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Office of Labor-Management Standards (OLMS)

FORM LM-10 — Employer Reports Frequently Asked Questions

The following series of questions and answers responds to inquiries received by the Department of Labor on the Form LM-10 (Employer Report), a reporting and disclosure form issued by the Department of Labor pursuant to the Labor-Management Reporting and Disclosure Act of 1959 (LMRDA).

This guidance describes the Form LM-10 requirements, provides for a de minimis exemption that excludes from reporting payments of $250 or less, explains the steps employers should take if they have not maintained records relevant to the Form LM-10, and establishes a grace period during which employers will not have to file delinquent reports for past reporting years. The guidance is effective for fiscal years beginning on or after January 1, 2005. This guidance is intended as compliance assistance. It is not legal advice, and should not be relied upon as legal advice. If you have additional questions about the Form LM-10 or your reporting obligations, you may wish to e-mail the Office of Labor-Management Standards (OLMS) directly at olms-public@dol.gov. If you require legal advice, you may wish to consult a private attorney.


A. Coverage of Form LM-10

Q1. Who has to file a Form LM-10?

A1. Employers must file Form LM-10 annual reports to disclose certain specified financial dealings, subject to a $250 de minimis exemption discussed in question 50 below, with a union or officer, agent, shop steward, employee, or other representative of a union (collectively referred to as “union officials”). Under the Labor-Management Reporting and Disclosure Act (LMRDA), an “employer” is defined as:

Any employer or any group or association of employers engaged in an industry affecting commerce:

  • which is, with respect to employees engaged in an industry affecting commerce, an employer within the meaning of any law of the United States relating to the employment of any employees, or
  • which may deal with any labor organization concerning grievances, labor disputes, wages, rates of pay, hours of employment, or conditions of work, or
  • any person acting directly or indirectly as an employer or as an agent of an employer in relation to an employee,
  • but does not include the United States or any corporation wholly owned by the Government of the United States or any State or political subdivision thereof.

Except in rare cases, every private sector business or organization within the United States that has one or more employees is considered an employer under this definition, and thus may have reporting obligations under the LMRDA.

Q2. Is a business always considered an employer for purposes of Form LM-10 reporting or only if it actually has employees?

A2. Ordinarily, to be an “employer,” a business must have employees or must be acting for an employer. The LMRDA defines an “employer” in part as “any employer . . . which is, with respect to employees engaged in an industry affecting commerce, an employer within the meaning of any law of the United States relating to the employment of employees.” 29 U.S.C. § 402(e); see also 29 U.S.C. § 402(f). A business with one or more employees is an “employer” under the LMRDA for Form LM-10 reporting purposes.

The definition of “employer” also includes “any person acting directly or indirectly as an employer or as an agent of an employer in relation to an employee.” 29 U.S.C. § 402(e); see also 29 U.S.C. § 402(f). For example, an individual hired by a large financial services firm to generate new business who provides a union official with season tickets to a sporting event would be required to file a Form LM-10, even if the individual has no employees. In another example, the owner of a printing company, an employer, enlists a prospective business partner, who is not an employer, to lend his vacation home to a union official as part of an effort to generate a business relationship between the official's union and the printing company. The prospective business partner would be required to file a Form LM-10. (See Form LM-10 Frequently Asked Questions (“FAQ”), Question 56, for the reporting obligation of an employer who is reimbursed by another employer.) A business that has no employees and is not acting for an employer has no Form LM-10 reporting obligations.

Q3. Are Form LM-10 reports required from attorneys who are designated legal counsel?

A3. Yes. Reports are required if the lawyer is an employer and makes a reportable payment.

Any entity that is an “employer” under the LMRDA and makes “any payment or loan, direct or indirect, of money or other thing of value (including reimbursed expenses), or any promise or agreement therefor, to any labor organization or officer, agent, shop steward, or other representative of a labor organization, or employee of any labor organization” (collectively referred to as “union officials”) must file a report, unless a specific exemption is applicable. 29 U.S.C. § 433. Lawyers who are designated legal counsel for a union will in most, if not all, cases meet this definition. Designated legal counsel, i.e., lawyers recommended by the union to its members for representation in workers' compensation, personal injury, or other matters, have a relationship with the union by virtue of this designation. Thus, if the lawyer provides a gift, payment, loan, or other thing of value to a union official, a report is required even where the lawyer does not have a direct commercial relationship with the labor union of the official to whom it provided a gift, payment or a loan. Union members have the right to evaluate whether a lawyer's presence on a list of designated legal counsel is based on merit rather than a financial relationship between the lawyer and union officials. Also see FAQ, Question 10.

Q3(A). Are payments for services, such as legal services provided by a lawyer to a union official, exempt from reporting because they are regular marketplace transactions?

A3(A). Generally, yes. A lawyer that employs employees is an employer under the LMRDA, and categories of employers are subject to the Form LM-10 reporting requirements. See FAQ, Questions 1-2 (who is an employer), 6 (employers subject to the Form LM-10), 3 & 10 (discussing designated legal counsel). Section 203(a) of the LMRDA requires employers to report certain payments to labor organizations and their officials, subject to multiple exceptions. 29 U.S.C. § 433. One of these exceptions exempts employers from disclosing "payments of the kind referred to in section 302(c) “of the Labor Management Relations Act. Section 302(c) excludes, among other things, payments "with respect to the sale or purchase of an article or commodity at the prevailing market price in the regular course of business.” 29 U.S.C. § 186(c).

The Department considers the purchase of legal services as a payment of the kind referred to in section 302(c). Payments relating to the purchase of legal services are, therefore, not reportable if the purchase is made at the prevailing market price in the regular course of business. No report would be due from a law firm that provides a union official with a contract for legal services the firm regularly offers the public and on the same terms it provides similarly situated individuals who are not union officials. If any of the terms of the agreement are altered because of the official's role in the union, however, the exemption does not apply.

A contingency fee agreement may require a lawyer to pay for the costs of the litigation in return for a right to a percentage of any recovery received by the client-union official. Under these circumstances, all the litigation expenses made by the lawyer are with respect to the purchase of the legal services and the sale by the union official of conditional right to a portion of his or her recovery. The litigation expenses are thus not reportable.

In cases in which the exemption does not apply because the purchase of the legal services was not made at the prevailing market price or was not made in the regular course of business, the lawyer must report any agreement, payments provided to the union official, as well as expenditures made on behalf of the official, including litigation-related expenses fronted by the lawyer. The following guidance is intended to assist lawyers or law firms in reporting such payments and expenditures.

The following guidance on completing the Form LM-10 is applicable only for reports in which Item 8a is answered “yes.” Item 8a concerns payments to any labor organization or official of a labor organization. The guidance is not applicable to reports in which any of Items 8b through 8f are answered “yes.” Speaking broadly, these items concern payments, expenditures and agreements with respect to bargaining and representation rights.

In completing the Form LM-10, the law firm, having answered “yes” to item 8a, will complete item 9a by checking “both,” indicating that a contingency agreement and payments under the agreement have been made. Item 9b will provide the name and address of the union official who is the client of the law firm. Item 9d will provide the name and address of the union official's union. Item 10a will provide the date of the contingency agreement, and 10b will disclose whether the agreement was written or oral. Pursuant to 10b, the contingency agreement, and any documents modifying, supplementing or superseding the agreement, must be attached to the Form LM-10. Filers are advised that the Department does not require any report, or attachment thereto, to contain privileged information lawfully communicated to a filer who is an attorney by any of his or her clients in the course of a legitimate attorney-client relationship. See 29 U.S.C. § 434. If the agreement contains such privileged information, the information may be redacted or obscured prior to filing.

In Item 11a, the filer should provide the date of each payment or expenditure made. Item 11b must disclose the amount of each payment, and Item 11c must describe the payment. A sufficient description need not include the identity of the individual who received the payment. It need only reveal the type of payment, such as “court costs,” “expert witness fees,” “witness fees,” “court reporter,” “filing fees,” “duplication expenses,” “deposition expenses,” etc. The filer will complete Item 12 by providing information that identifies the pertinent case caption, and any other information necessary to identify the case and court proceeding.

Subject to the de minimis exemption, and any other applicable exemptions, gifts, payments and gratuities provided to a union official or union in order to gain the union official as a client or otherwise generate business are reportable. See FAQ, Questions 45-46. The fact that the official ultimately becomes a client or receives the benefit of payments exempt from reporting does not eliminate this requirement.

If an employer believes that completing Form LM-10 will result in the disclosure of sensitive, confidential or proprietary information that could cause substantial harm to the employer's business interests, the issue should be discussed with OLMS prior to the filing of the report. See FAQ, Question 24.

Q4. Is a sole proprietor, who works alone at his firm, an employer under the LMRDA?

A4. In general, no. The LMRDA provides in part that an entity is an employer if it is, “with respect to employees engaged in an industry affecting commerce, an employer within the meaning of any law of the United States relating to the employment of any employees.” 29 U.S.C. § 402(e). This definition would not include a sole proprietor with no other employees at his firm because the sole proprietor is not an employer “with respect to employees.” This interpretation is consistent with the common law definition of employer, which depends on the existence of a relationship between two people or entities. See Clackamas Gastroenterology Assocs., P.C. v. Wells, 538 U.S. 440, 448-50 (2003).

However, a sole proprietor could satisfy the LMRDA's definition of “employer” if he or she is “acting directly or indirectly as an employer or as an agent of an employer in relation to an employee.” 29 U.S.C. § 402(e). See FAQ, Question 2, for examples of persons acting for an employer.

Q5. Would a partnership with no workers other than the partners be an employer under the LMRDA?

A5. In general, no. As discussed above, to qualify as an employer under the LMRDA, an entity ordinarily must have employees. 29 U.S.C. §§ 402(e) and (f). A partnership consisting solely of the partners of the enterprise would therefore probably not qualify as an employer. However, if the partnership includes many partners but control of the enterprise is concentrated in only a few managing partners, then the non-managing partners may qualify as employees, and the partnership could be considered an employer under the LMRDA. See Clackamas Gastroenterology Assocs., P.C. v. Wells, 538 U.S. 440, 446 (2003).

However, a partnership, even one without concentrated control, could satisfy the LMRDA's definition of “employer” if it is “acting directly or indirectly as an employer or as an agent of an employer in relation to an employee.” 29 U.S.C. § 402(e); see also 29 U.S.C. § 402(f). See FAQ, Question 2, for examples of persons acting for an employer.

Q6. What transactions must be reported on Form LM-10?

A6. Employers must file a Form LM-10 to disclose any:

  • Payments and loans made to any union or union official, other than payments of the kind referred to in section 302(c) of the Labor Management Relations Act, 1947, and payments and loans in the regular course of business by insurance companies and credit institutions. Under section 302(c) of the Labor Management Relations Act, employers do not have to report, among others, the following types of payments: - with respect to money paid to their employees as compensation for, or by reason of, service as an employee; - in satisfaction of a court or administrative judgment, or in settlement of a dispute; - with respect to the sale or purchase of an article or commodity at the prevailing market price in the regular course of business; - with respect to money deducted from the wages of employees in payment of union dues; - with respect to money paid to certain health and welfare trust funds or labor management committees.
  • Payments to any of their employees for the purpose of causing them to persuade other employees with respect to their bargaining and representation rights, unless the other employees are told about these payments before or at the same time they are made;
  • Payments for the purpose of interfering with employees in the exercise of their bargaining and representation rights, or obtaining information on employee or union activities in connection with labor disputes involving their company, except information obtained solely for use in a judicial, administrative or arbitral proceeding; and
  • Arrangements (and payments made under these arrangements) with a labor relations consultant or other person for the purpose of persuading employees with respect to their bargaining and representation rights, or obtaining information on employee or union activities in connection with labor disputes involving their company, except information obtained solely for use in a judicial, administrative, or arbitral proceeding.

Q7. May payments be excluded from the Form LM-10 if they are made by an employer that is not acting in the capacity of an employer, but instead as a service provider?

A7. No. The fact that a payment is not made in relation to a direct employment relationship, or in the context of collective bargaining, is not relevant to whether the payment is reportable under section 203(a)(1). 29 U.S.C. § 433(a)(1). Relevant criteria include whether the payment is made by an employer, whether payment was made to a labor union or a union official, and whether a specific exemption applies. See the response to question 10 below for a description of the types of employers whose payments are reportable.

EXPANDED! Q7(A). Are service providers to labor organizations and Taft-Hartley funds agents of a labor organization?

A7(A). A person or entity who is an "employer" under the LMRDA and makes "any payment or loan, direct or indirect, of money or other thing of value (including reimbursed expenses), or any promise or agreement therefor, to any labor organization or officer, agent, shop steward, or other representative of a labor organization, or employee of any labor organization" must file a report, unless a specific exemption is applicable. 29 U.S.C. § 433. As a result, by its terms, the statute requires reports of payments from an employer to an agent of a union.

Labor unions routinely contract with vendors and service providers. Some of these contracts create an agency relationship. For example, a financial institution may be acting as an agent of a labor organization when carrying out its responsibilities to make investment decisions for the union. The Department has been asked whether employers must report payments to such service providers or vendors that are unrelated to the vendor or service provider's status as an agent.

The Department will not require employers, except in unusual circumstances, to report payments to such service providers or vendors on Form LM-10. Ordinarily, a payment to a service provider serving as a labor organization's agent will be reportable only if the payment is made as a result of, or pursuant to, the agency relationship. For example, payments by employers to a service provider, such as a law firm hired by a labor organization, would ordinarily not be reportable, unless such payments were made with the intent or purpose of influencing the manner in which the law firm executed its agency obligations, such as the positions it would advocate while representing a labor organization in collective bargaining.

Without additional facts, it is not apparent how a service provider or vendor to a Taft-Hartley fund could be viewed as an agent of the labor organization by virtue of that relationship. Therefore, employers will not ordinarily be required to report on Form LM-10 payments made to service providers or vendors to a Taft-Hartley fund. [new language is in bold]

Q7(B). Are service providers to the employer of union members agents of that employer?

A7(B). The definition of "employer" includes "any person acting directly or indirectly as an employer or as an agent of an employer in relation to an employee." 29 U.S.C. § 402(e); see also 29 U.S.C. § 402(f) (emphasis added). A person or entity who is an "employer" under the LMRDA and makes "any payment or loan, direct or indirect, of money or other thing of value (including reimbursed expenses), or any promise or agreement therefore, to any labor organization or officer, agent, shop steward, or other representative of a labor organization, or employee of any labor organization" must file a report, unless a specific exemption is applicable. 29 U.S.C. § 433. As a result, by its terms, the statute requires a report when an agent of an employer makes a payment to a union or union official. A question, therefore, arises: whether a service provider or vendor to the employer of the union members also constitutes an "agent" of the employer. See FAQs, Question 17. Such a service provider or vendor might be required to file a Form LM-10 when it makes a payment to a union or union official -- irrespective of its agency relationship -- if a substantial part of its business is derived from the employer of the union members. See FAQs, Question 10. But for those service providers who do not meet this "substantial part" test, would such a service provider or vendor be required to file a Form LM-10 based solely on its status as an agent of the employer of the union members?

The Department will not require service providers to employers, except in unusual circumstances, to file Form LM-10 reports based solely on their agency relationship unless the payment is made as a result of, or pursuant to, the agency relationship. For example, a vendor without substantial dealings with the employer of the union members must report a payment to a union official made to secure the official's support in the vendor's bid to maintain its commercial relationship with the employer of the union members, if the vendor has an agency relationship with the employer. On the other hand, such a vendor and agent need not report a payment to a union official made to secure a contract with the union official's family business.

Q8. Unions are often affiliated with trusts, such as pension and welfare plans. Union officers frequently serve as trustees to these trusts. Are service providers to trusts, such as broker-dealers, investment advisors, investment companies, and investment banks, required to file a Form LM-10?

A8. Yes, if a service provider to a trust has one or more employees and makes a payment to a union or a union official that is not subject to a specific reporting exemption, the service provider must file a Form LM-10. For example, if an investment management firm offers a union official the use of a vacation home or paid travel and lodging in an effort to establish a business relationship between the firm and a pension plan for which the union official is a trustee, the firm would be required to file a report disclosing the gift. See the response to questions 73 and 74 for more information in regard to Form LM-10 filing obligations for service providers to trusts.

Q9. Are banks, credit unions, insurance companies, and other credit institutions entirely exempt from the Form LM-10?

A9. No. Although payments and loans made in the regular course of business as a bank, credit union, insurance company or other credit institution are specifically exempted by the LMRDA, other disbursements by these businesses may be reportable on Form LM-10.

Section 203(a)(1) of the LMRDA generally requires reports of “any payment or loan, direct or indirect, of money or other thing of value (including reimbursed expenses), or any promise or agreement therefor” to labor unions and union officials. 29 U.S.C. § 433(a)(1). However, section 203(a)(1)(A) exempts from the Form LM-10 reporting requirement “payments or loans made by any national or state bank, credit union, insurance company, savings and loan association or other credit institution.” 29 U.S.C. § 433(a)(1)(A). The Form LM-10 Instructions, promulgated in 1960 after notice and comment, clarify that only “[p]ayments or loans made in the regular course of business as a national or state bank, credit union, insurance company, savings and loan association or other credit institution” are nonreportable. Form LM-10 Instructions, Part A, Item 8.a.

Under the statute and the Instructions, therefore, this exception is limited to payments and loans that reflect the regular course of business of the insurance company or credit institution. Payments and loans from credit institutions are generally arms-length, commercial transactions, made on neutral terms, without regard to the recipient's status as a union official. This reporting exemption covers such payments and loans. Thus, a credit institution that pays, for example, interest on bonds, dividends on stocks, and the proceeds on such securities, and whose regular course of business is providing such financial services, need not report such payments. An insurance company need not report, for another example, payments on insurance claims.

However, payments merely incidental to the regular course of business of the payer are not within the exception. For example, expensive meals and entertainment may routinely be offered by some credit institutions to favored clients, but such gratuities are only incidental to the regular course of business, and are therefore reportable on the Form LM-10.

Q10. Must every payment from every employer to any union officer be reported?

A10. No. Generally, payments from only the following employers are reportable:

  1. An employer whose employees the recipient's labor organization represents or is actively seeking to represent;
  2. An employer a substantial part of which consists of buying from, or selling or leasing directly or indirectly to, or otherwise dealing with an employer whose employees the recipient's labor organization represents or is actively seeking to represent;
  3. An employer that buys from, or sells or leases directly or indirectly to, or otherwise deals with the recipient's labor organization;
  4. An employer that buys from, or sells or leases directly or indirectly to, or otherwise deals with a trust in which the recipient's labor organization is interested; or
  5. An employer in active and direct competition with an employer described in paragraphs 1 though 4.

Thus, for example, payments to a union official from an employer actively seeking to establish a business relationship with the official's union, or an affiliated pension and welfare plan, would be reportable. A law firm that is on, or actively vying to be included on, a union's list of “designated legal counsel” and thus be recommended by the union to the union members, is another example of an employer whose covered payments must be included on Form LM-10. The act of making a payment (or giving something of value) to a union or union official may be an indication that the employer is actively competing for union or trust business. On the other hand, for example, a payment from an investment firm to a client who is a union official will not be reportable unless the investment firm is described in one of the paragraphs listed above in 1 though 5.

Q11. Must an employer file a Form LM-10 if one of its employees gives a gift to a union officer purchased with the employee's personal funds?

A11. If the employer is not described in one of the paragraphs (1 through 5) set forth in the response to question 10, above, the gift is not reportable. If the employer is described in one of these paragraphs, the employer should adhere to the following factors to determine whether it must report gifts made by its employees:

  1. Does the employee hold a key position with the employer, such as a manager?
  2. Is it within the employee's job responsibilities to generate or maintain business relationships with unions or affiliated trusts?
  3. Is it within the employee's job responsibilities to engage in labor relations activity for the employer?
  4. Is the employee acting, directly or indirectly, for the employer when giving the gift? For example, could the employee seek reimbursement from the employer, but has simply chosen to forgo reimbursement?

If any of these questions are answered “yes,” the payment is reportable by the employer. If the questions are all answered “no,” the employer need not file a Form LM-10.

Q12. Are labor organizations with employees required to file a Form LM-10 when they make payments to unions and union officials?

A12. In a Notice of Proposed Rulemaking published in the Federal Register on August 29, 2005, the Department sought comments on whether a labor organization is, or can constitute, an “employer” or a “business,” making such payments reportable on the Form LM-30. See 70 Fed. Reg. 51166, 51182.

As a matter of enforcement discretion, the Department will not seek to file an enforcement action to obtain Form LM-10 reports of payments from unions to other unions or union officials pending the resolution of the Form LM-30 rulemaking and further written guidance.

Q13. A large corporation has a number of subsidiaries and affiliates for whom it maintains centralized administrative records. May a consolidated group of affiliated employers report on a single Form LM-10 if all of the payments from the component employers of the group are included in the single Form LM-10 report?

A13. The entity required to file the Form LM-10 is the “employer” who made the payment. 29 U.S.C. § 433(a). A Form LM-10 filed by an entity other than that employer is not sufficient. In determining what entity is the employer, reasonable judgments may be made based on the structure, corporate or otherwise, of the businesses in question, and non-LMRDA law governing when two entities are considered separate, and when they are considered to be one.

Q14. Corporation A acquired Corporation B. Is Corporation A required to file a Form LM-10 for reportable payments made by Corporation B to union officials prior to the acquisition?

A14. There are at least three potential situations and the reporting requirements are different for each.

First, if Corporation A acquired Corporation B in total, rather than simply its assets for example, and Corporation B no longer has a separate existence, Corporation B is required to file a Form LM-10 covering the portion of its fiscal year ending on the effective date of its termination. It must prepare and sign a terminal employer report, on Form LM-10, immediately prior to its loss of identity as a reporting employer through merger or otherwise, and file the report within 30 days thereafter. 29 C.F.R. § 405.4.

Second, if Corporation B survived the acquisition as a separate corporation and employer, albeit now under a new owner, Corporation B must file a Form LM-10, reporting its payments, within 90 days after the end of its fiscal year.

Third, if Corporation A acquired only the assets of Corporation B, Corporation A has no reporting obligations as to payments made by Corporation B. Corporation B would retain the filing obligation.

Q15. Does an investment manager who pays $300 for business meals for a Taft-Hartley pension plan trustee who is not appointed by the union have to report the amount on a Form LM-10? What if the investment manager does not know whether or not a particular plan trustee is appointed by the union?

A15. The investment manager does not have to report payments to a trustee who is not appointed by the union.

For reports covering payments in fiscal years beginning on or before December 31, 2005, if the investment manager does not know whether the plan trustee is appointed by the union, the investment manager should make reasonable inquiry and exercise due diligence to determine the status of the individual who received the meal by, for example, querying the pension and welfare plan, its trustees, or the affiliated union. See FAQ, Question 66, which explains what employers should do when adequate records have not been maintained. For reports covering subsequent fiscal years, it is the responsibility of the employer to institute procedures to record the information necessary to accurately complete the form.

Q16. An employer in the sports and entertainment industry sought to build a new venue for its business. In the employer's attempt to obtain financial assistance from various governments in building the new venue, it obtained assistance from a number of organizations, including several unions. The unions providing assistance would have benefited from the construction and the hotel/service sector jobs created. However, none of these unions represent workers that were or ever would be employed by the employer. During the course of the advocacy for the new building, the employer paid transportation, food, and lodging expenses for those unions and their officers. Is the employer required to submit a Form LM-10?

A16. No. Under the facts precisely as presented, the employer is not one that is obligated to file a Form LM-10. See FAQ, Question 10.

Q17. The LMRDA's definition of “employer” contains a phrase including “any person acting directly or indirectly as an employer or as an agent of an employer in relation to an employee.” Under this definition, would a law firm that provides legal representation to an employer in collective bargaining with the union be obligated to file a Form LM-10 for gifts/lunches it provides to union officials? Does this depend on whether the cost is ultimately borne by the employer?

A17. Yes. The gifts and lunches provided to union officials by the law firm would be reportable, unless these payments are of the kind referred to in section 302(c) of the Labor Management Relations Act, or some other exception to the LMRDA reporting requirements apply. Here, the law firm is acting for, or as an agent, of the employer in relation to its employees.

If the law firm is reimbursed by the employer-client for the gifts/lunches within the same fiscal year, the payments would only be reported by the employer-client. See FAQ, Question 56.


B. What Payments are Reportable?

Q18. What are some examples of situations where an employer must file a Form LM-10?

A18. If the following businesses are employers, they must file a Form LM-10 in the following instances, provided that the de minimis exemption, or other reporting exemption, is not applicable:

  • A vendor of office supplies to a union guarantees payment of a bank loan made to a representative of that union.
  • A vendor of printing and publishing services to a union sends a holiday gift basket worth more than $250 to the union's treasurer.
  • An employer of the union members provides the union's officers an exclusive opportunity to purchase the employer's stock at below market prices.
  • A vendor of legal or accounting services to a union take the union's officers on a golf excursion.
  • A vendor whose business consists in substantial part of selling restaurant equipment to the employer of the union members makes loans to the union's officers.
  • A vendor of financial services to a union affiliated pension plan provides a gift worth more than $250 to a union trustee.
  • An employer of the union members pays a union official for a “no-show” job.
  • An employer of the union members takes a union official with whom it is negotiating a collective bargaining agreement out for dinner and drinks worth more than $250.
  • An employer pays any of its employees to persuade other employees not to join a union or to affect the negotiation of a collective bargaining contract.
  • An employer makes expenditures for the printing and dissemination of pamphlets, advertisements, or other printed matter that threatens to move or close the plant if organized.
  • An employer gives gifts or provides services to employees on the condition that they will not organize.
  • An employer pays a labor relations consultant to deliver an anti-union speech to its employees.
  • An employer pays a labor relations consultant to plant agents among its employees to obtain reports about a union's organizational activities.

Q19. What are some examples of situations where an employer does not have to file a Form LM-10?

A19.

  • An employer pays regular wages to a bona fide employee who is also an officer of a union.
  • An employer makes a payment, such as an interest or dividend payment, or a loan in the regular course of business as a national or state bank, credit union, insurance company, or other credit institution.
  • An employer seeking to sell financial services to a union affiliated pension plan provides gifts to a wide variety of potential clients, including a union trustee of the plan, and the gift received by each recipient is worth less than $250.
  • An employer pays funds to a union officer, or a union employee, or the union itself in satisfaction of a judgment or arbitration award.
  • An employer pays to settle a bona fide claim, in the absence of fraud or duress.
  • An employer extends discounts or offers loans to all its employees, including those who are union officers, and the discounts and loans are granted to all on the same terms and under the same circumstances, without regard to the employees' status in a labor union.
  • An employer pays a union the money lawfully deducted from employees' wages for union dues.
  • An employer pays, in accordance with the law, into a trust fund for employee benefits.
  • An employer make payments in the regular course of business of interest on bonds or dividends on stocks to individuals determined without regard to whether they are affiliated with a union.

Q20. Is a CPA firm that does business with a local union required to file a Form LM-10 to report bona fide salary payments that it makes to the husband of the local's treasurer? Is the treasurer required to file a Form LM-30?

A20. The CPA firm would not be required to file a Form LM-10 for its regular salary payments to the husband of the local's treasurer, but the treasurer is required to file a Form LM-30 for the CPA firm's salary payments to her husband.

Section 203(a)(1) of the LMRDA, which is the statutory basis for requiring employers to report payments to union officials on the Form LM-10, requires reports from every employer who makes any payments or loans, direct or indirect, or other thing of value to “any labor organization or officer, agent, shop steward, or other representative of a labor organization, or employee of any labor organization.” The provision does not include payments to spouses or minor children of labor organization officers or employees. Thus, the CPA firm would not be required to file a Form LM-10 of its bona fide salary payments to the union official's spouse.

At the same time, Section 202 of the LMRDA, which is the statutory basis for the Form LM-30, requires that any officer or employee of a labor organization (other than an employee performing exclusively clerical or custodial services) must report certain payments, loans, or transactions that the union officer or employee or his or her spouse or minor child directly or indirectly received or engaged in. Specifically, Section 202(a)(4) requires that a union officer report “…any income or any other benefit with monetary value (including reimbursed expenses) which he or his spouse or minor child directly or indirectly derived from, a business any part of which consists of buying from, or selling or leasing directly or indirectly to, or otherwise dealing with such labor organization.”

Thus here, because the CPA firm that employs the treasurer's husband does business with the treasurer's union, the treasurer must complete Part B of the Form LM-30, reporting her husband's salary payments from the CPA firm.

Q21. A union sponsored a golf outing attended by union members and their families. Each golfer paid his or her own greens fees. Two employers of the union members contributed golf bags and clubs to the union to be awarded to golfers who won in various categories. The sporting goods cost each employer more than $250. Must Form LM-10 be filed in this situation?

A21. Yes. Each employer would be required to file a Form LM-10 because each is giving something of value to a labor organization, and the dollar-threshold criterion for the de minimis exemption is not met.

Q22. A union officer, who is also a trustee of a related benefit plan, attends a $300 golf outing that the benefit fund's investment advisor pays for. Should the investment advisor file a Form LM-10? Should the officer file a Form LM-30? How should the Form LM-30 be completed?

A22. Yes. The investment advisor, if an employer, would file a Form LM-10. The union officer should file a Form LM-30. The officer would enter the investment advisor in Item 8 on Form LM-30, check the 'trust' box in Item 9, because the investment advisor deals with the benefit fund, and then enter the benefit fund in Item 10. In Item 11, the officer would describe the dealings between the fund and the investment advisor and enter the amount the fund pays for investment services. In Line 12 the officer would enter a description of the golf outing and its value.

Q23. Must an investment advisor file a Form LM-10 if the advisor occasionally buys dinner for trustees (labor and management) of plans for which the advisor manages funds (that is, clients), or for which the advisor wishes to manage funds (that is, prospective clients)?

A23. Employers doing business with, or actively and directly seeking business with, pension or welfare plans who provide dinners for trustees who are union officers or other union representatives are reportable unless they are covered by the de minimis exemption. FAQ, Question 50 explains in detail the de minimis exemption. Also see FAQ, Questions 45 and 46, for further details concerning payments by credit institutions and employers for marketing purposes.

Q24. What if reporting a transaction on Form LM-10 would violate a confidentiality clause?

A24. There is no exemption for confidentiality clauses in the LMRDA. The only confidentiality recognized by the LMRDA is that of attorney-client privilege, contained in Section 204 of the LMRDA, which states that “nothing contained in this Act shall be construed to require an attorney who is a member in good standing of the bar of any State, to include in any report required to be filed pursuant to the provisions of this Act any information which was lawfully communicated to such attorney by any of his clients in the course of a legitimate attorney-client relationship.” 29 U.S.C. 434. If an employer believes that completing Form LM-10 will result in the disclosure of sensitive, confidential or proprietary information that could cause substantial harm to the employer's business interests, the issue should be discussed with OLMS prior to the filing of the report.

Q25. Is a Form LM-10 required if an employer that has a business relationship with a union sends flowers to the funeral of an officer of the union?

A25. No. Flowers provided for a funeral are not reportable because they are not provided to the union officer. In addition, the de minimis exemption would most likely exempt such a gift from reporting.

Q26. From time to time, a law firm pays for certain costs that are then billed to the client union. For example, a meal may be provided for a meeting that takes place to prepare for or engage in collective bargaining or to prepare for or conduct arbitration over a grievance under a collective bargaining agreement. Is this a transaction that should be reported on Form LM-10 if a union officer is a recipient of the meal?

A26. The law firm would not owe a report if it is reimbursed by the client union within the same fiscal year. FAQ, Question 56. If the payment is made near the end of the fiscal year, the law firm would not owe a report if it is reimbursed promptly, even if the reimbursement occurs in the next fiscal year. The union's payment would be accounted for on its Form LM-2, LM-3 or LM-4, but the union would not be required to file a Form LM-10. FAQ, Question 12. If timely reimbursement is not made, the law firm would owe a report unless the meal is covered by an exemption such as the de minimis exemption.

Q27. Is an employer required to file a Form LM-10 if the employer provides office space dedicated for use by the union that represents its employees?

A27. Assuming that the office space is provided without cost to the union, the value of the office space is reportable. Section 203(a) of the LMRDA requires employers to report certain payments to labor organizations and their officials, subject to multiple exceptions. 29 U.S.C. § 433. No exception for providing cost-free office space is provided.

Unlike the situation where the employer in essence leases office space to a union without charging rent, no report is required where an employer permits its employees' union officials to reserve on a temporary and episodic basis office or conference space on an as-needed basis for conducting union business. This type of fleeting use by the union of an employer's facilities, where permission, timing and location are entirely within the employer's discretion, has no reasonably quantifiable market value.

Q28. An employer guarantees payment of a bank loan made to a labor organization representative. Is this reportable?

A28. Yes. The employer is required to report the guarantee because the employer has provided a “thing of value” to the recipient within the meaning of section 203(a)(1) of the LMRDA unless it was a benefit offered by an employer to all of its employees, including union officials, under circumstances and terms unrelated to any individual's status in the union.

Q29. An employer provides an advance of salary to an officer of the union who works for the employer. Is this event reportable on Form LM-10?

A29. No. This payment is not reportable unless this arrangement is available just to this employee, rather than being made available on the same terms to other employees.

Q30. An employee who is elected to union office takes a leave of absence without pay and during the leave the employee's rights are preserved for him, including the provision for group insurance for the employee and his dependents in the same amount as is provided for active employees. Does the employer have to report amounts paid on behalf of the union officer on Form LM-10?

A30. No. The preservation of employee rights and group insurance coverage for a union officer in “union leave” status are not reportable if these payments are “required by law or a bona fide collective bargaining agreement” or made pursuant to a “custom or practice” under the collective bargaining agreement. Form LM-10 Instructions at 8.a.

Q31. As an employer, I make payments to a jointly administered vacation plan. Are these payments reportable?

A31. No. Ordinarily the plan will meet the conditions set forth in section 302(c)(5) and (6) of the Labor Management Relations Act, and the payments will not be reportable. See 29 U.S.C. 433(a)(1). The LMRDA contains an exception for payments of the kind referred to in this section of the Labor Management Relations Act. If the plan does not meet these conditions, the payments are considered to be payments to a union or union official and must be reported.

Q31(A). An employer pays a labor organization $1,000 for a full-page advertisement in a commemorative booklet that is given to all of the officers of local unions attending a union conference. The same employer also pays $2,000 to conduct marketing activities from a trade booth at the conference. Are these payments reportable on Form LM-10?

A31(A). Yes. The employer must file a Form LM-10 reporting the $1,000 paid for the advertisement in the commemorative booklet, and the $2,000 for the conference trade booth.

Under section 203(a), and subject to multiple exceptions, employers must report payments to labor organizations and their officials. 29 U.S.C. § 433(a)(1). Section 203(a)(1)(B) exempts payments of the kind referred to in section 302(c) of the Labor Management Relations Act (LMRA). 29 U.S.C. § 433(a)(1)(B). Section 302(c) covers payments "with respect to the sale or purchase of an article or commodity at the prevailing market price in the regular course of business." 29 U.S.C. § 186(c)(3). The purchase of "advertising" in a journal or use of a booth might be considered to be comparable to the purchase of an "article or commodity" within the meaning of the exception set forth in section 302(c)(3) of the LMRA, but the transactions, by all appearances, are not made in the "regular course of business." Unions are not in the business of producing and selling periodicals for advertising revenue or hosting trade shows. Thus, the payment is not in the regular course of business. In addition, the purpose of a commemorative journal is to raise funds for the union, and purchasers of space do so, at least in part, to support the union, and not merely for advertising purposes. Thus, there is no reliable way to assess a "prevailing market price" for journal entries or rental of a booth at a union conference; therefore this exemption is not applicable.

Such payments to a labor organization are of interest to union members, regulators, and the public. Because a prevailing market price cannot be determined, an employer's purchase of advertising or use of a booth could be, for example, a mechanism for a payment intended to persuade the union as to its collective bargaining demands, its aggressiveness in handling grievances, or, in the case of a vendor, its decisions on the purchase of products and services. By requiring the employer to report this type of transaction, interested members will be able to see exactly how much the employer paid for the advertisement or booth, which will help them determine whether the cost is appropriate or is suggestive of other motives.

The Department recognizes that the LMRDA Interpretative Manual states that "[e]xpenditures for employer advertisements in union souvenir journals paid to a labor organization should be treated as 'sporadic and insubstantial'" and that such payments, when made to an employee committee, "need not be reported unless the purpose is to persuade employees in relation to their collective bargaining rights." LMRDA Interpretative Manual § 253.070. Under one reading, this provision merely holds that the de minimis test may be applicable to purchases of advertising space in union journals, and that if the test is met, no report is due. As always, such payments would still be subject to the de minimis test as outlined in this guidance.

However, the Department recognizes that the Interpretative Manual provision could also be read as creating a blanket rule that such payments, no matter how large, are not reportable under section 203(a)(1)(A). Any such blanket rule was never intended and is hereby rejected. The Department has never applied a blanket rule and has considered these questions on a case-by-case basis to determine whether the payments meet the de minimis test of being sporadic or occasional and insubstantial. It is not correct to assume that all expenditures for employer advertisements are invariably sporadic and insubstantial, without regard to the frequency of the expenditure or its amount. Nevertheless, inasmuch as employers may have relied on this provision to not track or report these types of payments, the Department, as a matter of enforcement discretion, will not seek to require Form LM-10 reports of expenditures for employer advertisements in labor organization journals or payments for booths at union conferences for fiscal years commencing on or before December 31, 2006.

Q32. Must an employer file a Form LM-10 for donations to a union scholarship fund?

A32. No. Ordinarily the scholarship fund will meet the conditions set forth in section 302(c)(5) and (7) of the Labor Management Relations Act, and the payments will not be reportable. See 29 U.S.C. 433(a)(1). The LMRDA contains an exception for payments of the kind referred to in this section of the Labor Management Relations Act. If the fund does not meet these conditions, the payments are considered to be payments to a union or union official and must be reported. See also FAQ, Question 62, which addresses payments made to tax-exempt organizations at the request of a union or union officer.

Q33. Is a Form LM-10 required if an employer makes a contribution to a union officer or employee who is a candidate for public office? Must the union officer or employee who receives the contribution file a Form LM-30?

A33. Yes. Such contributions are reportable, unless the de minimis or another exemption is applicable. See also FAQ, Question 10. Even if the payments are made to a separate campaign fund for the individual, the payments are reportable as an “indirect” payment to a union official.

Q34. Does an employer have to report a business meal with a union official that it pays for, even where only legitimate labor-management business is discussed?

A34. Yes, but only if the union officer's meal costs more than $250, or if multiple meals provided to the same union official cost in aggregate more than $250. See FAQ, Question 50.


C. Who Must Receive the Payments?

Q35. Are employee benefit plan trustees who are appointed by a union considered to be union representatives?

A35. Yes. An individual appointed by a union to serve on the board of trustees of a Taft-Hartley plan is a “union official” for purposes of the reporting requirements.

Q36. Does an employer have to report payments to individuals who are officers or employees of unions composed entirely of state, county, or municipal employees not covered by the LMRDA? How would an employer know if a union included a small number of members who are employed by private employers?

A36. No. The LMRDA excludes from the definition of employer the United States or any corporation wholly owned by the Government of the United States or any State or political subdivision thereof. 29 U.S.C. § 402(e). The LMRDA's definitions of “employee” and “labor organization” rely on the definition of “employer.” 29 U.S.C. §§ 402(f) and (i). Thus, unions representing exclusively public sector workers are not LMRDA covered labor organizations. Payments to officers or employees of such unions are not required to be reported on Form LM-10 and those individuals are not required to file Form LM-30. It bears repeating that the union must represent only public sector workers. If any union members are employed by a private sector employer, payments to any official of the union are reportable on Form LM-10. An individual wishing to research whether a labor union is covered by the LMRDA should access the Office of Labor-Management Standards' web site, at www.olms.dol.gov, and then navigate to the Internet Public Disclosure Room. If a search for the union by name, or otherwise, reveals a recent financial disclosure report, the union should be considered to be covered by the LMRDA. For unions that have been in existence fewer than 15 months, please contact OLMS at (202) 693-0124 or toll free at 1-866-487-2365 for further information on the union's status.

In a recent rulemaking, the Department concluded that intermediate unions - those interposed between a national union and a local union - may be covered by the LMRDA even if they represent no private sector employees. In a final rule issued on October 9, 2003, the Department concluded that a public sector intermediate labor body is covered by the LMRDA if it is subordinate to a national or international labor organization that includes a private-sector local. 68 Fed. Reg. 68374, 58383-84. This result was cast into doubt by Alabama Education Ass'n, et al. v. Chao, Nos. 03-0253, 03-0682 (consolidated), 2005 WL 736535 (March 31, 2005) (appeal pending). In light of this decision, the Department will not seek to enforce any Form LM-10 and Form LM-30 reporting obligations regarding payments made to, or received by, officials of intermediate unions that would be covered by the LMRDA only by operation of this rule, 68 Fed. Reg. 68374, 58383-84, pending final resolution of these court proceedings. An individual needing assistance in determining whether a union is covered by the LMRDA should inquire with the union or contact OLMS.

Q37. I process the payroll for a city. Does the city have to file a Form LM-10 if the only payments that are made to the local branches of unions representing only police officers and fire fighters are the union dues withheld from the employees' wages?

A37. No. The LMRDA excludes from the definition of employer the United States or any corporation wholly owned by the Government of the United States or any State or political subdivision thereof; thus the LMRDA's reporting requirements do not extend to purely governmental employers such as a city. 29 U.S.C. § 402(e). Additionally, payments of dues withheld pursuant to a written agreement are not reportable because they are “payments of the kind referred to” in section 302(c)(4) of the Labor Management Relations Act, 1947.

Q38. Union employees who perform exclusively clerical or custodial services are not required to report employer payments on the Form LM-30. Must payments to such employees be reported on Form LM-10?

A38. Yes. The payments are reportable if they are not within the $250 de minimis exemption or another reporting exemption. There is no statutory exclusion for payments by an employer to a union clerical or custodial employee. Section 203(a)(1) requires employers to report “any payment or loan, direct or indirect, of money or other thing of value (including reimbursed expenses), or any promise or agreement therefor” to “any labor organization or officer, agent, shop steward, or other representative of a labor organization, or employee of any labor organization.” No exceptions to the Form LM-10 reporting requirements are made based on the type of work performed by the union employee receiving the payment, loan, or other thing of value.

Q39. If an employer makes an otherwise reportable payment to a union employee who makes $10,000 or less per year (below the threshold for being listed by name on the union's Form LM-2), are reports required from the employer and employee?

A39. Yes. Neither the Form LM-10 nor the Form LM-30 exempt from reporting payments by employers to union employees based on the employees' salary levels.

Q40. Is a meal purchased by an investment manager for the spouse of a union officer required to be reported on a Form LM-10 by the investment manager?

A40. No. Under section 203(a), an employer must report payments and loans, direct or indirect, and other things of value, only when made to “any labor organization or officer, agent, shop steward, or other representative of a labor organization, or employee of any labor organization.” 29 U.S.C. 433. Thus, ordinarily, a payment to a union officer's spouse would not be reportable.

Under unusual circumstances, however, a payment to a union officer's spouse may be considered an “indirect” payment to the union officer. The circumstances may include the reasons for the payment, the relationship, existing or potential, between the payer and the union officer's spouse, and the relationship, existing or potential, between the payer and the union officer, the union, or a trust, such as a pension or welfare plan, in which the union is interested. For example, if an employer provides two Super Bowl tickets to a spouse of a union official several weeks before a collective bargaining agreement between the employer and the official's union is to be negotiated, and the employer has no meaningful, independent relationship with the spouse, the tickets are reportable on Form LM-10. Similarly, if a service provider to a union's pension plan provides an official's spouse with a luxury watch, and the employer has no meaningful, independent relationship with the spouse, the watch is reportable on Form LM-10. On the other hand, if a service provider to a union's pension plan takes all plan trustees and their spouses to a meal and concert, the payments for the spouses would not be reportable. Note, however, a union official who is also either a union officer or a union employee is subject to the Form LM-30 reporting requirements, which mandate reports of payments received by union officers and employees as well as their spouses.

Q41. An investment manager currently engaged by a trust in which Union X is interested, sends a fruit basket worth $300 to that pension trust (not to an individual), and the fruit basket is shared by the pension trust's employees. Is the investment manager required to report the amount on a Form LM-10? Is the answer different if the basket was sent to the Executive Director of Investments of the pension trust and he is not a union employee, union officer or union representative?

A41. Ordinarily, a gift or payment to a lawfully constituted pension or welfare plan will not be reportable on Form LM-10 because the reporting requirement applies only to payments to a labor organization or its officials. 29 U.S.C. § 433(a). Under the facts presented, the employer sending the gift basket would not incur a reporting obligation even where the pension or welfare plan subsequently gives the gift to a union official. In contrast, an employer who sends four gift certificates worth $300 each to a plan with four trustees, for example, will be considered to have made indirect payments to union officials and must file a Form LM-10.

Gifts to individuals or entities, directly or indirectly, that are not listed in section 203(a) are not reportable. If a fruit basket is sent as a gift to an Executive Director who is not a labor organization employee, officer, agent, shop steward, or other representative, it is not reportable.

Q42. Does a for-profit corporation in which a labor organization holds a minority equity position meet the definition of a labor organization under the LMRDA? Would the answer be the same if the corporation was majority owned by the labor organization?

A42. No. An organization, including a corporation owned by a labor organization, is not a labor organization unless it meets the LMRDA definition of a “labor organization.” The Act provides as follows:

    “Labor organization” means a labor organization engaged in an industry affecting commerce and includes any organization of any kind, any agency, or employee representation committee, group, association, or plan so engaged in which employees participate and which exists for the purpose, in whole or in part, of dealing with employers concerning grievances, labor disputes, wages, rates of pay, hours, or other terms or conditions of employment, and any conference, general committee, joint or system board, or joint council so engaged which is subordinate to a national or international labor organization, other than a State or local central body. 29 U.S.C. § 402(i).

If the corporation does not meet this definition, it is not a labor organization, and payments to it are not reportable. Payments to this corporation may, under unusual circumstances, be considered indirect payments to a labor union. Relevant factors will include the ultimate disposition of the funds, the reason for the payment, the extent of the union's ownership interest in the company, and any understandings or agreements between the parties. A payment from an employer to a corporation that markets merchandise with union themes and logos that is wholly owned, wholly financed, and wholly controlled by a labor union would be reportable. A payment from an employer to a corporation, 60% of which is owned by a labor union but which is under independent management, that designs and builds low-income housing would not be reportable.

Q43. Is a Form LM-10 required if an employer that has a business relationship with a union sends flowers valued at more than $250 to a union officer's spouse who is recovering from surgery?

A43. No. A Form LM-10 would not be required.

Q44. All employees receive a Christmas bonus from the employer that is based on a percentage of earnings. Are the bonuses paid to employees who are also union officers reportable?

A44. No. As long as the bonuses are given without regard to an employee's relationship to the union, the bonuses are payments of the kind referred to in section 302(c)(1) of the Labor Management Relations Act, which covers compensation by an employer to a union official who is also an employee, or the LMRDA section 203(e) exemption for payments made to any regular employee as wages or other compensation for services as a regular employee.


D. Reporting Exceptions Involving Payments in the Regular Course of Business

Q45. Payments made by insurance companies and credit institutions as marketing expenses are generally deductible under the Internal Revenue Code. Are they also exempt from reporting on the Form LM-10?

A45. No. Business development and client relations expenditures are not exempt from reporting under the exemption for payments or loans made in the regular course of business as a national or state bank, credit union, insurance company, savings and loan association or other credit institution. 29 U.S.C. § 411(a)(1)(A); Form LM-10 Instructions, Part A, Item 8.a. The Department has not adopted the Internal Revenue Service standards for partial deductibility as the test for whether this exception is satisfied.

The Instructions provide that only “payments and loans made in the regular course of business” as a credit institution are not reportable. Payments merely incidental to the regular course of business of the payer are not within the exception. Providing union officials with gifts, entertainment, free travel, or other gratuities does not meet this exception. Gifts and hospitality are ancillary, or an aid, to the institutions' regular course of business. They may have a business purpose, such as cultivating goodwill or securing or maintaining a commercial relationship, but they are not themselves the business of a credit institution. They must be reported on Form LM-10.

Workers in their capacities as union members and participants in pension and welfare plans have a right to know whether insurance companies, banks, and credit institutions have provided their union's officials with expensive gifts, golf outings, entertainment, hunting trips, and other gratuities. In this way, they can gauge whether union business decisions are being made solely in the best interests of the union, and whether pension and welfare plan business decisions are being made solely in the best interests of the plan, without regard to any personal benefits received by the union official. At the same time, the $250 de minimis threshold helps to ensure that employers are not burdened with reporting routine transactions of little interest to union members.

Q46. Payments made by employers to union officials and union-appointed trustees of pension and welfare plans as marketing expenses are generally deductible under the Internal Revenue Code. Are they also exempt from reporting on the Form LM-10?

A46. No. Business development and client relations expenditures by employers for marketing are not exempt from reporting.

Section 203(a) of the LMRDA requires employers to report certain payments to labor organizations and their officials, subject to multiple exceptions. 29 U.S.C. § 433. One of these exceptions exempts employers from disclosing “payments of the kind referred to in section 302(c)” of the Labor Management Relations Act. Section 302(c) excludes, among other things, payments “with respect to the sale or purchase of an article or commodity at the prevailing market price in the regular course of business.” 29 U.S.C. § 186(c).

For the reasons discussed in response to question 45, payments for the purpose of cultivating or maintaining a business relationship are ancillary to the employers' regular course of business. Further, in most cases, the gift or gratuity, such as a golf outing, does not constitute an “article or commodity.” In addition, and for obvious reasons, the gift or gratuity is not provided at a prevailing market price. Finally, workers have an interest in knowing whether union or pension and welfare plan business decisions are being made solely in the best interests of the union or the plan, without regard to any personal benefits received by the union official. At the same time, the $250 de minimis threshold helps to ensure that employers are not burdened with reporting routine transactions of little interest to union members.

Q47. A financial management company provides services to a pension and welfare plan. It also provides brokerage services to an individual client who is an officer of the union that is affiliated with the pension and welfare plan. Must the company file a Form LM-10 reporting payments made to the union officer arising from the brokerage services?

A47. No. The financial management company need not report the payments arising from the brokerage services. Under section 203(a) of the LMRDA, and subject to multiple exceptions, employers must report payments to labor organizations and their officials. 29 U.S.C. § 433(a). The Form LM-10 contains an exception for “payments made in the regular course of business to a class of persons determined without regard to whether they are, or are identified with, labor organizations and whose relationship to labor organizations is not ordinarily known to or readily ascertainable by the payer, for example, interest on bonds and dividends on stock issued by the reporting employer.” This provision would exempt the brokerage account payments because they are made without regard to the individual's position in the union, and union status is not relevant to the company's provision of brokerage services to the union official.

Q48. Do payments of dividends to labor organizations that are stockholders of a corporation need to be reported?

A48. No. The payment of dividends is excluded pursuant to an exemption in the Form LM-10 instructions for “payments made in the regular course of business to a class of persons determined without regard to whether they are, or are identified with a labor organization and whose relationship to organizations is not ordinarily known to or readily ascertainable by the payer, for example, interest on bonds and dividends on stock issued by the reporting employer.”


E. Directors' Fees

Q49. Is a payment to a union officer for compensation for service as a member of a corporate board of directors reportable on Form LM-10?

A49. Yes, but as a matter of enforcement discretion the Department will not seek to require Form LM-30 or LM-10 reports of directors' fees (or reimbursed expenses) for fiscal years commencing on or before December 31, 2005. Under section 203(a) of the LMRDA, employers who make payments to a labor organization or its officials must file a report, subject to multiple exceptions. 29 U.S.C. § 433(a). One of these exceptions exempts employers from disclosing “payments of the kind referred to in section 302(c)” of the Labor Management Relations Act. Section 302(c) excludes, among other things, payments “with respect to the sale or purchase of an article or commodity at the prevailing market price in the regular course of business.” 29 U.S.C. § 186(c).

A 1983 letter from a senior Department official, responding to a request for an opinion concerning directors' fees paid to union officers serving on a corporate board, concluded that the fees must be reported. Subsequently, in 1986, a senior Department official reached a different conclusion, stating “so long as the corporation pays the union officer/director at the same rate that it pays the other directors, for the same services,” the payments are not reportable.

There is no basis in the LMRDA for exempting employers from disclosing directors' fees. These fees are a payment from an employer to a union official. 29 U.S.C. § 433(a)(1). They are not payments of the kind referred to in section 302(c). The exemption concerning compensation to employees is not ordinarily applicable, as directors usually do not stand in an employee-employer relationship with the employer. 29 U.S.C. § 433(a)(1)(B), 29 U.S.C. § 186(c)(1). Directors' fees are not an article or commodity, and it is questionable whether such payments for these types of personal services can be said to have a prevailing market price. 29 U.S.C. § 433(a)(1)(B), 29 U.S.C. § 186(c)(3). Significantly, these payments raise potential questions of a conflict of interest, due to the employer's role in selecting the directors and setting the amount of the fee.

Inasmuch as Department officials have in the past notified certain employers that these payments were not reportable, the Department, as a matter of enforcement discretion, will not seek to require Form LM-30 or LM-10 reports of directors' fees (or reimbursed expenses) for fiscal years commencing on or before December 31, 2005.

Q49(A). Is a payment to a union officer for compensation for service as a member of the board of directors of a financial institution reportable on Form LM-10?

A49(A). Yes. Section 203(a)(1)(A) of the LMRDA does not exempt payments of directors' fees to a union official who serves on the board of directors of a financial institution. The Form LM-10 Instructions, promulgated in 1960 after notice and comment, clarify that "[p]ayments or loans made in the regular course of business as a national or state bank, credit union, insurance company, savings and loan association or other credit institution" are nonreportable. Form LM-10 Instructions, Part A, Item 8. Compensation paid by a financial institution to a director who is a union official is not within this exemption and must therefore be reported.

The "payments or loans" exempted by section 203(a)(1)(A) encompass the transactions engaged in during the regular course of business of a financial institution. Financial institutions are in the business of providing financial services to customers and to this end they routinely, for example, make interest and dividend payments, sell financial products and services, execute demands for the payment and receipt of funds, as well as pay proceeds on securities. Directors' fees, in contrast, are not provided to customers as a financial service; they are paid only to directors. Expenses that further the administrative functions of financial institutions are integral to the operation of their businesses, but they are not payments of the kind that the businesses (i.e. the financial institutions) exist to make. These fees are therefore reportable for the same reasons that any other corporate employer must disclose directors' fees paid to union officials serving on their board of directors.


F. Reporting Exemption for De Minimis Payments

Q50. Must a filer report infrequent, insubstantial offers of hospitality, such as coffee and donuts at a meeting, restaurant meals, or gifts at holidays?

A50. No. Under section 203(a) of the LMRDA, employers who make payments to a labor organization or its officials must file a report, subject to multiple exceptions. 29 U.S.C. § 433(a). The Form LM-10 informs filers that they may exclude from their reports “sporadic or occasional gifts, gratuities, or favors of insubstantial value, given under circumstances and terms unrelated to the recipients' status in a labor organization.” Form LM-10 Instructions, Part A, Item 8.a. This test has been referred to as a “de minimis exemption.” If the test is satisfied, the filer need not report the gift or gratuity on Form LM-10. If the test is not satisfied, the gift or gratuity must be reported on Form LM-10.

For the de minimis exemption to be available, the gift or gratuity must be “insubstantial.” Consistent with the recent guidance for union officer and employee reporting on Form LM-30, gifts and gratuities with an aggregate value of $250 or less provided by an employer will be considered insubstantial for the purposes of Form LM-10 reporting. If the aggregate value of multiple gifts or loans from a single employer to a single union or union official exceeds $250 in a fiscal year, the transaction will no longer be treated as “de minimis,” and the aggregate value of the transactions will be reportable. Gifts or loans from multiple employees of one employer should be treated as originating from a single employer when calculating whether the $250 threshold has been exceeded.

Although offers of numerous small gratuities would appear to be outside the de minimis exemption because they are not provided on an “infrequent or sporadic” basis, the Department will not seek to enforce the reporting requirement, so long as the aggregate value of these gratuities by an employer does not exceed $250 per union or union official. For example, an employer who provides union officials with coffee at bi-weekly meetings over the course of a year would not be required to report these gratuities on a Form LM-10.

Finally, the gift or gratuity must be unrelated to the recipient's status in a labor organization. In assessing whether a gratuity is unrelated to union status, the test is whether the employer ordinarily provides such consideration to individuals in similar circumstances who are not union officials. The mere fact that the union official would not be present to receive the payment or meal absent his official position is not necessarily the relevant inquiry. If, for example, an employer routinely provides meals to all its clients (union affiliated or not) during the course of day-long meetings, the meal would be unrelated to union status. Similarly, if a service provider to a pension and welfare plan provided a meal to both union and management trustees, and these types of meals are ordinarily offered to its clients under like circumstances, the meal would be deemed unrelated to the union official's status for the purpose of meeting that part of the de minimis test.

In a Notice of Proposed Rulemaking published in the Federal Register on August 29, 2005, concerning the Form LM-30, the Department sought comments on the de minimis standard and the applicable dollar threshold. 70 Fed. Reg. 51166, 51175. As both the Form LM-30 and Form LM-10 have similar de minimis standards, to the extent that the standard is revised, or a different dollar value threshold is adopted for the purposes of the Form LM-30, the same standard would likely be applied to the Form LM-10. Until there is any change, however, employers should apply the existing standard, with its $250 threshold.

Q51. Assume that meals are served at a trustees' meeting. For the purposes of the de minimis reporting exemption on Form LM-10, should the breakfast, lunch, snack, and dinner expenses be combined?

A51. Yes. All expenses in a single fiscal year to a single union official should be combined to determine whether the de minimis exemption is available. See FAQ, Question 50. Meals provided to different union officials are not aggregated when applying the de minimis exemption. See FAQ, Question 2, for examples of persons acting for an employer.

Q52. Does the answer change if different caterers provide each meal? Does the answer change if one caterer provides all meals? What if the caterer bills one amount for all of the meals without itemizing the cost for each meal?

A52. No. The number of caterers or their billing practices is not relevant. The employer should instead focus on the total value of the meals it provided the union official. If the invoice is not itemized, reasonable good faith estimates may be used to determine the overall value of the meals that each officer received.

Q53. Is a company required to file a Form LM-10 if it provides refreshments at a series of labor-management meetings that cost the employer a total of $300, but the cost per union official is less than $250?

A53. No. Form LM-10 is not required as long as the aggregate cost per person is $250 or less, and the other requirements of the de minimis exemption are met. See FAQ, Question 50.

Q54. A company provides meals to union officials, all of whom belong to the same union. Each official received meals worth less in total than $250. Is the de minimis exemption not applicable because all the officials belong to the same union and the total payments to this single union's officials exceed the $250 threshold?

A54. No. The de minimis exemption would still be applicable. When determining the de minimis threshold, employers should calculate the amount received by each union or union official and determine whether each of these amounts exceeds $250. The fact that each union official is affiliated with the same union is not relevant because the gifts were provided to the union officials, not the union.

Q55. An employer conducts educational conferences designed to educate and explain employee benefit issues and products at no cost to employee pension or welfare plan personnel, including union officials who are trustees. In holding the conference, the employer provides conference rooms, audio-visual equipment, refreshments, meals, travel, and lodging. What must be reported on Form LM-10?

A55. The employer must calculate the value of the conference to each union official in attendance to determine whether the de minimis exemption applies, and, if not, how much to report on Form LM-10. The cost to the employer of the refreshments, meals, travel, and lodging must be included in this calculation. The costs of the conference rooms and audio-visual equipment need not be included. Once the employer has derived a figure representing the value of the conference, it must determine the value received by each union official. One reasonable approach would be to divide the total cost of refreshments, meals, travel, and lodging for the conference by the number of attendees to determine the value received by each. At that point, the employer will have a reasonable estimate of the value received by each union official, and be able to determine the applicability of the de minimis exemption, and the amount, if any, to be reported.


G. Reimbursement by and Allocation among Employers

Q56. Where Employer A makes a reportable payment that is reimbursed by Employer B, who files the Form LM-10?

A56. Employer B must file the Form LM-10. Generally speaking, the employer that makes the final payment without reimbursement from another employer should report the transaction. If, however, the reimbursement is from a person or company that is not an employer, the employer making the payment must file a Form LM-10, but may note the fact of reimbursement on the form. For example, a service provider to a pension and welfare plan hires a marketing firm to generate new business for the service provider. The marketing firm makes a covered payment to a union official. If the marketing firm is an employer, it must report the payment. If the service provider is an employer and reimburses the marketing firm, only the service provider must file the report. If the service provider is not an employer, however, the marketing firm must report the payment.

Q57. Where multiple employers pay a portion of a single reportable payment, who files the Form LM-10?

A57. Each employer must file a separate Form LM-10 for the amount it paid. For example, where an employer that provides services to a pension and welfare plan takes a union official who is also a trustee of the plan to dinner, and divides the cost among two other investment management firms, each firm must file a Form LM-10 because each is an employer that has provided a thing of value to a union official, unless an exemption, such as the $250 de minimis exemption, is applicable. In determining the applicability of the de minimis exemption for payments to union officials, described in the response to question 15, the employer should consider only the amount it individually contributed. Form LM-10 Instructions, Part A, Item 8.a.

Q58. Where an employer pays for the meals of multiple individuals, but only half are union officials, what should be reported in the Form LM-10?

A58. If the actual cost of the meals for the labor organization officials can reasonably be determined, the employer should report those amounts. If not, the employer may report a good faith per-participant estimate by, for example, reporting an amount based on the average cost of each meal multiplied by the number of union-official attendees. For example, an employer who pays a $1,004 restaurant bill hosting four individuals, two of whom are union officials, may estimate that each union official's meal was $251 and report those amounts on Form LM-10.

Q59. If an employer paid amounts that are otherwise reportable on a Form LM-10 but which are subsequently repaid by the recipient within the same year, must those amounts be reported on a Form LM-10?

A59. No. Employers need not report gifts that are rejected and returned and payments that are repaid by the recipient. The same rule applies to hospitality items, such as meals, beverages, vacations, etc. The items are not reportable when reimbursement is made. The recipient must reimburse the employer for the gift, payment, or hospitality in the same fiscal year in which it was received. If the payment is made near the end of the fiscal year, however, the employer need not file a report if it is reimbursed promptly, even if the reimbursement occurs in the next fiscal year. Where timely reimbursement is not made, the payment must be reported, although the filer may note that reimbursement was made.

Cash payments not promptly reimbursed must include interest, or the forgone interest will be reportable as a gift. Similarly, a gift of a car or a boat, for example, must be returned with compensation for their use at the fair market rate and any diminution in value or the forgone compensation must be reported as a gift.

In particular cases concerning serious conflicts of interest or attempts by employers to circumvent or evade the filing requirements, the Department may, by specific request, require reports of payments and gifts, etc., despite return or reimbursement. For example, a series of numerous, high-value payments made by an employer to a union official must be reported even where each payment is promptly reimbursed, to avoid the nondisclosure of the substantial value that is conferred on an individual who has even short-term use of very large amounts of money.


H. Parties, Receptions, and Widely Attended Gatherings

Q60. An investment manager hosts a large holiday reception to which its clients, including labor union officials, are invited. How should this be reported on Form LM-10? What should the employer do if it did not keep track of the attendees?

A60. In reporting payments for receptions, employers should consider the applicability of the de minimis exemption, discussed in the response to question 50. In situations where the de minimis exemption is not applicable because, for example, the reception or other event results in expenditures of more than $250 in aggregate to one or more union officials, or are related to the union official's status in the union, the expenditure for the event is reportable on Form LM-10.

Employers have represented to the Department that records for current and past fiscal years may not be sufficient to support detailed reporting for large group events. In such instances, the Department will accept as compliant with the reporting requirements of section 203(a) any reasonable estimate that is made in good faith and based on available and reconstructed records when completing the reports for a fiscal year commencing on or before December 31, 2005.

Q61. An employer hosts a large reception and invites more than a thousand attendees of an educational conference. Many of the attendees are union officials and many are not. The employer pays for carving stations, an open bar, musical entertainment, and the rental of the hall. How should the employer track and report this event?

A61. For all receptions attended by union officials, an employer must first determine the value of the reception. In making this calculation, the employer must include the costs of the food, beverage, service, and entertainment, but not the cost of the hall in which the reception is held, security for the event, or the time spent by its employees in planning or running the reception. The employer should then determine the value of the benefit conferred on each individual attendee. The figure may be derived by summing the covered costs and dividing by the number of attendees, but any reasonable, good faith method of making this determination will be acceptable. An employer who pays travel expenses for a union official to attend a widely-attended gathering may not treat this expense as part of the cost of the widely-attended gathering. Travel expenses must be tracked and reported on Form LM-10 separately, subject to the de minimis exemption and any other applicable exemption.

The following guidance applies only to widely-attended gatherings. A gathering is widely attended if it is expected that a large number of persons will attend and that attendees will include both union officials and a substantial number of individuals with no relationship to a union. For a gathering to qualify as a widely-attended gathering, union officials must be treated the same as individuals not affiliated with a union when the employer advertises or distributes invitations for the event. Union officials and individuals without union status must be treated alike at the reception. An employer holding a widely-attended gathering may take advantage of the recordkeeping and reporting exemptions discussed below.

Employers who hold receptions that do not constitute widely-attended gatherings must identify and keep records of each attendee who is a union official and include the amount in any Form LM-10 that may be required. When determining whether a Form LM-10 is actually required, the employers should always consider the applicability of the reporting exemptions, including the de minimis exemption.

$20 Exemption for All Widely-Attended Gatherings

If an event is a widely-attended gathering, the employer may take advantage of a $20 recordkeeping and reporting exemption. Thus, if an employer holds a widely-attended gathering and spends $20 or less per attendee, it has no Form LM-10 obligations with regard to tracking or disclosing these costs. By way of example, if a union official attends four widely-attended gatherings hosted by a single employer costing it $20 or less and, in the same fiscal year, receives $300 worth of sporting event tickets from the same employer, the employer would be required to report only the $300 tickets.

On the other hand, if the benefit conferred on each individual exceeds $20, and the $125 exemption discussed below is not applicable, the employer must identify and keep records of each attendee who is a union official. At the end of the fiscal year, the employer should determine whether a Form LM-10 must be filed based on payments to the union attendees, after considering the applicability of the reporting exemptions, including the de minimis exemption, discussed in Form LM-10 Frequently Asked Questions, Question 50. An employer, for example, who in a single fiscal year hosted a union official at three receptions that cost it $35 per attendee and also provided the union official a $220 jacket, would be required to file a Form LM-10 reporting $325 in payments. Under other circumstances, the de minimis exemption may result in no report being filed, such as when the $105 value of the receptions is the only gratuity provided to the union official.

By the same token, a union officer or employee who attends a widely-attended gathering that costs the employer $20 or less per attendee need not maintain records or report the value of the reception on Form LM-30. On the other hand, if the benefit conferred on the union officer or employee exceeds $20, and the $125 exemption discussed below is not available, the union official must track and maintain records on the value of the reception. When determining whether a Form LM-30 is actually required, union officers and employees should always consider the applicability of the reporting exemptions, including the de minimis exemption.

$125 Exemption for One or Two Widely-Attended Gatherings

The following guidance applies to widely-attended gatherings where the employer spends more than $20 per attendee. For one or two widely-attended gatherings in a single fiscal year an employer may take advantage of a $125 recordkeeping and reporting exemption. If an employer holds one or two widely-attended gatherings and spends $125 or less per attendee per gathering, it has no Form LM-10 obligation with regard to tracking or disclosing these costs.

Specifically, this exemption is available for any widely-attended gathering where the employer has not previously held, in the same fiscal year, more than one prior gathering costing it more than $20 per attendee, at which the same union official or officials are in attendance. In other words, an employer may hold one widely-attended gathering attended by a group of union officials costing it $125 per attendee without incurring a Form LM-10 filing obligation. An employer may then, in the same fiscal year, hold a second widely-attended gathering attended by the same group of union officials costing it $125 per attendee and still incur no Form LM-10 filing obligations. An employer who holds a third such widely-attended gathering that is attended by one or more of the same group of union officials will be required to file a Form LM-10 that identifies the name of the union official and the amount expended on that individual at all three widely-attended gatherings. To track the identity of the union officials at this gathering, the employer may need to use sign-in sheets or another method of determining the union status of the individuals in attendance.

An employer who chooses to take advantage of the $125 exemption for one or two widely-attended gatherings must, therefore, determine at the start of the fiscal year that they will not hold more than two such gatherings at which one or more of the same union officials will be in attendance. If so, they need to keep no records of the attendees at the two gatherings. If the employer is unable to make this determination at the start of the year, the employer will need to track and maintain records of the union officials in attendance at the first two gatherings. Only then will the employer have sufficient information to file an accurate report made necessary by its holding a third widely-attended gathering.

By the same token, a union officer or employee who attends one or two widely-attended gatherings that cost the employer $125 or less per attendee need not retain records or report the value of the reception on Form LM-30. On the other hand, if the benefit conferred on the union officer or employee exceeds $125, the union official must track the value of the reception. When determining whether a Form LM-30 is actually required, union officers and employees should always consider the applicability of the reporting exemptions, including the de minimis exemption.

NEW! Q61(A). A number of employers sponsor a union-conducted meeting attended by many union officers and employees (the meeting does not meet the definition of a widely-attended gathering). The employers make payments directly to the vendors leasing the space for the meeting and who are supplying the food and beverages to those attending the meeting. The union that is conducting the meeting does not require individuals to sign-in or register. How can a participating employer obtain the required information to complete Form LM-10?

A61(A). When an employer makes a payment to a vendor or to a union itself for a union-conducted meeting, the issue of whether the payment should be reported as a payment to the union or as a payment to the union officers and employees in attendance depends on whether the union controls who attends or if the employer has a role in that decision. If the union determines who will attend, the employer should report the payment as either a direct or indirect payment to the union, as appropriate. The employer does not have to maintain records of those in attendance and the union officers and employees do not have to file Form LM-30 to report such payment. If, on the other hand, the employer has a role in determining which union officers and employees attend the meeting, the employer must maintain a record of the amount that it contributed to the meeting and the names of the union officers and employees who attended. In this last instance, it is the employer's responsibility to request that the union use reasonable methods, such as a sign-in sheet, to ensure that it records and can provide the employers with the names of the attendees and their union status. An employer who does not make such arrangements with the union prior to the meeting will have failed to establish procedures necessary to file an accurate and complete Form LM-10. See also FAQ 61. When determining whether a Form LM-10 is actually required, the employer should always consider the applicability of the reporting exemptions, including the de minimis exemption.


I. Payments to and from Tax Exempt Organizations

NEW! Q62. Are payments from an employer to a tax exempt organization reportable on Form LM-10?

A62. Payments made by an employer to a tax exempt organization are generally not reportable on Form LM-10, as they are not payments made to a labor organization. An organization, including a tax exempt organization, is not a labor organization unless it meets the LMRDA definition of a "labor organization." See Form LM-10 FAQ 42. The Act provides as follows:

    "Labor organization" means a labor organization engaged in an industry affecting commerce and includes any organization of any kind, any agency, or employee representation committee, group, association, or plan so engaged in which employees participate and which exists for the purpose, in whole or in part, of dealing with employers concerning grievances, labor disputes, wages, rates of pay, hours, or other terms or conditions of employment, and any conference, general committee, joint or system board, or joint council so engaged which is subordinate to a national or international labor organization, other than a State or local central body. 29 U.S.C. § 402(i).

If the organization does not meet this definition, it is not a labor organization, and payments to it are generally not reportable. Two exceptions to this rule follow.

Indirect payments. Under highly unusual circumstances, payment to a tax-exempt organization may be considered an indirect payment to a labor union or labor union official. Payments to a charity created to fraudulently enrich the union officials that chartered it, for example, or to provide educational scholarships to their own children, would be reportable. On the other hand, the mere fact that a union official sits on the board of the charity would not in itself make the payment reportable.

Tax exempt funds that constitute union funds. Payments made to a tax exempt organization are reportable on Form LM-10 if the union manages the organization's assets and controls its expenditures. For example, payments from employers to a tax-exempt union relief fund, would be reportable if the union manages its assets and controls its expenditures. For further example, payments to a union-sponsored PAC would be reportable if the union manages the PAC's assets and controls its expenditures, as these payments are made to a union. 29 U.S.C. § 433.

RENUMBERED! Q62(A). At the request of the officer of a labor organization, an employer donates $100 to each of the following organizations which are all tax exempt under section 501(c)(3) of the Internal Revenue Code. Must these payments be reported on Form LM-10?

  1. The United Way;
  2. The Local Union Scholarship Fund, which benefits the children of members of that union and was established in conformance with section 302(c)(7) of the Labor Management Relations Act;
  3. The Local Union Apprenticeship Fund, which provides training to apprentices and journeymen and was established in conformance with section 302(c)(6) of the Labor Management Relations Act;
  4. The Union Relief Fund, which benefits the members of a union and other employees in the industry with assistance during times of natural disaster or similar distress.

Is the answer different in any case if an officer of a labor organization serves as an uncompensated director of the organization or otherwise volunteers his time for the entity?

A62(A). The payment to the United Way and the Union Relief Fund would not be reportable, in that they are not payments to a union or a union official. 29 U.S.C. § 433. The payments to the scholarship and apprenticeship fund are not reportable. They are payments of the kind exempt under Labor Management Relations Act § 302(c)(6) and (c)(7), as made relevant by LMRDA § 203(a)(1)(B).

Under highly unusual circumstances, payment to a tax-exempt organization may be considered an indirect payment to a labor union or labor union official. Payments to a charity created to fraudulently enrich the union officials that chartered it, for example, or to provide educational scholarships to their own children, would be reportable. On the other hand, the mere fact that a union official sits on the board of the charity would not in itself make the payment reportable.

Q63. Are payments from a 501(c)(3) tax-exempt educational organization to a union official reportable on Form LM-10?

A63. In a Notice of Proposed Rulemaking published in the Federal Register on August 29, 2005, the Department sought comments on whether a charitable, social, educational, or political organization is, or can constitute, an “employer” making such payments reportable on the Form LM-30. See 70 Fed. Reg. 51166, 51182. This rulemaking is pending.

As a matter of enforcement discretion, the Department will not seek to file an enforcement action to obtain Form LM-10 reports of payments from charitable, social, educational, or political organizations to unions or union officials pending the resolution of the Form LM-30 rulemaking and further written guidance.

Q64. Is an investment manager that purchases, at the request of an officer of a labor organization, a $500 ticket to a dinner banquet held for the benefit of a 501(c)(3) tax exempt entity required to report that amount on a Form LM-10?

A64. No. Assuming the entire donation is remitted directly to the tax exempt organization, the payment would not be reportable because it is not a payment or loan to any union or union official. 29 U.S.C. § 433. See FAQ, Question 62, for further details concerning payments to tax exempt organizations solicited by labor organization officials. If the investment manager gives the banquet ticket to a union official, that gift is reportable on a Form LM-10.

Q65. Under what circumstances would a payment to a charitable event run by a union be reportable on Form LM-10?

A65. Payments of cash or gifts of goods made to a tax exempt organization are generally not reportable on Form LM-10. See FAQ, Question 62. If the cash or gifts are provided to a union the payment is reportable on Form LM-10, even where the union ultimately directs the donations to a tax exempt organization.


J. Filing and Signing Form LM-10 When Records Have Not Been Maintained

Q66. Some service providers to Taft-Hartley trusts, such as broker-dealers, investment advisors, investment companies, and investment banks, have never before considered themselves required to file a Form LM-10. These companies have employees who have made payments to union officials, but these employers have no systems in place to track and record the data. The Form LM-10 must be signed by the president and treasurer of the employer, and it must be signed under penalty of perjury. Under what circumstances are the president and treasurer of the employer obligated to sign a Form LM-10?

A66. In general, the LMRDA provides that the Form LM-10 must be signed “by [the employer's] president and treasurer or corresponding principal officers.” 29 U.S.C. § 433(a). When signing, the filer must swear to the following: “Each of the undersigned, duly authorized officers of the above employer declares, under penalty of perjury and other applicable penalties of law, that all of the information submitted in this report (including the information in any accompanying documents) has been examined by the signatory and is, to the best of the undersigned's knowledge and belief, true, correct and complete.”

Representatives of some service providers have asserted that they have considered themselves exempt from the Form LM-10 reporting requirements, and that they have not instituted procedures to capture the payments required to be reported on the form. They have asserted that it is not possible to file an accurate and complete report absent procedures that were implemented prior to the commencement of the fiscal year to track the relevant payments throughout the fiscal year. OLMS has noted that certain union officers and employees have indicated that they could not obtain financial information from employers, and Form LM-30s have been filed with “disclaimers,” indicating that, despite diligent efforts, they are based on incomplete data.

The following guidance applies to cases where an employer has employees who may have made payments that are reportable on the Form LM-10, where the employer did not institute procedures for tracking and reporting such payments for a fiscal year commencing on or before December 31, 2005 based on a belief that the LMRDA did not require such reporting of it, where the employer has acted diligently and in good faith to reconstruct the records and identify all covered transactions, and where the employer has prepared a report that discloses all the transactions revealed by its good faith inquiry. In such cases, the employer may strike out the attestation and substitute the following: “Each of the undersigned, duly authorized officers of the above employer declares, after good faith investigation and diligent inquiry, that all of the information submitted in this report (including the information in any accompanying documents) has been examined by the signatory and is, to the best of the undersigned's knowledge and belief, as complete as possible based on existing and reconstructed records.”

The president and treasurer may themselves have limited knowledge of the results of the good faith investigation. The Department recognizes that any good faith search will be necessarily ad hoc, in contrast to records maintained contemporaneously through established internal procedures. In the circumstances described in the previous paragraph, employers may authorize key officials in their organization who supervised or conducted the good faith search to sign the Form LM-10 in their place.

As a matter of enforcement discretion, the Department will not institute an enforcement action against a Form LM-10 filer who meets the criteria and files a report with the modified attestation, signed by the described key officials, for fiscal years commencing on or before December 31, 2005. Reports for fiscal years commencing on or after January 1, 2006, are required to be signed with an unaltered attestation by the employer's president and treasurer or corresponding principal officers.

Except as specifically addressed in this guidance, employers must comport with the recordkeeping and reporting requirements of the LMRDA. Section 206 of the LMRDA requires all individuals who must file reports such as Forms LM-10 and LM-30 to maintain applicable records such as “vouchers, worksheets, receipts, and applicable resolutions” for a period of at least five years after such reports have been filed. 29 U.S.C. § 436.

Q67. What does it mean for an employer to act “diligently and in good faith” to comply with the reporting requirements for an employer's most recently completed fiscal year?

A67. For OLMS' purposes, an employer who makes reasonable attempts to locate or reconstruct missing records, completes Form LM-10 as accurately as possible based on the located or reconstructed records, and who does not knowingly or negligently withhold information will have made a “diligent” and “good faith” effort to comply with the reporting requirements for its most recently completed fiscal year.

Q68. Can a company's compliance officer sign Form LM-10?

A68. Ordinarily, no. The LMRDA provides that an employer report must be signed “by its president and treasurer or corresponding principal officers.” 29 U.S.C. 433(a). In addition to the exception explained in FAQ, Question 66, which allows delegation of signing authority in certain limited circumstances for a fiscal year beginning on or before December 31, 2005, other officers can sign the report if they perform many of the functions normally performed by a company's president and/or treasurer. If a report is signed by an officer other than the president and/or treasurer, in Item 13 or 14 of Form LM-10, as appropriate, cross out the pre-printed officer title and insert the appropriate officer title.


K. Effective Date and Delinquent Reports

Q69. When is the guidance provided in response to these Frequently Asked Questions effective?

A69. This guidance is effective for all fiscal years beginning on or after January 1, 2005. The LMRDA requires that an employer report (Form LM-10) be filed within ninety days after the end of the employer's fiscal year. 29 U.S.C. § 437(b). Accordingly, employers whose fiscal year extends from January 1, 2005 to December 31, 2005, for example, must file a report conforming to this guidance by March 31, 2006. Employers whose fiscal year extends from March 1, 2005, to February 28, 2006, must file a report conforming to this guidance by May 29, 2006.

Q70. What if I owe a report for earlier fiscal years?

A70. Under a special enforcement policy and grace period, similar to the recent enforcement policy and grace period provided Form LM-30 filers, new filers of Form LM-10 will not have to submit reports or maintain records for fiscal years beginning prior to January 1, 2005, even if such reports should have been filed. Specifically, in the interest of achieving greater compliance with the reporting requirements, the Department will not require a new filer to submit reports for any prior years absent extraordinary circumstances. The new filer must submit its report for the first fiscal year beginning on or after January 1, 2005, on time, and without further direction by OLMS. For those who do not take advantage of this special enforcement policy, OLMS will continue to follow its normal practice, in which OLMS may seek reports from covered employers for the five prior years.

“Extraordinary circumstances” under which OLMS may require a new filer to submit reports covering the same financial interest for previous years include: (1) existence of an ongoing investigation relating to the financial interest; and (2) evidence of egregious conflicts of interest, such as those that would constitute serious violations of section 302(a) of the Labor Management Relations Act of 1947, 29 U.S.C. 186(a), or represent outright attempts to purchase official favors through cash or in-kind payments.

Q71. What are the current ramifications for filing a Form LM-10 late? Are there any monetary penalties?

A71. The LMRDA does not authorize civil monetary penalties for late filing of any required report. However, it does authorize the Department of Labor to bring a civil action in order to compel the filing of any required report and provides for criminal penalties for willfully failing to file a required report or submitting a false report. See FAQ, Questions 66, 69, and 70 concerning the Department's enforcement policy for delinquent Forms LM-10 for fiscal years prior to 2005.

Q72. How can I take advantage of the grace period if I don't have a reportable interest for FY05?

A72. If an employer does not have a reportable transaction for its first fiscal year beginning on or after January 1, 2005, but wishes to take advantage of the grace period, the employer must maintain or create records sufficient to verify that it identified no reportable interests for this fiscal year despite established internal procedures or reasonable, good faith efforts. See FAQ, Question 66. These records must be maintained for five years, in the event that the Department must verify the employer's compliance with the grace period. The employer should not submit a blank Form LM-10, or any other filing, to the Department.


L. Effective Date of Form LM-10 Coverage of Trusts and Service Providers to Trusts

Q73. Is the Department required to pursue rulemaking in order to make any change in coverage of Form LM-10 to include payments from trusts, or at least make any such change apply only to future fiscal years?

A73. No. The Department is not required to engage in rulemaking before issuing guidance that trusts are covered by the Form LM-10, but, as a matter of enforcement discretion, the Department will not seek to enforce Form LM-10 reporting requirements against trusts pending the completion of the Form LM-30 rulemaking proceeding initiated on August 29, 2005.

The Department's views on whether the LMRDA requires disclosure of payments from trusts to union officials have evolved over time. In correspondence issued in 1967, a high ranking Department official responded to an inquiry concerning whether reporting is required of officers of labor organizations who receive payments from union and employer established pension and welfare plans. The letter concluded that no report was required.

On June 27, 2005, the Office of Labor-Management Standards (OLMS) placed on its Web site a document titled “Trusts and Form LM-30 and Form LM-10.” In this guidance, OLMS indicated that payments from trusts to union officers and employees are reportable on Form LM-30 if the trust is an employer or business, and stated that there is a strong presumption that by their nature most trusts are businesses. OLMS also indicated that payments from trusts to unions or union officials would be reportable on Form LM-10, if the trust is an employer.

In a Notice of Proposed Rulemaking published in the Federal Register on August 29, 2005, the Department sought comments on whether a trust is, or can constitute, an “employer” or a “business,” making such payments reportable on the Form LM-30. The NPRM noted that the Form LM-30 is used by union officers and employees to report, generally speaking, payments (1) from an “employer” and (2) from a “business” that buys, sells, leases or otherwise deals with the union official's union, the employer of the union members, or a trust in which the union is interested, among others. 70 Fed. Reg. 51166, 51182.

Whether payments from trusts are reportable on the Form LM-30 is an issue on which the Department's position is evolving and which is subject to an ongoing rulemaking. See 70 Fed. Reg. 51166, 51182. The position set forth in OLMS' June 27, 2005, guidance, made in response to numerous requests for compliance assistance, represents the Department's current policy, subject to final resolution after notice and comment. As a matter of enforcement discretion, however, the Department will not file an enforcement action seeking Form LM-30 reports of payments from trusts that are lawfully constituted pension or welfare plans to union officials who are acting as trustees of the trust, pending the completion of the Form LM-30 rulemaking. Similarly, the Department will not seek to enforce the Form LM-10 filing requirements for these payments pending the completion of the Form LM-30 rulemaking and further written guidance.

Q74. Is the Department required to pursue rulemaking in order to make any change in coverage of Form LM-10 to include service providers to trusts, or at least make any such change applicable only to fiscal years beginning after the change in coverage has been made?

A74. No. The Department has not made any change in its interpretation of section 203(a) of the LMRDA with regard to service providers to trusts. As discussed in the response to question 1, above, any entity that meets the statutory definition of an “employer” is considered an employer under the LMRDA. 29 U.S.C. § 402(e) (defining “employer”); Form LM-10, Instructions, Part III (Who Must File). Service providers who meet this definition, one of the employers described in the response to question 6 above, and who make payments to labor organizations or their officials must file a report, unless a specific exemption is applicable. 29 U.S.C. § 433. There is no exemption that specifically excludes employers who provide services to trusts from the Form LM-10 requirements.

Another Department reporting form, long in existence, further indicates that payments from service providers to trusts are covered under the LMRDA. In some ways, the Form LM-30 is the counterpart to the Form LM-10. Broadly speaking, employers report payments to union officials on Form LM-10 and union officials report payments from employers on Form LM-30. The Form LM-30, which has been in effect since 1963, requires union officers and union employees to report payments from a “business … any part of which consists of buying from, selling or leasing to, or otherwise dealing with … a trust in which your labor organization is interested.” Form LM-30 Instructions, Part B. Thus, since 1963, union officials have been specifically informed of the need to report payments from service providers to trusts, such as pension and welfare plans, in which their union had an interest. Although the language in the Form LM-10 is different, requiring reports of payments from “any employer,” its breadth plainly covers service providers. This inference is made unavoidable by the specificity of the Form LM-30, which expressly singles out these transactions.

On June 27, 2005, OLMS placed on its Web site a document entitled “Trusts and Form LM-30 and Form LM-10.” This guidance was in response to numerous questions received by OLMS related to the circumstances in which payments from a trust in which a union is interested are reportable on Form LM-30 and Form LM-10. The guidance noted that a Form LM-30 would have to be filed if a union officer or employee received a payment, such as a lunch, golf outing, or ticket to a sporting event, from a service provider, such as an accounting firm, law firm, or investment manager, that does business with a trust in which the labor organization is interested, unless the payment is covered by any of the exceptions. The guidance also noted that a Form LM-10 would be required if the service provider is an employer, unless the payment, lunch, golf outing, tickets to a sporting event, etc. is covered by any of the exclusions.

This guidance does not effect any change in the law. Service providers to trusts are under the same obligation now as they were on the effective date of the LMRDA. The Department was not required to issue this guidance through rulemaking, nor has it chosen to make the guidance effective only for fiscal years beginning after the issuance of the guidance. However, as a matter of enforcement discretion, the Department will not seek reports for fiscal years that began prior to January 1, 2005, if the conditions described in questions 66 - 67, 70 and 72 are satisfied.


M. Form LM-30 Rulemaking

Q75. Should Form LM-10 filers be interested in the Form LM-30 rulemaking?

A75. Yes. In the Federal Register of August 29, 2005 (70 FR 51166), the Department published a Notice of Proposed Rulemaking that would revise the form that officers and employees of labor organizations are required to file under the LMRDA (Form LM-30).

There are several reasons why Form LM-10 filers should be interested in the proposed revision to the Form LM-30. Among other things, both the Form LM-30 and Form LM-10 have similar de minimis standards. In addition, the proposed rule changes the Form LM-30's definition of “bona fide employee” to eliminate the exemption for payments to employees for activities other than productive work, such as payments from employers to union officers for work performed for the union. The Form LM-10 has a comparable provision. Further, the Department proposes to eliminate the provisions for a special report found in the regulations and the Instructions for the Form LM-30. The Form LM-10 and its implementing regulations have a comparable provision. The Form LM-30 also contains two exceptions involving transactions in the “regular course of business,” as does the Form LM-10, and both forms incorporate by reference payments of the kind referred to in section 302(c) of the Labor Management Relations Act. 29 U.S.C. § 186(c). Although the Form LM-30 rulemaking will not directly revise any portion of the Form LM-10 or its Instructions, decisions made in the Form LM-30 context may well affect the enforcement and interpretation of the Form LM-10, and could set a precedent for any future, though currently unplanned, Form LM-10 rulemaking.

Q76. What are the differences between what must be reported on the Form LM-30 and the Form LM-10?

A76. First, the filer is different. The Form LM-30 must be filed by officers and employees of labor organizations if they or their spouses or minor children receive certain types of payments or hold certain types of interests. The Form LM-10 must be filed by employers who have engaged in certain financial transactions with any labor organization or officer, agent, shop steward, employee, or other representative of a labor organization.

Second, the types of transactions that must be reported are somewhat different. On the Form LM-30 a labor organization officer or employee's interests in and transactions with employers or businesses (or with a person who acts as a labor relations consultant to an employer) must be reported. This includes direct and indirect interests and transactions. The statute also specifically requires officers and employees to report interests or transactions that his or her spouse or minor children have or have been party to that meet the requirements in the statute. 29 U.S.C. § 432

The Form LM-10 includes any direct or indirect payment or loan of any thing of value or any promise or agreement of a payment or loan of any thing of value to not only any labor organization officer or employee, but also payments or loans to a labor organization, agent, shop steward, or other representative of a labor organization. The statute's language does not include the official's spouse or minor children. Note, however, that in unusual cases a payment to a spouse or minor child, if intended for the benefit of the union official, may be considered an “indirect” payment, and be reportable on Form LM-10. See FAQ, Question 40, regarding treating payments to a union official's spouse as indirect payments to the union official. Similarly, labor organization employees performing “exclusively clerical or custodial services” are not required to file Form LM-30, but an employer who makes a payment to “any … employee of a labor organization” must file a Form LM-10. The Form LM-10, unlike the Form LM-30, does not exclude payments to exclusively clerical or custodial workers.

An employer must also report on the Form LM-10 any expenditure, payment to or agreement with certain entities, an object of which is to persuade, interfere with or restrain employees in exercising or not exercising their collective bargaining rights, as described in the statute.

Both forms have a de minimis exception for gifts or gratuities of an insubstantial amount ($250 or less). There are also some other exceptions included in the statute. For both forms, the main exception is for transactions of the kind referred to in section 302(c) of the Labor Management Relations Act. This exception applies to all transactions on the Form LM-10, but only one category of transactions on the Form LM-30.

One example of where reporting may overlap is where an employer holds a golf tournament and pays the $300 entrance fees for union officers that participate. The value of the golf event must be reported on the Form LM-30 and the Form LM-10.


N. How to File Form LM-10

Q77. Do I complete a separate Form LM-10 for each reportable activity?

A77. No. You must complete one Form LM-10 for each fiscal year in which you had reportable activity. However, the form must include a separate Part B for every person or organization with which you engaged in reportable activity.

Q78. When do I file Form LM-10?

A78. Form LM-10 must be filed within 90 days after the end of the filer's fiscal year.

Q79. Where can I get a copy of Form LM-10?

A79. Form LM-10 and instructions can be downloaded here.

Q80. Where do I file Form LM-10?

A80. The completed Form LM-10 must be mailed to:

U.S. Department of Labor ESA/OLMS, Room N-5616 200 Constitution Avenue, NW Washington, DC 20210-0001

Q81. How do I file an amended Form LM-10?

A81. Complete the form in its entirety and write “Amended” in Item 2 along with the period covered by the report. Also write “Amended” at the top of Page 1 of the form.

Q82. Are Form LM-10 reports available to the public?

A82. Yes, all reports required to be filed under the LMRDA are public information. You can view and print Form LM-10 reports for the year 2000 and later at www.union-reports.dol.gov. You can also order earlier reports at this Web site. In addition, Form LM-10 reports may be examined, and copies purchased, at the OLMS Public Disclosure Room in Room N-1519 at the above address.

Q83. How can I get more information on Form LM-10?

A83. If you have additional questions about Form LM-10 or your reporting obligations, you can e-mail OLMS directly at OLMS-public@dol.gov.

Q84. Where does the employer report the name of the person or labor organization that received the payment or benefit that is being reported?

A84. The name is reported in Item 9.b. of Form LM-10 and the position in the labor organization is reported in Item 9.c.

Q85. How do I complete Item 1. of Form LM-10 when I don't have a file number?

A85. OLMS assigns a five-digit file number for each reporting employer. If this is your first time filing Form LM-10, leave Item 1. blank. Form LM-10 Instructions, Part A, Item 1.

Employers who filed a Form LM-10 prior to 2003 received four-digit file numbers. As OLMS has expanded file numbers to five-digits, simply place a zero in front of your old four-digit file number to meet the format requirement.

Q86. How do I complete Form LM-10 when payments are made on a single day to separate payees to purchase services, meals or goods for the same officer of a labor organization?

A86. Payments made on a single day to separate payees for the same officer of a labor organization, such as payments to a restaurant, hotel, and a professional sports ticket vendor, should be reported on a single Part B of Form LM-10, listing each transaction.


O. Criminal Liability under the Labor Management Relations Act

Q87. If an employer has to report a payment, does that mean the employer has committed a crime?

A87. No, although some payments from employers to unions and union officials may constitute a crime, not all such payments do. Willful violations of section 302(a) and (b) of the Labor Management Relations Act are subject to criminal prosecution only by the Department of Justice, not the Department of Labor. 29 U.S.C. § 186(a), (b) and (d). Section 302(c) of the Labor Management Relations Act, 29 U.S.C. § 186(c), contains a list of payments that are exceptions from the prohibition in subsections (a) and (b) and therefore are not violations of the statute and not subject to criminal prosecution. 29 U.S.C. § 186(c)(1-9).

This guidance at times discusses the language of section 302(c) of the Labor Management Relations Act, 29 U.S.C. § 186(c), because “payments of the kind referred to in section 302(c)” need not be reported on the Form LM-10. 29 U.S.C. § 433(a)(1)(B). When concluding that a payment is reportable, the guidance does not interpret the provisions of section 302(c), and conclusions reached by the Department regarding payments of the kind referred to in section 302(c) would not bind the Department of Justice in carrying out its criminal enforcement responsibilities.

Last Updated: 10/26/07

 

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