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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
Cleveland District Office
1240 East 9th Street, Suite 831
Cleveland, OH 44199
(216) 357-5455 Fax: (216) 357-5425
May 17, 2011

Mr. Gary M. Bretz, Business Manager
Laborers Local 574
1585 Harding Highway East
Marion, OH 43302

Case Number:
LM Number: 013-320

Dear Mr. Bretz:

This office has recently completed an audit of Laborers Local 574 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 you and Recording Secretary Brenda Sand on May 5, 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.

Record Keeping 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 574’s 2009 records revealed the following recordkeeping violations:

1. General Receipts and Disbursement Records

Mr. Gary M. Bretz
May 17, 2011
Page 2 of 3

Local 574 did not retain adequate documentation for reimbursed expenses and credit card
expenses incurred by union officers and employees totaling at least $479.54. For example,
credit card purchases of at least $479.54 were made by the union in April 2009, but
individual receipts for all of the items purchased were not in the union’s records.

As previously 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 records.

2. Disposition of Property
Local 574 did not maintain an inventory of T-shirts, caps, and other property it purchased,
sold, or gave away. The union must report the value of any union property on hand at the
beginning and end of each year in Item 28 (Other Assets) of the LM-2. The union must
retain an inventory or similar record of property on hand to verify, clarify, and explain the
information that must be reported in Item 28.

If the union sells such items, the union must record in at least one record the date and

amount received from each sale of T-shirts and other items.

Based on your assurance that Local 574 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-2) filed by Local 574 for fiscal year ending
December 31, 2009, was deficient in the following areas:

1. Disbursements to Officers/Employees
Local 574 erroneously credited and/or failed to credit some reimbursements to officers and
employees/payments to officers and employees totaling at least $4,870 in Schedule 11 (All
Officers and Disbursements to Officers) and Schedule 12 (Disbursements to Employees).
It appears that the local erroneously ascribed some payments to officers or employees other
than the ones whose names the payments should have been under.

The union must report in Column F of Schedules 11 and 12 (Disbursements for Official
Business) direct disbursements to officers and employees for reimbursement of expenses
they incurred while conducting union business. In addition, the union must report in
Column F of Schedules 11 and 12 indirect disbursements made to another party (such as a
credit card company) for business expenses union personnel incur. However, the union
must report in Schedules 15 through 19 indirect disbursements for business expenses union

Mr. Gary M. Bretz
May 17, 2011
Page 3 of 3

personnel incur for transportation by public carrier (such as an airline) and for temporary
lodging expenses while traveling on union business. The union must report in Column G
(Other Disbursements) of Schedules 11 and 12 any direct or indirect disbursements to
union personnel for expenses not necessary for conducting union business.

2. Acquire/Dispose of Property
Item 15 (During the reporting period did your organization acquire or dispose of any assets
in any manner other than by purchase or sale?) should have been answered, “Yes,” because
the union gave away caps totaling more than $1,249.96 during the year. The union must
identify the type and value of any property received or given away in the additional
information section of the LM report along with the identity of the recipient(s) or donor(s)
of such property. The union does not have to itemize every recipient of such giveaways by
name. The union can describe the recipients by broad categories if appropriate such as
“members” or “new retirees.” In addition, the union must report the cost, book value, and
trade-in allowance for assets that it traded in.

I am not requiring that Local 574 file an amended LM report for 2009 to correct the deficient
items, but Local 574 has agreed to properly report the deficient items on all future reports it files
with OLMS.

Other Issues

The audit revealed that Local 574 permits officers and employees to use union credit cards to pay
for personal expenses. Although the local has no knowledge of anyone ever utilizing this policy,
OLMS does not recommend policies that allow personnel to make personal purchases with union
credit cards because this may lead to misuse of union funds. If the union continues to sanction
such a policy, it should establish specific guidelines and procedures for the authorization and
repayment of such use of the union credit cards.

I want to extend my personal appreciation to Laborers Local 574 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: Mr. Jeffrey L. Sparks, Laborers Local 574 President