- DOL Announces Grace Period for Filing Information Regarding Financial Transactions with Unions
- May 3, 2006
- Law Firm: Ford & Harrison LLP - Atlanta Office
The U.S. Department of Labor (DOL) recently announced what is essentially a "grace period" for employers to file records of financial transactions with unions as required by the Labor-Management Reporting and Disclosure Act (LMRDA). The LMRDA requires employers to report certain financial transactions with unions within 90 days after the end of the employer's fiscal year. For employers whose fiscal year ended December 31, 2005, the disclosures must be filed by March 31, 2006. Recognizing that many employers are not familiar with the LMRDA's reporting requirements, the DOL has issued an advisory announcing that, while it does not have the authority to extend the LMRDA's statutory filing deadline, it will not compel compliance with the reporting requirements until May 15, 2006 for employers whose reports are due March 31, 2006.
The DOL has developed Form LM-10, which employers are to use when making the disclosures required by the LMRDA. (Unions are to make similar disclosures on Form LM-30.) The DOL has posted extensive Frequently Asked Questions on its web site to provide some guidance regarding the reporting requirements. These questions can be accessed at: http://www.dol.gov/esa/regs/compliance/olms/LM10_FAQ.htm.
This Alert highlights some of the LMRDA's reporting requirements and exceptions; however, it is not intended to be a detailed discussion of all of the circumstances in which a report may be required. A determination of whether an employer is required to report a specific payment depends on the facts and circumstances of the transaction and should be made in conjunction with experienced labor counsel.
The term "employer" is broadly defined under the LMRDA. Generally, every private sector business or organization within the United States that has one or more employees, as any U.S. law defines that term, is an employer who must file a Form LM-10. The definition of employer also includes any person acting directly or indirectly as an employer or as an agent of an employer, even if that individual has no employees.
Employers required to make reports under the LMRDA include those whose employees are represented by the recipient's union, or whom the union seeks to represent, and employers who do a substantial amount of business with an employer whose employees are represented by the recipient's union, or whom the union seeks to represent. Other employers covered by the reporting requirements include an employer who buys from, sells or leases directly or indirectly to, or otherwise deals with the recipient's union or a trust in which the recipient's union is interested, and an employer in active and direct competition with an employer described above.
What Transactions Must be Reported?
The transactions that must be reported on the Form LM-10 include:
- Payments and loans made to any union or union official, subject to certain exceptions discussed below. However, payments and loans by insurance companies and credit institutions made in the regular course of business are excluded;
- Payments to any employees for the purpose of causing them to persuade other employees regarding bargaining and representation rights, unless the other employees are told about these payments before or at the same time they are made;
- Payments for the purpose of interfering with employees in the exercise of their bargaining and representation rights, or obtaining information on employee or union activities in connection with labor disputes, other than information obtained solely for use in a judicial, administrative or arbitral proceeding; and
- Arrangements (and payments made under these arrangements) with a labor relations consultant or other person for the purpose of persuading employees with respect to their bargaining and representation rights, or obtaining information on employee or union activities in connection with labor disputes, other than information obtained solely for use in a judicial, administrative or arbitral proceeding.
The payments and loans excluded by the LMRDA include:
- payments made to employees as compensation;
- payments in satisfaction of a court or administrative judgment, or in settlement of a dispute;
- payments made at the prevailing market price in the regular course of business with respect to the sale or purchase of an article or commodity;
- amounts deducted from the wages of employees in payment of union dues;
- payments to certain health and welfare trust funds or labor management committees.
De Minimis Exception
Employers are not required to report de minimis payments to a union or union official. To qualify for the de minimis exception, the payment must not exceed $250 and must not be related to the recipient's status in a labor organization. Gifts or loans from multiple employees of one employer to a single union or union official must be aggregated to determine whether the de minimis exception applies. If the total value of the gifts or loans exceeds the $250 threshold, all of the payments made to that official or union must be reported.
According to the DOL, whether payments are unrelated to the recipient's status in a labor organization depends on whether the employer ordinarily provides such consideration to individuals in similar circumstances who are not union officials. For example, if an employer routinely provides meals to all of its clients during the course of a day-long meeting, such meals would be unrelated to the recipient's union status. However, if the employer does not routinely provide meals during such meetings, the provision of meals to union officials during collective bargaining negotiations likely would be reportable, because the meals were provided to the union officials because of their union status.