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WASHINGTON—The U.S. Department of Labor today announced final rules to strengthen the financial integrity and transparency of labor unions by improving the annual financial disclosure forms filed by unions as required by the Labor-Management Reporting and Disclosure Act (LMRDA).
After receiving and reviewing more than 35,000 public comments, the Department made numerous changes to its initial proposed rule that will reduce the burden on reporting unions, exempt more than 500 smaller unions from having to file the most detailed financial report, and protect the legitimate privacy interests of union members, as well as the organizing strategies and other “trade secrets” of affected labor organizations.
“Most labor officials are dedicated to the well being of their members. But the current financial disclosure forms that unions file provide little of value to rank-and-file members about their union’s finances and operations, and they have failed as an effective deterrent against financial misconduct,” said Secretary of Labor Elaine L. Chao. “Too many workers are being hurt by the wrongdoing of a few. In this era of accountability and transparency, updating the financial reporting requirements will empower and protect workers who trust their unions to represent their interests.”
Due to changes made in the final rule in response to public comments, only the nation’s largest unions - those with $250,000 or more in annual receipts - will be required to itemize certain receipts and disbursements of $5,000 or more on their Form LM-2 annual report. The number of reporting categories in the current form will be reduced and will more accurately reflect the services large unions provide to their members. And for the first time, union members will be able to readily obtain information about the financial transactions of large trusts like “joint funds,” which are partially financed and managed by their unions. Some union-financed trusts control hundreds of millions of dollars of assets, yet they have no financial accountability or transparency to the union members on whose behalf they are managed.
Over the last several years, the Department has made major strides in converting the LMRDA reporting regime to an electronic system, in response to Congressional mandates. The new rule requires large unions covered by the changes to file their reports electronically or obtain a hardship exemption. The Department is developing financial reporting software that it will provide free of charge to covered unions. It will also provide extensive compliance assistance resources to help unions understand the new disclosure requirements and make changes to their accounting and reporting systems. The new rules will be effective for annual financial reports for fiscal years beginning on or after January 1, 2004, although no union will have to actually file a report under the new disclosure rule until March 2005, nearly 18 months from now.
The new rule enhancing union transparency echoes the Department’s efforts to protect workers with stronger retirement security laws, improved corporate governance and record-breaking enforcement of the health and safety and wage and hour laws that the Department administers. Additional information about the rule and related issues may be found at www.olms.dol.gov.