New Financial Disclosure Rules Should Go Back to the Drawing Board

The AFL-CIO says the Department of Labor’s proposed new requirements, which call for far more detailed accounting of union finances, are excessively burdensome. They claim these regulations are the product of an anti-union, anti-worker Republican administration that wants to undermine the labor movement and divert its resources from organizing and political action in support of Democrats.

The federation has mounted a fierce lobbying campaign, generating tens of thousands of letters and emails to the DOL during its public comment period. But many union members, especially those fighting real or suspected corruption, welcome the idea of having access to more information on union finances. Who should we believe?

The current LM-2, which must be filed annually with the DOL by any labor organization with income over $200,000 (those with less file an LM-3), requires reporting on a range of information, including officer salaries, union assets, the date of the next officer election, the number of reported members, and whether any officer earns more than $10,000 from another labor organization.

The new rules would go further, requiring a breakdown of expenses to the nearest 10% for each of the following categories: political activities, lobbying, organizing/contract bargaining, and administration. Each staffer's time would also have to be broken down into the same categories.

This is all information that could be useful for union members and which few unions voluntarily disclose.

Is compiling and filing it truly burdensome? Secretary of Labor Elaine Chao estimates 50 hours per year, which does seem burdensome for a union with a $200,000 budget. However, it is impossible for someone unfamiliar with bookkeeping in an organization of this size to accurately judge.

Putting the burdensome question aside, there are other reasons--some good and some bad--that the rules are being opposed.

THE CASE FOR

While union corruption has declined, it remains an intractable problem in some unions. The Teamsters are in the 14th year of a federal monitorship to rid the union of racketeers. The New York Times reported last year that federal prosecutors are mulling a similar move against the International Longshoremen’s Association.

Moreover, even unions that are free of racketeering or serious corruption sometimes bristle at the notion of giving information to the members. The Machinists union, for example, refused members' repeated requests that it comply with a section of the LMRDA which requires unions to "inform members of the provisions of the Act." Members had to sue all the way to a federal appeals court to get the union to do the right thing.

THE CASE AGAINST

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While the new regulations could help union members deal with corruption, they appear to be intended to undermine a union’s ability to act politically. This is particularly troubling in light of the spate of political attacks on workers and unions in recent years.

Forcing unions to report what percentage of staff time and total expenditures are made for political action and lobbying will make it easier to allege that unions which engage in vigorous efforts to elect pro-union candidates or support pro-worker initiatives have violated campaign finance restrictions.

Additionally, the breakdown of expenditures may result in more agency fee payers, those who choose to pay only that portion of dues used for collective bargaining purposes, demanding a larger share of their money back.

Finally, it is difficult not to be suspicious of any union related initiatives coming out of an administration with such an anti-worker, and anti-union record. Though this is not necessarily a good reason to oppose the rules, it is a good reason to be skeptical of them.

DOUBLE SALARIES

Perhaps the most troubling aspect of the new DOL regulations is something that they’ve left out. As noted above, the current LM-2 requires disclosure when any officer receives $10,000 or more as an officer or employee of another labor organization.

One would expect that new requirements ostensibly designed to protect union members from corruption would strengthen, or at least maintain, requirements that multiple salaries be clearly disclosed. Curiously, the DOL has decided instead to eliminate the specific question providing that information.

This alteration in the LM-2 would not only make it more difficult for members to obtain vital information about potential misuse of union funds, it also calls into question the DOL’s motivations for pushing these new regulations.

When one considers that the Teamsters, the union most aggressively courted by the Bush administration, are historically one of the worst offenders when it comes to multiple salary abuses, these questions become downright disturbing.

These rules are a mixed bag and should be sent back to the drawing board.

Judith Schneider is the president of the Association for Union Democracy