Number: 07-10

November 30, 2010

OLMS News 07-10: Rescission of Form T–1, Trust Annual Report, and Change to LMRDA Coverage of Intermediate Unions

The Department of Labor’s Office of Labor-Management Standards (OLMS) will publish tomorrow, December 1, 2010, in the Federal Register a Final Rule rescinding the Form T-1, Trust Annual Report, and its implementing regulations, and altering an interpretation pertaining to the coverage of wholly public sector intermediate labor organizations under the Labor-Management Reporting and Disclosure Act (LMRDA).  The Form T-1, established by final rule in 2008, is an annual financial reporting form that labor unions were required to use to disclose the assets, liabilities, receipts, and disbursements of related organizations, called trusts.  Union trusts are organizations established and maintained primarily to provide benefits to union members. Common examples of trusts include credit unions, strike funds, redevelopment or investment groups, training funds, apprenticeship programs, building funds, and educational funds.  Under the 2008 final rule, the first Form T-1 reports would have been filed in March 2010.  However, the Department published a final rule in December 2009 that delayed the filing due date for one year for Form T-1 reports that were due in calendar year 2010.   

As part of the rescission of the Form T-1, OLMS is returning to the Form LM-2, Labor Organization Annual Report, reporting concerning entities that are wholly owned, controlled, and financed by a single union (i.e., “subsidiary organizations”).  Form LM-2 filers will have the option of consolidating the subsidiary’s financial information in the Form LM-2 report filed for the labor organization, or attaching a separate audit report completed by a certified public accountant.  The Department is also modifying subsidiary reporting on the Form LM-3, Labor Organization Annual Report, to be consistent with the Form LM-2. 

Additionally, in interpreting the definition of “labor organization” under the LMRDA, OLMS is returning to its long held view that the statute’s coverage does not encompass intermediate bodies that are wholly composed of public sector labor organizations.  Generally speaking, intermediate bodies are labor unions that are subordinate to an international union but higher in the typical three-tier union hierarchy than local unions.  Under the new rule, intermediate bodies that are wholly composed of public sector organizations are not covered under the statute.  In so doing, OLMS has reconsidered a definitional interpretation that it adopted in 2003, and now considers that its pre-2003 policy constitutes a better effectuation of the purposes of the statute.  

This rule, including the rescission of the Form T-1, will be effective January 1, 2011.  The changes made to the Form LM-2 and Form LM-3 reporting requirements will apply to reports required by labor organizations with fiscal years beginning on or after January 1, 2011.

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Last Updated: 11-30-10