U.S. Department of Labor Announces Final Rule To Increase Financial Transparency for Unions
WASHINGTON, DC – The U.S. Department of Labor’s Office of Labor-Management Standards (OLMS) today announced a final rule to establish the “Form T-1” Trust Annual Report that requires unions to file annual financial reports concerning their trusts. These annual reports will increase the financial transparency of unions and ensure that members have access to information about their union’s financial transactions. The Federal Register will publish the final rule on March 6, 2020.
The final 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 trust of the type defined by section 3(l) of the Labor-Management Reporting and Disclosure Act (LMRDA). Such labor organizations trigger the Form T-1 reporting requirements if, during the reporting period, the labor organization—either alone or in combination with other labor organizations—selects or appoints the majority of the members of the trust’s governing board; or contributes more than 50 percent of the trust’s receipts. Any contributions in accord with a collective bargaining agreement (CBA) shall be considered the labor organization’s contributions.
To reduce the reporting burden on labor organizations, the department is allowing a union to voluntarily file the Form T-1 on behalf of one or more other unions where each of those unions would otherwise be obligated to individually file for the same trust.
The final rule notes the recent convictions of United Auto Workers’ and Fiat Chrysler Automobiles’ officials for criminal acts involving funds meant to operate a training center for union members. Had the Form T-1 been in place, these acts would likely have been discovered earlier. The Form T-1 might also have deterred the perpetrators’ actions entirely.
“Full disclosure of trust operations gives workers the information they need to make informed choices, and more information means better decisions,” said Director of the Office of Labor-Management Standards Arthur Rosenfeld. “This rule will increase financial transparency, encourage responsible union democracy and foster accountability of union officials.”
Union members have long been denied important information about union funds that are directed to other entities, such as joint funds administered by a union and an employer related to a CBA, educational or training institutions and redevelopment or investment groups. The Form T-1 is necessary to close this gap, prevent certain trusts from being used to evade the LMRDA’s Title II reporting requirements, and provide union members with information about financial transactions involving a significant amount of money related to the union’s overall financial operations and other reportable transactions. Trust reporting is necessary to ensure, as intended by Congress, the full and comprehensive reporting of a union’s financial condition and operations, including a full accounting to union members. Trust reporting is also necessary to prevent circumvention and evasion of the reporting requirements imposed on officers and employees of unions and on employers.
The final rule will help bring the reporting requirements for labor organizations and their trusts in line with contemporary expectations for the disclosure of financial information. Labor organization members – no less than consumers, citizens or creditors – expect access to relevant and useful information to make informed decisions on investments, careers and retirement and to exercise legally guaranteed rights. Millions of private and federal sector union members will have increased access to important financial information with the final rule’s implementation.
OLMS administers and enforces provisions of the Labor-Management Reporting and Disclosure Act of 1959 (LMRDA). The LMRDA promotes union democracy and financial integrity in private sector labor unions, and transparency for labor unions and their officials, employers and others. OLMS also administers provisions of the Civil Service Reform Act of 1978 and the Foreign Service Act of 1980, which extend comparable protections to federal sector labor unions.
The mission of the Department of Labor is to foster, promote and develop the welfare of the wage earners, job seekers and retirees of the United States; improve working conditions; advance opportunities for profitable employment; and assure work-related benefits and rights.