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Office of Labor-Management Standards
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Office of Labor-Management Standards (OLMS)

U.S. Department of Labor
Office of Labor-Management Standards
Los Angeles District Office
915 Wilshire Boulevard, Suite 910
Los Angeles, CA 90017
(213) 534-6405 Fax: (213) 534-6413
April 20, 2011

Ms. Sue Potts, Financial Secretary Treasurer/Assistant B.A.
Amalgamated Transit Union Local 1704
505 North Arrowhead Ave.
Suite 500A
San Bernardino, CA 92401

LM Number: 543960
Case Number:

Dear Ms. Potts:

This office has recently completed an audit of Amalgamated Transit Union Local 1704 under the
Compliance Audit Program (CAP) to determine your organization’s compliance with the
provisions of the Labor-Management Reporting and Disclosure Act of 1959 (LMRDA). As
discussed during the exit interview with Financial Secretary Treasurer Sue Potts on April 13,
2011, the following problems were disclosed during the CAP. The matters listed below are not
an exhaustive list of all possible problem areas since the audit conducted was limited in scope.

Recordkeeping Violations

Title II of the LMRDA establishes certain reporting and recordkeeping requirements. Section
206 requires, among other things, that labor organizations maintain adequate records for at least
five years by which each receipt and disbursement of funds, as well as all account balances, can
be verified, explained and clarified. As a general rule, labor organizations must maintain all
records used or received in the course of union business.

The audit disclosed a violation of the LMRDA Section 206, by failing to maintain the following
records during the audit period:

1. Information not Recorded in Meeting Minutes
Local 1704 failed to maintain general membership meeting minutes for the
months of April through June 2010 as well as executive board meeting minutes
for the months of March through June 2010. Between March 1, 2010 and June 30,
2010, Local 1704 authorized and disbursed approximately $58,691.40 worth of
individual expenditures in excess of $1,500 each. Although the authorized
expenditures consisted of general operating expenses such as salary payments,
taxes, legal fees and rent, the Local’s failure to maintain the meeting minutes
resulted in the disbursements not being properly documented.

Ms. Sue Potts
April 20, 2011
Page 2 of 3

2. General Disbursements
Local 1704 did not retain adequate documentation for disbursements by failing to
maintain the majority of all original bank statements, which included the
cancelled checks. In addition, Local 1704 failed to retain backup documentation
for debit card transactions totaling approximately $3,652.94 during the months of
August 2009, April 2010 and June 2010, such as August 19, 2009 debit card
transaction payable to Costco in the amount of $156.36. This and other debit card
transactions were not supported by receipts and or invoices.

As noted above, labor organizations must retain original receipts, bills, and vouchers for all
disbursements. The president and treasurer (or corresponding principal officers) of your union,
who are required to sign your union’s LM report, are responsible for properly maintaining union

Based on your assurance that Local 1704 will retain adequate documentation in the future,
OLMS will take no further enforcement action at this time regarding the above violations.

Other Violations
Inadequate Bonding

The audit revealed a violation of the LMRDA Section 502 (a)-Bonding, which requires that
union officers and employees be bonded for no less than 10 percent of the total funds those
individuals or their predecessors handled during the preceding fiscal year. Local 1704’s officers
and employees are currently bonded for $30,000, but they must be bonded for at least
$46,275.22. Local 1704 is in the process of obtaining adequate bonding coverage for its officers
and employees. Please provide proof of bonding coverage to this office as soon as possible, but
no later than May 18, 2011.

Other Issues

Salaries-Lost Time and Expense Policy (Article IV)

As was discussed during the exit interview with Sue Potts concerning lost time payments to
former President Dale Moore, the audit revealed that Article IV (F) of Local 1704’s Constitution
and Bylaws does not clearly address the proper method of compensation for officers terminated
from the employer but able to maintain their officer position pending the resolution of all appeal
remedies available under the grievance process. OLMS recommends that the union adopt written
guidelines concerning such matters.

Ms. Sue Potts
April 20, 2011
Page 3 of 3

I want to extend my personal appreciation to Amalgamated Transit Union Local 1704 for the
cooperation and courtesy extended during this compliance audit. I strongly recommend that you
make sure this letter and the compliance assistance materials provided to you are passed on to
future officers. If we can provide any additional assistance, please do not hesitate to call.


Alan Weiss
District Director

cc: Mr. Jeff Caldwell, President