first LM-2 report filed on the revised form may be understandably different from the end of report period assets reported on the prior year's LM-2?

A. There should not be a considerable difference; but any difference should be noted in Item 69, Additional Information. Currently, if a separate report is filed for an investment subsidiary, the net assets are reported in Schedule 2, Other Investments. Likewise, net assets of non-investment subsidiaries are reported in Schedule 3. The value of trusts to be reported in Schedules 5 and 6 of the new reports are essentially the same as the net assets of the old subsidiaries.

Q. If an individual member is more than 90 days past due in dues totaling $5,000 or more, should that individual be reported in Schedule 1?

A. The $5,000 threshold should eliminate nearly all concerns about individual union dues appearing on the accounts receivable schedule. It would be unusual - and likely take years - for a union member to become $5,000 or more delinquent on union dues. If, however, a union member is more than 90 days delinquent on dues in excess of $5,000, that fact must be disclosed. The names of such members must be reported on Schedule 1.

Q. If an individual member's past due membership dues are forgiven, should that individual be reported in Schedule 1?

A. The names of individual members whose debts of $5,000 or more to the union are forgiven must be reported on Schedule 1.

Q. If an individual owes membership dues that are over 90 days past due and that individual is consequently dropped from membership and the dues owed are written off, should that individual be reported in Schedule 1?

A. The names of individual members whose debts of $5,000 or more to the union are forgiven must be reported on Schedule 1.

Q. If an employer owes the union more than $5,000 in dues deductions and the receivable is more than 90 days past due, but the union does not know the exact amount of the receivable because the employer has not provided a record of the total amount deducted, what should the union report in Schedule 1?

A. The union should report its best estimate of the amount of dues receivable from the employer. The union may assume that the employer deducted the amount authorized by the member necessary to fulfill the member's obligations to the union.

Q. If a subordinate affiliate owes the union more than $5,000 in per capita tax and the receivable is more than 90 days past due, but the union does not know the exact amount of the receivable because the subordinate has not provided a per capita tax report documenting the number of members (hence the amount owed), what should the union report in Schedule 1?

A. The union should report its best estimate of the amount of per capita receivable from the subordinate affiliate.

Q. Does Schedule 8 require itemized reporting of an account payable where $5,000 is 90 days past due, or does it just have to be a $5,000 or greater account payable any portion of which is 90 days past due?

A. If the total debt or account payable is $5,000 or more and any portion is over 90 days past due, the total account payable should be listed in Column (B) of Schedule 8, the amount 90 - 180 days past due should be listed in Column (C), and the amount over 180 days past due should be listed in Column (D).


Questions on Schedules 11 – 13

Q. With respect to estimated time percentages in Schedules 11 and 12, would it be acceptable for an officer or employee to systematically calculate his or her percentages for three or four weeks and then extrapolate those same percentages throughout the rest of the year?

A. Only good faith estimates are required, so this method would be acceptable if those three or four weeks are generally representative of how the individual spends his or her time during the entire year. However, the percentages should be modified during the course of the year if circumstances warrant.

Q. Should unions be concerned about making a good faith estimate that turns out to be not exact?

A. A good faith effort is all that is required. However, if you expect to have your estimate challenged, then you should maintain records to substantiate your good faith estimate. You should feel confident that you will be able to justify your actions if that becomes necessary. You may want to consider keeping related records.

Q. Do union officers have to document their activities during the year?

A. No. Union officers do not have to create such documentation. They may rely on their memory of events in good faith. If they choose to document their activities, however, they must retain those records.

Q. How should the time of a part-time officer be allocated?

A. This is a judgment call. Generally, as is the case with any officer, the allocation should be based on the work the officer does as part of his or her official duties-not for any volunteer work the officer may perform unrelated to the official duties.

Q. If an officer is also a committee member, how would the union report the percentage of time he/she works on the committee? The committee work is not part of the officer's duties and he is not paid for the committee work.

A. If the officer is not expected to participate in the committee as part of his official duties, then the time spent in those activities is not required to be reported in Line I of Schedule 11.

Q. If a local union president also works for an intermediate body but doesn't get paid by the intermediate body, how should his/her disbursements be allocated?

A. The local's Form LM-2 should only include percentages for the time that the president spends on activities that he performs as part of his official duties as local president.

Q. What is the pay threshold for reporting officers on Schedule 11?

A. There is no threshold for reporting officers on Schedule 11. All officers must be listed on Schedule 11 along with all payments to them. If an officer receives no salary or any other monies, either direct or indirect, then zeros would be shown for dollar amounts.

Q. If the union reports all the checks that are paid to an officer, wouldn't that mess up his/her W-2?

A. No. Only salary is reported on the W-2. The requirements for reporting disbursements in Schedule 11 have not changed from the comparable schedule on the old Form LM-2 (Schedule 9).

Q. If a few officers go to a negotiating luncheon, are the disbursements for the luncheon reported under negotiations or under those officers?

A. The disbursements should be reported in Schedule 11, allocated among the officers.

Q. How does OLMS define the term "common carrier" for purposes of Schedules 11 and 12?

A. The instructions use the term "public carrier." Generally, public carriers are regularly scheduled airplanes and trains, but not chartered airplanes or taxis.

Q. Should time spent in preparing Form LM-2 or Form T-1 be considered general overhead or union administration?

A. In allocating disbursements unions are expected to use a rule of reason and to be consistent in their allocation. Time spent in preparing Form LM-2 or Form T-1 would most appropriately be considered union administration.

Q. Payments to an assistant to an officer should be allocated the same as the person they are assisting. What if the assistant has other duties?

A. The portion of the time the assistant works for the officer should be allocated the same as the officer. The time spent on other duties should be allocated according to the nature of those duties. For example, if the assistant spends half of his/her time assisting the president and the rest doing general clerical work for the union, then half of the disbursements to the assistant should be allocated to categories following the allocation of the president, and the other half should be allocated to Schedule 18, General Overhead.

Q. If a member is called as a witness for an arbitration case and is paid lost time, would the union have to estimate what percent of that day's lost time was for arbitration?

A. A member who receives lost time payments is considered to be an employee for reporting purposes even if the union does not otherwise consider him/her to be an employee. If the only purpose of the payment to the member was for an arbitration case, then 100% of the payment was for representational activities. An employee need not be listed by name on Schedule 12 unless the employee received more than $10,000 in gross salaries, allowances, and other direct and indirect disbursements from the labor organization or from any affiliates or trusts of the labor organization.

Q. Does DOL expect each parent organization to report membership categories in Schedule 13 in as much detail as each of its subordinate affiliates?

A. The instructions for Schedule 13 state that "the categories of membership tracked by the reporting labor organization" should be entered in Column (A), so the parent organization should enter the categories that it tracks.


Questions on Schedules 14 - 19

Q. If a union pays a printing company to print a monthly newsletter, is the union required to analyze the content of the newsletter each month to determine what percentage of the payment to the printer should be reported in Schedules 15, 16, 17, 18 or 19? Would it be acceptable for the union to analyze the content of the newsletter for one month and then extrapolate those same percentages throughout the rest of the year?

A. The extrapolation method would be acceptable if the monthly newsletter selected is generally representative of the content of the newsletter throughout the year. However, the percentages should be modified for any month if circumstances warrant. A union may also choose to report the entire cost of the newsletter as general overhead or union administration if it wishes.

Q. Some members might earn enough to pay working dues of $5,000 or more. Would the union have to complete an Initial Itemization Page for each of those members?

A. No, dues are reported in Statement B, Item 36, which does not require itemization.

Q. How detailed do the "break outs" have to be for credit card charges?

A. Each payee should be listed separately. For example, in arranging a convention, the union may contract for arrangements to be made by an event coordinator, such as a hotel or travel agency, including the hiring and payment of subcontractors providing services. In this situation, the event coordinator would be the sole payee listed. If, however, the event coordinator is paid a fee for its services and subcontractors providing services are to be paid directly by the union, then the event coordinator and the individual subcontractors should be listed as payees.

Q. Regarding airline travel, how do I assign separate credit card charges to functional categories?

A. Your allocation should be based on a reasonable method and good judgment. For example, if a flight is for an employee of the union who will provide about 30% of his time on representational activities (assisting with contract negotiations) and 70% of is time on union administration (attending a convention), the allocation should be made to the schedules for these activities. If, however, the purpose of the trip was to attend the convention and while there the employee engaged in some incidental activities under other categories, the union could reasonably decide to report the airline charge entirely as union administration.

Q. When paying credit card charges, such as room rent charges on hotel bills and airline travel, does the union have to attribute the charges to union officers and employees by name?

A. No. You do not have to attribute indirect disbursements for temporary hotel lodging or transportation by public carrier to an officer or employee by name when the individual is in travel status away from his or her home and principal place of employment with the labor organization. You should allocate such disbursements to Schedules 15 through 19, as appropriate.

Q. Assume a union has three different invoices from the same caterer for catering three different meetings:

  • 1st meeting $1,700 - all representational - meeting took place October 1
  • 2nd meeting $1,700 - all representational - meeting took place October 15
  • 3rd meeting $1,700 - all representational - meeting took place November 1
  • The union's accounting software combines open invoices of the same vendor in the system and issues one check for $5,100. How does this get reported?

A. This is one disbursement of $5,100 and should be itemized on an initial itemization page for the caterer for Schedule 15, Representational Activities.

Q. If a federal union disburses funds to lobby Congress for the passage of legislation that will provide better job security and wages to its members, are those disbursements reportable in Schedule 15 or 16?

A. These disbursements should be reported in Schedule 16.

Q. If a union disburses funds to fight the implementation of the new LM-2 and T-1 reports, are those disbursements reportable in Schedule 15 or 16?

A. These disbursements should be reported in Schedule 16.

Q. On Schedule 17, what is a contribution and what would be considered time spent in this category?

A. Contributions include more than disbursements for charitable expenses. As an example, if the union sponsored a youth baseball team, then the percentage of time officers and employees spent in activities relating to the support of the team, arranging uniforms, etc would be allocated to Schedule 17 on Line I of Schedule 11 or 12. Other disbursements for the union's support of the team, such as payments for uniforms, would be reported in Schedule 17. If the union made total disbursements of $5,000 or more to a single payee for any disbursements reported in Schedule 17, it would complete an Initial Itemization Page for Schedule 17 for that payee.


Questions on Signatures

Q. Will it be possible for the two principal officers of a union to each digitally sign the same LM-2 from two separate locations? How?

A. Yes, the form can be e-mailed or transferred via removable media from one person to another for signature. The form cannot be altered after one of the two principal officers signs it unless the digital signature is removed.


Recordkeeping Questions

Q. Is OLMS requiring the use of one of the four software applications listed on your Web site?

A. OLMS is not endorsing any specific software. We mention the four applications on our Web site because they are widely available off-the-shelf applications.


New Form T-1 - Frequently Asked Questions

General Questions

Q. If a union's fiscal year ends November 30th, and the union's reportable trust's fiscal year ends December 31st, then when the union files its LM-2 report in February, which fiscal year of the trust should the T-1 be filed for? Should the T-1 be filed for the trust's fiscal year completed two months prior or 14 months prior?

A. The Form T-1 would be filed for the trust's fiscal year that ended 14 months previously. The reporting period for the Form T-1 is always for the fiscal year of the trust that ended during the fiscal year of the union.

Q. Does the union have to report all the trust's transactions or just those related to the union?

A. All of the trust's transactions must be disclosed on Form T-1.

Q. If a union has an interest in a trust, but not a controlling interest, and the trust will not provide information when asked, what should the union do?

A. The union must make a good faith effort to obtain the information. The union should document all efforts to obtain information from the trust. Keeping the trust's responses to all requests for information, for instance, would indicate a good faith effort by the union.

Q. What if a trust provides incorrect information to the local and the local reports it, will the local be held responsible?

A. The attestation that the officers sign states that the information is correct, "to the best of the undersigned's knowledge and belief." If at the time they submit the report they have no reasonable basis to doubt the information provided by the trust, they will have fulfilled their reporting requirement, even if the information later proves inaccurate. An officer who knowingly files inaccurate information, or continues to assert information known to be inaccurate, may be held responsible for violating the reporting laws. A labor organization required to file an amended report should select Item 3(a) on Form T-1.

Q. If a union files a T-1 for a trust and the trust is subsequently audited at which time it is determined that the figures that had been reported on the T-1 were slightly off (i.e., inaccurate), then is the union required to file an amended T-1?

A. Yes, an amended Form T-1 should be filed.

Q. Do all members of a union have the right (assuming just cause) to examine the records of the union's reportable trusts? What about members who, in no way, participate in the trust?

A. The right of a member to examine the records of a trust is not dependent upon the member's participation in the trust.


Questions on the Definition of a Trust

Q. Does a union have to file a Form T-1 for its credit union where members maintain vacation funds that are withheld pursuant to a collective bargaining agreement? No employer or union funds are contributed; all funds come from members' voluntary contributions.

A. A Form T-1 must be filed if the credit union meets the definition of a trust in which a labor organization is interested, and if it is a "significant" trust (if it had receipts of $250,000 or more during the fiscal year and if the union contributed $10,000 or more directly or indirectly during the fiscal year). The voluntary contributions of members for their vacation funds which are deposited into the credit union are not union contributions for purposes of determining whether the credit union is a significant trust; those deposits are the property of the members and are not union contributions to the credit union.

Q. Is a union checking account that is specifically designed for job targeting and is funded by union dues only, a trust in which the labor organization is interested?

A. A trust must be a separate entity, so a job targeting checking account would not meet the definition of a trust in which a labor organization is interested and should be reported on the union's Form LM-2.


Electronic Filing Questions

Q. If a union filing a T-1 is exercising the audit report option, how can the union file the audit report electronically?

A. The audit must be filed electronically in a pdf format as an attached to the T-1.


Questions on Exemptions from Trust Reporting and the Audit Option

Q. In lieu of filing a Form T-1, unions are allowed to file page one of the T-1 and attach an audit certified by an accountant that the trust's financial statements are presented fairly in conformity with GAAP or OCBOA. Does an Initial Itemization Page need to be completed for receipts/disbursements exceeding $10,000 since this is not required by either GAAP or OCBOA?

A. The instructions state that the audit used in lieu of Form T-1 must cover specific items to include "… a statement of trust receipts and disbursements aggregated by general sources and application, which must include the names of the parties with which the trust engaged in $10,000 or more of commerce and the total of the transactions with each party." Union filers must comply with the instructions, even if the filer perceives them to conflict with GAAP or OCBOA.

Q. If a union filing a T-1 is exercising the audit report option, and the answers to questions 16 through 20 would all be negative, does that negative information need to be contained in the audit report or is it sufficient for the audit report to be silent in that regard?

A. The negative information should be in the audit report. It should not be merely silent.

Q. If a union filing a T-1 is exercising the audit report option, does the audit report need to contain a listing of all officers and all direct and indirect disbursements to them and a listing of all employees who received more than $10,000 and all direct and indirect disbursements to them?

A. The audit report only needs to contain a listing of any officers and employees who received $10,000 or more in direct disbursements from the trust.

Q. If a union filing a T-1 is exercising the audit report option, how can the union file the audit report electronically?

A. The audit must be filed electronically in a pdf format as an attached to the T-1.

Don’t forget to bookmark the OLMS web site at http://www.olms.dol.gov for the latest news and information.

Last Updated: 03/26/04