Pursuant to a controversial new rule passed by the U.S. Department of Labor (DOL), “Labor Organization Annual Financial Reports for Trusts in Which a Labor Organization Is Interested,” unions must disclose how certain union-controlled trusts spend and invest their funds.
The rule requires unions with revenue in excess of $250,000 to file annual reports (Form T-1), disclosing “assets, liabilities, receipts and disbursements” of training and strike funds and other trusts whose board members they appoint or whose funds they mostly contribute.
The rule will take effect on April 5, 2020, but unions’ obligations to file will not begin until after the end of their first fiscal year following the rule’s effective date.
The T-1 requires disclosure of loans made to officers or employees, details about disbursements, and the identification of people receiving more than $10,000 from the trust.
The rule is part of the DOL’s continuing effort to foster the reporting requirements of the Labor-Management Reporting and Disclosure Act. The rule does not apply to certain trusts, including political action committees or other political organizations that already disclose their spending; credit unions; and retirement funds falling under the Employee Retirement Income Security Act (ERISA).
The DOL has indicated that the rule is designed to provide union members and others with information relating to trust funds that unions historically have used for a variety of purposes, such as to fund apprenticeship programs, strike funds, redevelopment or investment groups, training funds, building funds, and educational funds. Proponents of the rule believe it will increase financial transparency and expose potential union corruption, including union leader self-dealing. Opponents have expressed skepticism of government intervention in private affairs.
For employers, the rule may result in unsuccessful union organizing when corrupt practices by a union are exposed. (Employers can use the information the rule will make available to educate employees on the facts regarding the risks associated with union representation.) For employees, the rule provides union members with the opportunity to inspect union finances, and thus, make a more informed decision about who they want as their union leaders.