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Final Rule: Form T-1 Trust Annual Report


The Office of Labor-Management Standards (OLMS) published, on March 6, 2020, a final rule establishing a Form T–1 Trust Annual Report that requires annual reporting by Form LM-2 filing labor organizations on financial information pertinent to “trusts in which a labor organization is interested” (“section 3(l) trusts”). See: https://www.govinfo.gov/content/pkg/FR-2020-03-06/pdf/2020-03958.pdf; see also the correction notice published on March 30, 2020. Historically, this information has largely gone unreported despite the significant impact such trusts have on a labor organization’s financial operations and their members’ interests. This rule is part of the Department’s continuing effort to better effectuate the reporting requirements of the Labor-Management Reporting and Disclosure Act (LMRDA).

The rule requires a labor organization with total annual receipts of $250,000 or more to file a Form T–1, under certain circumstances, for each section 3(l) trust, as defined by 29 U.S.C. § 402(l) of the LMRDA. Under this rule, the Form T-1 reporting requirements are triggered where the labor organization during the reporting period, either alone or in combination with other labor organizations, (1) selects or appoints the majority of the members of the trust’s governing board, or (2) contributes more than 50 percent of the trust’s receipts.  

Through transparency, the LMRDA’s various reporting provisions are designed to empower labor organization members by providing them the means to maintain democratic control over their labor organizations and ensure a proper accounting of labor organization funds. Labor organization members are better able to monitor their labor organization’s financial affairs and to make informed choices about the leadership of their labor organization and its direction when labor organizations disclose financial information as required by the LMRDA. By reviewing a labor organization’s financial reports, a member may ascertain the labor organization’s priorities and whether they are in accord with the member’s own priorities and those of fellow members. At the same time, this transparency promotes the labor organization’s own interests as a democratic institution and the interests of the public and the government. Furthermore, the LMRDA’s reporting and disclosure provisions operate to safeguard a labor organization’s funds from depletion by improper or illegal means. Timely and complete reporting helps to deter embezzlement or other improper use of such funds.

Effective Date: the rule is effective April 6, 2020; however, no labor organization is required to file a Form T-1 until 90 days after the conclusion of its first fiscal year that begins on or after June 4, 2020. A Form T-1 covers a trust’s most recently concluded fiscal year, and a Form T-1 is required only for trusts whose fiscal year begins on or after June 4, 2020. A trust’s “most recently concluded fiscal year” is the fiscal year ending on or before 90 days before the filing union’s fiscal year.

How to File: Filers must submit the Form T-1 electronically to OLMS via the OLMS Electronic Forms System (EFS). OLMS will make the electronic form available to filers beginning on July 1, 2021.

For Further Information: View the Form T-1 and Instructions, as well as the Form T-1 Compliance Tip, or contact Andrew R. Davis, Chief of the Division of Interpretations and Standards, Office of Labor-Management Standards, U.S. Department of Labor, 200 Constitution Avenue N.W., Room N-5609, Washington, DC 20210, olms-public@dol.gov, (202) 693-0123 (this is not a toll-free number), (800) 877-8339 (TTY/TDD).

 

Last Updated: 4-7-20