Construction Employee Relations and Benefits
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DOL REQUIRES EMPLOYERS TO DISCLOSE ANY ITEM OF VALUE GIVEN TO A UNION, UNION OFFICER, OR UNION EMPLOYEE

By Dave Wing

Did your organization pay or agree to pay any money or other thing of value to a union, a union officer, or a union employee in 2004? Did you realize such payments or promises may be prohibited? Whether prohibited or not, did you know that unless that payment or promise fits within a narrow set of exceptions , your organization is required to report the payment to the Department of Labor on DOL Form LM-10 and the union, union employee, or union officer is also required to report on corresponding DOL forms? (Form LM-2 for the unions and Form LM-30 for the union employees and officers.)

While the underlying laws prohibiting payments to unions, union employees, and union officers, as well as the statutory reporting requirements have long been in effect, the Department of Labor has only recently issued “clarifying” guidance that expands greatly the scope of the reporting obligation. The DOL is making clear that LM-10s are required from all employers who engage in the transactions with the unions, union employees, or union officers. It is not limited to employers with a union contract or with employees represented by a union. There are penalties both for violating the prohibition on the payments or agreements to pay as well as for the failure to disclose such payments or promises to pay. The penalties are severe and can include imprisonment as well as substantial monetary fines.

Specific guidance from the DOL is expected soon but is not yet available concerning the LM-10s. However, specific guidance is available concerning the reports required of the unions, union employees, and union officers. This guidance provides a preview of what will be required of employers. From the information currently available from the DOL, there will be a de minimis exception for reporting sporadic or occasional gifts, gratuities, or loans valued at $25 or less under circumstances unrelated to the recipient’s status in a labor organization. Otherwise, the following items are examples of reportable expenditures:

• A joint employer-union trust fund that is itself an employer and that provides a dinner, holiday gift basket, golf outing, athletic event tickets, or other item to the fund trustees.

• A charitable organization that is an employer, that has a union employee or officer on its board, and that provides its board members a dinner, reception, overnight retreat, or other item of value.

• An employer who provides dinner for a union bargaining committee during negotiations if union officers or employees participate in the dinner.

• An employer who contributes money or any other thing of value for a union’s golf or other charity event or a retirement gift for a union officer or employee.

• An employer sends a year-end holiday gift to a union business agent of a fruit basket or bottle of wine.

• An employer provides a personal loan to a union officer.

• An employer pays the expenses of a union officer to travel with management officials to a plant in another part of the country to view some new equipment that the employer is thinking of purchasing.

• An employer provides a loan to the husband of a union officer of a union that represents the employer’s employees. 

• An employer makes a campaign contribution to assist a union officer or union employee running for a local public office.

This year, the DOL is providing a grace period beyond the usual due date for filing the forms applicable to 2004. The LM-30s to be filed by the union officers and employees are to be filed by August 15, 2005. The DOL has announced that it will provide a grace period for employer filings for 2004 as well, but the date has not yet been announced. Good faith filings within the grace period will mean that the employer will not be required to file for years before 2004. Filings for 2005 will be due 90 days after the end of 2005 or the employer’s fiscal year, whichever is later.

Now is an excellent time to reconsider future payments or agreements to pay unions, union officers, or union employees any item of value that does not clearly fit into the exceptions noted above. The risks of being found in violation of the prohibitions and the burdens of meeting the reporting obligations are likely to be too great.

If you believe that you may have made payments or promises of payments to a union, union employee, or union officer in 2004 or after, it is important that you obtain specific guidance on your obligations under the reporting requirements. Should you have questions in this area, please contact any member of the Spencer Fane Britt & Browne LLP Labor and Employment Group.