In February 2006, Baker & Daniels LLP reported a new enforcement initiative announced by the U.S. Department of Labor (“DOL”) aimed at the Form LM-10 reports of various union-related expenditures that employers are required to file under the Labor Management Reporting and Disclosure Act (“LMRDA”). In essence, the DOL announced that it would begin actively monitoring the required employer reports after years of near non-existent enforcement measures. Around the same time, the DOL announced a similar initiative regarding the Form LM-30 reports that unions are required to file under the LMRDA. The transactions that unions must report on the LM-30 are largely the same as those that employers must report on the LM-10, providing DOL with the ability to readily cross-check employer and union reports for accuracy.
On July 2, 2007, the DOL issued its final rule (“Final Rule”), governing Form LM-30 reports. Though the Final Rule only covers required union reports, the changes made by the Final Rule will almost certainly be reflected in revised formal or informal guidance governing the employer reports required on Form LM-10. The Final Rule makes several significant changes to prior DOL policy.
The De Minimis Exemption
Under the Final Rule, the DOL retains its longstanding de minimis reporting exemption but has adopted a much more easy-to-administer test: LM-30 filers need not report “payments or gifts totaling $250 or less from any one source during the reporting year” and “payments or gifts valued at $20 or less need not be included in determining whether the $250 threshold has been met.” This new standard eliminates the difficult considerations imposed by the previous rule, such as whether a particular payment or gift was “sporadic,” “insubstantial,” or “related to the recipient’s status in a labor organization.”
Importantly, a filer cannot utilize the de minimis exemption to hide the receipt of a series of gifts or payments purposely set at $20 or less to avoid reaching the $250 threshold. For example, a filer would have to report his receipt of individual tickets worth $20 or less to all of a professional baseball team’s home games that are provided before each game rather than given as a complete package at the start of a season.
In addition, the Final Rule provides that LM-30 filers need not report attendance at “one or two widely-attended gatherings for which an employer has spent $125 or less per attendee per gathering” during the year, provided that a large number of attendees including union officials and those unrelated to the union are expected to attend.
Payments Received Pursuant to No-Docking or Union Leave Provisions
Many employers have “no-docking” or “union leave” policies under which they continue to pay employees even for time spent doing union work. Prior to the Final Rule, the DOL’s position was that such payments were non-reportable on the LM-30 and LM-10. The Final Rule expressly reverses the DOL’s position. Under the Final Rule, payments received under a union leave or no-docking policy must be reported unless they (1) totaled 250 or fewer hours during the filer’s fiscal year and (2) were paid pursuant to a bona fide collective bargaining agreement. If reporting is required, the filer must also calculate the hourly monetary value of any fringe benefits received and include such figure in the total.
Implications Under 29 U.S.C. § 186
The majority of the payments reportable on the LM-10 and LM-30 mirror those prohibited by the Labor Management Relations Act (“LMRA”), 29 U.S.C. § 186. Section 186 prohibits employers from, among other things, providing money or things of value to unions or union officials which represent or seek to represent employees of the employer. The DOL maintains that employers and unions must submit LM-10 and LM-30 reports notwithstanding the fact that those very reports may disclose a violation of the LMRA. Both the LMRA and LMRDA carry their own sets of substantial civil and criminal penalties for violations.
Even though DOL’s new de minimis exemption for LMRDA reporting purposes is much easier to analyze than the prior version, there is no de minimis exemption to the LMRA’s prohibition on providing “things of value.” Courts have broadly construed the term “thing of value” to include virtually anything, including lunches, watches, and preferred rates on hotel rooms. In other words, the Final Rule’s reporting requirements are more narrow than Congress’s prohibition on union-related payments, and whether a transaction qualifies for the de minimis reporting exemption says nothing about whether that transaction is itself legal.
There is case law holding that union leave and no-docking policies, are lawful under the LMRA where the employee’s right to payment vests prior to taking the leave and prior to the benefits being conferred (as when it is provided for in a collective bargaining agreement). The DOL’s Final Rule nevertheless requires unions to report compensation and benefits received pursuant to such policies for amounts of time in excess of greater than 250 hours per fiscal year. The DOL’s rationale is that, even if not illegal, union members have an interest in knowing how much time their representatives are spending on union business. Here, the Final Rule’s reporting requirements are apparently broader than Congress’s prohibitions, and union leave or no-docking pay in excess of 250 hours must be reported even though the pay itself is likely permissible under the LMRA.
These changes have not been instituted formally or informally for employer LM-10 reports. However, the DOL has historically utilized near-identical standards for employer’s LM-10s and unions LM-30s, and they will likely continue to do so. Again, employers need to be aware that the DOL will easily be able to check the accuracy of employer LM-10 reports against union-submitted LM-30 forms. Any current practices that raise concerns under these new standards or the LMRA should be discussed with counsel on a case-by-case basis.