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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
Milwaukee District Office
310 West Wisconsin Avenue, Suite 1160W
Milwaukee, WI 53203
(414) 297-1501 Fax: (414) 297-1685
July 26, 2011

Mr. Michael Baier, President
Communication Workers AFL-CIO Local 4640
2233 Birch Street
Eau Claire, WI 54703-3400

Case Number:

LM Number: 010908

Dear Mr. Baier:

This office has recently completed an audit of Communication Workers AFL-CIO Local 4640
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 Bookkeeper Kathleen Steffen and you on June 23, 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.

For disbursements, this includes not only original bills, invoices, receipts, vouchers, and
applicable resolutions, but also documentation showing the nature of the union business
requiring the disbursement, the goods or services received, and the identity of the recipient(s) of
the goods or services. In most instances, this documentation requirement can be satisfied with a
sufficiently descriptive expense receipt or invoice. If an expense receipt is not sufficiently
descriptive, a union officer or employee should write a note on it providing the additional
information. For money it receives, the labor organization must keep at least one record showing
the date, amount, purpose, and source of that money. The labor organization must also retain
bank records for all accounts.

The audit of Local 4640’s 2010 records revealed the following recordkeeping violations:

1. General Reimbursed Expenses and Credit Card Expenses

Mr. Michael Baier
August 2, 2011
Page 2 of 5

Local 4640 did not retain adequate documentation for credit card charges and reimbursed
expenses incurred by Vice President Christine Faschingbauer and you totaling at least
$423.00. For example, adequate supporting documentation was not retained for a $235.90
reimbursement paid to you for airfare to the national convention on June 4, 2010. Local
4640 only retained a copy of your personal credit card statement in support of the airfare
expense, which is not sufficient. As another example, adequate supporting documentation
was not retained for a $122.08 charge to the union credit card for Chief Steward Marsha
Flater’s lodging to attend benefit training in Hoffman Estates, IL on September 19, 2009,
which was paid by Local 4640 on October 25, 2009. The only supporting documentation
retained for this credit card charge was a printout of Ms. Flater’s reservation confirmation,
which is also not sufficient.

As noted above, labor organizations must retain original receipts, bills, and vouchers for all
disbursements. Itemized receipts provided by restaurants to officers and employees must be
retained. These itemized receipts are necessary to determine if such disbursements are for
union business purposes and to sufficiently fulfill the recordkeeping requirement of LMRDA
Section 206. Records of meal expenses must include written explanations of the union
business conducted and the full names and titles of all persons who incurred the restaurant
charges. Also, the records retained must identify the names of the restaurants where the
officers or employees incurred meal expenses. The president and treasurer (or corresponding
principal officers), who are required to sign your union’s LM report, are responsible for
properly maintaining union records.

2. Lost Wages
Local 4640 did not retain adequate documentation for lost wage reimbursement payments to
Newsletter Committee Member Kathryn Brenden, Secretary Renee Kolisch, and you totaling
at least $2,328.00. Records must be maintained in support of lost wage claims that identify
each date lost wages were incurred, the number of hours lost on each date, the applicable rate
of pay, and a description of the union business conducted. The audit found that Local 4640,
retained vouchers for lost wage reimbursements, but the vouchers were not sufficient in that
the dates that the lost wages were incurred were typically not recorded on the vouchers.

Based on your assurance that Local 4640 will retain adequate documentation in the future,
OLMS will take no further enforcement action at this time regarding the above violations.

Reporting Violations

The audit disclosed a violation of LMRDA Section 201(b), which requires labor organizations to
file annual financial reports accurately disclosing their financial condition and operations. The
Labor Organization Annual Report (Form LM-3) filed by Local 4640 for the fiscal year ended
September 30, 2010, was deficient in the following areas:

Mr. Michael Baier
August 2, 2011
Page 3 of 5

1. Disbursements to Officers
Local 4640 did not include some reimbursements and credit card expenses to Ms.
Faschingbauer and you totaling at least $1,649 in the amounts reported Item 24 (All Officers
and Disbursements to Officers). Local 4640’s credit card statements and expenses vouchers
for the audit year indicate that Ms. Faschingbauer and you incurred reimbursed expenses and
credit card expenses totaling $3,713. However, the total amounts reported in Column E
(Allowances and Other Disbursements) of Item 24 total only $2,064. It appears that some of
the payments were erroneously included in the amounts reported in Item 48 (Office &
Administrative Expenses) and Item 54 (Other Disbursements).

In addition, Local 4640 did not report the names of some officers and the total amounts of
payments to them or on their behalf in Item 24 and erroneously reported the names of some
individuals who are not officers of the union in Item 24. During the exit interview, Ms.
Steffen and you confirmed that Chief Stewards Rodger Gasper and Chris Mattson are
officers of Local 4640 and should have been reported in Item 24. Article VII, Section 2 of
Local 4640’s bylaws state that the members of the executive board consists of the president,
executive vice president, secretary, treasurer, and six chief stewards. The LMRDA defines
officer as “any constitutional officer, any person authorized to perform the functions of
president, vice president, secretary, treasurer, or other executive functions of a labor
organization, and any member of its executive board or similar governing body. All persons
who held office during the year must be reported in Item 24 regardless of whether they
received any payments from the union. During the exit interview, you also confirmed that
Ms. Steffen and Ms. Brenden were not members of the union’s executive board and are not
officers of Local 4640. Ms. Steffen and Ms. Brenden are considered employees for LM
reporting purposes, and the total payments to them, less deductions, are required to be
reported in Item 46 (To Employees).

Most direct disbursements to Local 4640 officers and some indirect disbursements made on
behalf of its officers must be reported in Item 24. A "direct disbursement" to an officer is a
payment made to an officer in the form of cash, property, goods, services, or other things of
value. See the instructions for Item 24 for a discussion of certain direct disbursements to
officers that do not have to be reported in Item 24. An "indirect disbursement" to an officer
is a payment to another party (including a credit card company) for cash, property, goods,
services, or other things of value received by or on behalf of an officer. However, indirect
disbursements for temporary lodging (such as a union check issued to a hotel) or for
transportation by a public carrier (such as an airline) for an officer traveling on union
business should be reported in Item 48 (Office and Administrative Expense).

2. Failure to File Bylaws
The audit disclosed a violation of LMRDA Section 201(a), which requires that a union
submit a copy of its revised constitution and bylaws with its LM report when it makes

Mr. Michael Baier
August 2, 2011
Page 4 of 5

changes to its constitution or bylaws. Local 4640 amended its constitution and bylaws in
2010, but did not file a copy with its LM report for that year.

Local 4640 has now filed a copy of its constitution and bylaws.

Other Issue

Lost Wage Policy

The audit revealed lost wage reimbursements to Secretary Renee Kolisch for 8.27 hours
totaling $186.90 for each of the following dates: October 6, 2009, December 3, 2009,
December 7, 2009, and December 8, 2009. During the initial interview, Ms. Steffen and you
stated that Local 4640 will pay lost wages to officers and employees if they lose wages from
their employer for working on union business, but this is not in the union’s written lost wage
policy, which can be found in Article XIII, Section 1 of Local 4640’s Local Rules. The lost
wage policy in Local 4640’s Local Rules identifies specific amounts of hours of lost wages
that the officers and employees are authorized to incur each month but does not set forth any
specific requirements that must be met in order for lost wages to be claimed. It does not
appear that Ms. Kolisch actually lost any wages on the dates noted above that she could have
been reimbursed for because AT&T payroll records indicated that she was either not
scheduled to work or worked her full shift at AT&T on those dates. Further review of Ms.
Kolisch’s AT&T payroll records for the audit year revealed that Ms. Kolisch took 14 hours
of unpaid leave for union business from AT&T totaling $321.50 that she did not submit to
Local 4640 for reimbursement.

During the exit interview, Ms. Steffen and you indicated that the lost wage claims submitted
by Ms. Kolisch for the dates noted above were inconsistent with Local 4640’s lost wage
policy in that it does not appear that Ms. Kolisch lost wages from AT&T, but you felt that
these lost wage claims were not a problem because Ms. Kolisch lost additional wages at
AT&T for working on union business that she did not submit to Local 4640 for
reimbursement, which she was entitled to claim. You believe Ms. Kolisch was working on
union business for those instances that she took time off from AT&T and did not submit a
lost wage claim to Local 4640 for reimbursement. You also stated that in the past there have
been a number of officers and employees that have donated time and have not submitted lost
wage claims to Local 4640 for reimbursement because the union has been short on money.

The audit confirmed that the policy is generally followed by Local 4640’s officers and
employees, except for the few instances noted above. I recommend that Local 4640 review
the written lost wage policy and make any necessary changes to the policy so that the policy
accurately describes Local 4640’s current practice regarding such disbursements.
Additionally, verification of lost wage claims submitted by union personnel by either
allowing the officers to compare lost wage claims to employer records or by requiring union
personnel to submit proof of lost wages claimed (for example, time cards) can be an effective
internal control for such payments.

Mr. Michael Baier
August 2, 2011
Page 5 of 5

I want to extend my personal appreciation to Communication Workers Local 4640 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.


Senior Investigator

cc: Ms. Renee Kolisch, Secretary