Number: 08-04

April 1, 2004

OLMS Posts New Revised Form LM-2 and Form T-1 Frequently Asked Questions

Revised Form LM-2 Frequently Asked Questions

Questions on Schedules 1 – 10

Q. If a member owes under $5,000 in past dues and the member drops out of the union before paying up and prior to the end of the fiscal year, is the member's account liquidated and not required to be reported?

A. It is the union's decision whether to liquidate the account or continue to carry it on its books. If the union liquidates the account, the amount liquidated should be included in Schedule 1, Column E, on Line 27, "Totals from all other accounts receivable." If the union continues to carry the account on its books, it should include the amount owed in Schedule 1, Column A, on Line 27.

Q. If a union's constitution and bylaws provides a member with a two-month grace period for dues payments and the member maintains his dues in arrears for two months, do the dues owed by the member constitute an account receivable for that member and does that member's account then have to be reported in Line 27?

A. Yes. Since the dues are overdue by two months, it is an account receivable and must be reported in Line 27 of Schedule 1.

Q. Why should information on trusts be reported here when it is reported on Form T-1?

A. The Form LM-2 filed by a union would not accurately and completely disclose the union's financial condition and operations without showing its share of the value of a trust in which it is interested. Also, Form T-1 is not filed for all trusts in which a labor organization is interested.

Q. What are the criteria for capitalization of furniture and equipment?

A. Unions may use any reasonable accounting standards to determine whether furniture should be expensed or depreciated.

Q. How do you put a value on a training fund? No unions own the apprenticeship fund.

A. If the union does not have any ownership interest in the fund there would be nothing to report in this schedule, but if the union does have an ownership interest in the assets of a non-investment trust, that amount should be reported in Schedule 7.

Q. Will unions have to account for accrued salaries, per capita, etc., i.e., if the fiscal year ends in the middle of the week and the union will owe two days of salary for the remainder of the week, but the week ends in the next fiscal year or per capita for December that is not paid until January?

A. No. Salaries, per capita, etc. are not considered accounts payable until the date the payments are due.

Questions on Schedules 11 – 13

Q. How do I classify the time of our officers on each paycheck in our accounting system?

A. It is not necessary to classify paychecks. The full amount of each paycheck should be allocated to the officer's name in Schedule 11, Column (D), Gross Salary. Then the total for the year in Column (H) will be allocated among Schedules 15 through 19 in accordance with the percentages entered in Line I for each officer.

Q. How will DOL audit and verify for accuracy the good-faith estimate of the allocation of officers' and employees' time?

A. Officers and employees have discretion in determining the allocation of their time. They must only make good faith estimates. No particular records are required to be created. However, if an officer does keep a calendar, for example, the calendar must be retained and made available for examination.

Q. What amount of time are the salary allocations based upon such as, a 40 hour work week? For example an officer usually works 60 hours per week but is paid for 40 hours per week so that the remaining 20 hours per week is the officer's own time, which he may spend in political activity. Would the officer not have to report any political activity?

A. If the activity is truly volunteer activity done on the officer's own time, it would not have to be reported here, but if the officer is expected to engage in the activity as part of the general duties of his or her office, the activity should be included in the time allocation.

Q. How are salary deductions over $5,000 to social services such as child support, to be reported?

A. All salary deductions to officers and employees should be reported in Line 8 of Schedule 11 and Line 9 of Schedule 12, respectively.

Q. If salary deductions for child support payments are required to be reported, would this violate a confidentiality agreement?

A. Salary deductions are not required to be itemized by individual, but are only reported in the aggregate for all officers and for all employees.

Q. If an officer dies, how does the union allocate his/her time?

A. The remaining officers will need to make a good faith estimate.

Q. If a membership category can only vote on its own CBA, should the union answer "Yes" in Column (C) of Schedule 13?

A. The instructions for Schedule 13 indicate that Column (C) should be answered "Yes" if the category of members is generally eligible to vote in all union elections held by the labor organization. If the only type of election in which a category of members can vote is on it own CBA, "Yes" should not be checked and the voting restrictions should be described in Item 69.

Questions on Schedules 14 - 19

Q. What date is to be listed for the aggregated amounts? Can the union list the end of the year or does it have to list each item of the aggregate with the date of the disbursement?

A. Aggregated disbursements are not required to be itemized. The only disbursements which must be itemized and for which a date must be listed are individual disbursements of $5,000 or more.

Q. If you have a lawyer that supports you in many different areas, is there a schedule for each category?

A. The disbursements to outside attorneys must be allocated among the appropriate items and schedules indicating the services they provided.

Q. Does the union have to allocate rent, telephone, utilities, etc. according to the five categories?

A. Generally these disbursements would be reported in Schedule 18, "General Overhead." But if any disbursements can be attributed to a specific activity, such as a phone bank set up to coordinate an organizing campaign, they should be included in the appropriate schedule for that activity.

Q. If an employee is typing a letter, must the union allocate his/her time by what he/she is typing?

A. A rule of reason should be used in allocating time. If a support staff member works in a department where all of his or her time can be allocated to a specific function, such as representational activity, that should be done. However, salary and other disbursements for general support staff can be reported in Schedule 18, General Overhead. If an employee supports a specific officer, however, the employee's salary should be allocated in the same way as the officer he/she supports.

Q. Which category does an officer put for the time spent learning about the new reporting requirements and completing the forms?

A. Schedule 19, "Union Administration."

Q. Where should a union report "sympathy" strike benefits for workers who are not its members?

A. Contributions in support of strikers in other unions should be reported in Schedule 17, Contributions, Gifts, and Grants.

Electronic Filing Questions

Q. How long does it take to get the electronic signature?

A. They can be applied for through the OLMS Web site and will be provided in approximately two weeks.

Q. Does the electronic signature have to be obtained in advance of filing the LM-2 form?

A. Yes.

Q. What if a local is in trusteeship? How does a trustee in Washington, D.C. get access to sign the LM-2 with his electronic signature?

A. The form can be e-mailed or sent via removable media for signature.

New Form T-1 - Frequently Asked Questions

General Questions

Q. How is a union supposed to legally access a Joint Apprenticeship Training Fund's financial records, which are needed to fill out the Form T-1?

A. Even though a trust is a separate entity from the reporting labor organization, it is reasonable to expect that the labor organization will have sufficient authority and/or influence to obtain the required information from a trust for which it must file a Form T-1 because (1) the labor organization had established the trust and/or selected one or more of the members of the trust's governing body, (2) a primary purpose of the trust is to provide benefits to the labor organization's members or their beneficiaries, and (3) the labor organization directly or indirectly made a substantial ($10,000 or more) contribution to the trust. The labor organization will be expected to take whatever steps it can to secure the necessary information. OLMS expects that in many instances the trust will prepare the Form T-1 and provide it to the labor organization(s) for filing. OLMS recognizes that there may be some situations when a labor organization will not have the leverage or authority to obtain trust records.
In that situation, the labor organization should contact OLMS, and provide evidence that it has made a good faith effort to obtain the information. OLMS may then contact the trust and attempt to assist the labor organization in obtaining the necessary records. A union that makes a good faith effort to obtain the information necessary to prepare a Form T-1 but is unsuccessful will not be penalized.

Q. Who is going to verify the information filed on the T-1? Why is the burden placed upon the union?

A. The president and treasurer of the reporting labor organization are, by statute, required to sign the report. They are verifying that the information in the report is true, correct, and complete to the best of their knowledge and belief.

Q. Who's going to audit Apprenticeship funds that are reported on T-1's?

A. Section 601(a) of the LMRDA gives the Secretary of Labor the authority to investigate to determine whether any person has violated or is about to violate any of the provisions of the Act, including the Title II reporting requirements.

Questions on the Definition of a Trust

Q. How do you define "direct" and "indirect" with respect to determining whether a trust provides benefits for union members? For example, is a national training center which doesn't provide any training, but supports local training centers with curriculum matters, etc. providing benefits? What if a trust is set up to pay for advertising promoting a particular industry in which the unionized members work?

A. A trust in which a labor organization is interested is a trust or other fund or organization (1) which was created or established by a labor organization, or one or more of the trustees or one or more members of the governing body of which is selected or appointed by a labor organization, and (2) a primary purpose of which is to provide benefits for the members of such labor organization or their beneficiaries. Examples of the kinds of entities that may be a "trust in which a labor organization is interested" include, but are not limited to: building corporations, redevelopment corporations, educational institutions, recreational facilities, banks, joint employer/union training and apprenticeship funds, job targeting funds, and benefit plans. Benefits include more than just direct monetary benefits and benefits of the kind described in the Employee Retirement Income Security Act (ERISA). Determinations as to whether the primary purpose of a specific trust is to provide benefits to members are made on a case-by-case basis. In the example above, the national training center would appear to satisfy the requirement that a trust's "primary purpose" be to provide benefits to members, in that the center provides support to local training centers that provide educational opportunities to members. Similarly, a trust used to promote an industry in order to increase job opportunities or conditions of employment, for example, for members would also meet this requirement.

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Last Updated: 04/02/04