Case: D.O.L. Advisory: New Interest in Enforcement of
Labor-Management Reporting Requirements
Citation: www.dol.gov/esa/olms_org.htm
Summary
The Department of Labor (DOL) recently announced that
it will depart from its longstanding policy of not aggressively
enforcing the reporting requirements for employers and labor
organizations under the Labor-Management Reporting Disclosure Act (LMRDA).
In early July 2005, the DOL announced its intention to begin
actively enforcing this reporting requirement for both employers and
labor organizations. This new DOL policy is especially dangerous for
employers because it can result in both criminal and civil penalties
against the employer and its officers, in their individual capacity,
for failing to meet the reporting requirements.
What actions by employers can trigger the statutory penalties?
The LMRDA requires employers to disclose payments or loans made
during the fiscal year to labor organizations, union officials, or
labor relations consultants, even if such parties or their members
have no connections to the employer. Under the LMRDA, all employers
must submit a LM-10 Form for each fiscal year in which they have
given anything of value to a labor organization, union official, or
labor relations consultant. Under the LMRDA, the employer must file
an LM-10 Form within 90 days of the close of a fiscal year in which
any of these transactions occurred. Similarly, labor organizations
have to submit a LM-30 Form for each equivalent fiscal year within
that same time frame.
Reportable transactions can include employer loans or expenditures for meals, refreshments, sporting event tickets, greens fees, gifts, hotel rooms, etc. However, certain occasional or sporadic de minimis payments (payments of less than $25) are exempt from the reporting requirements as long as the payments are given under circumstance unrelated to the recipient’s status in a labor organization.
For example, if the
employer occasionally provides a catered lunch during long meetings
with various groups, the lunch would not have to be reported as long
as it is valued at less than $25. However, if the employer gave
union officials Super Bowl tickets, then both the employer and the
union officials would have to report that transaction.
Does the term “labor relation consultant” include payments made to
an attorney?
“Labor relations consultant” refers to an agreement or arrangement
with a consultant or other independent contractor, which would
include attorneys. Employers must report any agreement or
arrangement under which the consultant/attorney attempts to persuade
employees to exercise or not exercise their right to organize or
bargain collectively through representatives of their own choosing.
In addition, employers must report any agreement or arrangement made
with a consultant/attorney concerning gathering information about
activities of employees or a labor organization involved in a labor
dispute.
However, the employer can exclude any agreement or arrangement
covering services related exclusively to the following:
Giving the employer advice;
Agreeing to represent the employer before any court, administrative agency, or arbitrator; or
Engaging in collective bargaining or other negotiable agreement on the employer’s behalf
Gathering information solely for use in conjunction with an administrative or arbitral proceeding or a criminal or civil judicial proceeding.
Thus, the employer would
not have to report any payments made to an attorney exclusively for
these purposes. However, if the agreement or arrangement between the
employer and the consultant/attorney also covered any of the
reportable activities mentioned above, this exclusion does not apply
and the employer must report the entire agreement.
What will be the effect of the new DOL guidance?
In early July 2005, the Office of Labor-Management Standards (OLMS),
a division of the DOL, released new guidance concerning
union-reporting requirements. Although this new guidance referred
only to union reporting requirements for LM-30 Forms, the OLMS
issued an employer advisory on July 15, 2005 stating that it
intended to issue similar new guidance for employers reporting
requirement for LM-10 Forms in the near future. Further, the OLMS
stated that the new employer guidance will contain many analogous
considerations present in the current union guidance.
With regard to the
future guidance for LM-10 Forms, the OLMS stated that employers will
be given a grace period for the purpose of encouraging voluntary
compliance with the requirements. Employers will not be required to
submit LM-10 Forms for years prior to 2004 except in extraordinary
circumstances (such as when an investigation is already in
progress), as long as the employer files the 2004 report within the
stated grace period. Thus, the grace period will allow employers to
file their reports for 2004 without enforcement of the applicable
criminal penalties for late filings. This is especially significant
for employers, because the criminal penalties under the LMRDA
include personal liability for an employer’s president and treasurer
or other comparable principal officers. These criminal penalties are
quite substantial, resulting in up to a $10,000 fine and one-year
imprisonment for failing to file or making knowing
misrepresentations to the DOL. In addition, employers can be liable
for civil penalties as well
What actions should you consider?
Until the OLMS releases definitive guidance concerning LM-10 Forms
and the reporting requirements, employers should begin gathering
information regarding any applicable payment made in fiscal year
2004. In doing so, employers should record the date of any
reportable transaction, as well as the nature of the transaction and
the name, address, and position of the individual or individuals who
received the payments or gifts. Further, while gathering this data,
employers should expect payment-verification questions from labor
organizations and unions as they attempt to meet the August 15, 2005
grace-period deadline for filing LM-30 Forms.
In the meantime, the DOL encourages employers to seek compliance assistance if needed, to inform the DOL of any possible compliance difficulties that might arise, and to offer suggestions for improving compliance with the reporting requirements.
If you should have
any questions concerning the reporting requirements, LM-10 Forms, or
the DOL guidance once it is announced, please contact us at
www.weintraubstock.com.