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
March 13, 2014
Mr. Reynaldo Gomez, Secretary Treasurer
Food and Commercial Workers, Local 1
12749 Norwalk Blvd, Suite 204
Norwalk, CA 90650
Case Number: 520-6000507
LM Number: 043640
Dear Mr. Gomez:
This office has recently completed an audit of Food and Commercial Workers, Local 1 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 on February 19, 2014, 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.
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 1’s FYE 2013 records revealed the following recordkeeping violations:
1. General Disbursements
Local 1 did not retain adequate documentation for disbursements totaling $1,000. A review of financial records revealed there was no supporting documentation for monthly $65 payments issued to Secretary Treasurer Gomez for janitorial services rendered to the union. In addition, there was no supporting documentation for an electronic withdrawal of $220 from the union’s checking account made on September 28, 2012.
As noted above, labor organizations must retain original receipts, bills, invoices and vouchers for all disbursements. The president and treasurer of your union, who are required to sign your union’s LM report, are responsible for properly maintaining union records.
2. Lack of Salary Authorization
Local 1 did not maintain records to verify that the salaries reported in Item 24 (All Officer and Disbursements to Officers) of the LM-3 was the authorized amount and therefore was correctly reported. The union must keep a record, such as meeting minutes, to show the current salary authorized by the entity or individual in the union with the authority to establish salaries.
Based on your assurance that Local 1 will retain adequate documentation in the future, OLMS will take no further enforcement action at this time regarding the above 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 (FormLM-3) filed by Local 1 for the fiscal year ended June 30, 2013 was deficient in that:
1. Disbursements to Officers
Local 1 did not include salary payments to Secretary Treasurer Gomez totaling at least $2,798 in the amounts reported in Item 24 (All Officers and Disbursements to Officers). It appears the union erroneously reported these payments in Item 46, cash disbursements to employees.
The union must report most direct disbursements to Local 1 officers and some indirect disbursements made on behalf of its officers 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 changes to its constitution or bylaws. Local 1 amended its constitution and bylaws in August 12, 2004, but did not file a copy with its LM report for that year.
Local 1 has now filed a copy of its constitution and bylaws.
I am not requiring that Local 1 file an amended LM report for fiscal year 2013 to correct the deficient items, but Local 1 has agreed to properly report the deficient items on all future reports it files with OLMS.
Signing Blank Checks
During the audit, you advised that President Nuno signs blank checks. Your union’s bylaws require that all checks be signed by the president and treasurer. The two signature requirement is an effective internal control of union funds. Its purpose is to attest to the authenticity of a completed document already signed. However, signing a blank check in advance does not attest to the authenticity of a completed check, and negates the purpose of the two signature requirement. OLMS recommends that Local 1 review these procedures to improve internal control of unions.
I want to extend my personal appreciation to Food and Commercial Workers, Local 1 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 me at (213) 534-6405 extension 222.
cc: Mr. Victor Nuno, President