Labor Department toughens union transparency rules

The often-forgotten third-wheel prong of my three-pronged “Taft-Hartley Consensus” principles of good labor policy is subjecting labor union operations to public scrutiny as a price of labor unions’ extensive, government-granted special powers. The most important law upholding that principle is the Labor Management Reporting and Disclosure Act of 1959, enacted to require unions (and certain management-side consultants) to publicly report on their finances after Congressional hearings exposed extensive corruption in organized labor, especially the Eisenhower administration-friendly Teamsters Union.

In the mid-2000s, the George W. Bush administration gave the disclosure rules in LMRDA teeth, allowing union members and the public to see their dues money going to dive bars, baseball teams, and radical-left political-advocacy organizations. Now, the Trump administration Labor Department has issued a final rule expanding the disclosures and making them more comprehensive.

DOL’s Changes

In its new final rule, the Department of Labor made a major change to the annual reports filed by the largest labor unions (those reporting more than $40 million in annual receipts). Starting in union fiscal years beginning July 1, the Labor Department will require the roughly 100 labor organizations that meet that threshold to file a “Form LM-2 Long Form” with additional disclosure schedules. According to the Office of Labor Management Standards, the DOL agency that administers the LMRDA:

This new form has 32 schedules, including a schedule that requires disclosure of foreign transactions, and new itemization requirements that will provide union members and the public with more detailed information about the financial condition and operations of the nation’s largest and most financially complex labor organizations.

Notable changes to the LM-2 Long Form (relative to the current Form LM-2) include separating the present “representational activities” schedule into an organizing expenditures schedule and a contract-administration schedule, separating the present “political activities and lobbying” schedule into those component parts on separate schedules, requiring unions to itemize receipts for revenue collections exceeding $5,000 in a single transaction (for instance, a large remittance of per capita tax from a local union to a national union), and requiring unions to itemize investment and asset transactions exceeding $5,000.

The purpose of the changes (and less substantial changes to the LM-2 for unions reporting receipts of $350,000 to $39,999,999) are to carry out the purposes of the LMRDA (and the consensus principle it codified): Ensure union members, prospective union recruits, and the public can appropriately track the use of member dues and compulsory fees required of workers in non-right-to-work states.

Further Improvements

The Labor Department’s work is to be commended. But there are still some changes that Congress could make to union reports if it wanted to deviate from its current practice of supporting union bosses and actually empower workers.

First, while breaking up the political-campaign and lobbying spending on the LM-2 Long Form is useful and helpful to watchdogs, there is still a problem with separate segregated fund transfers. Congress should revise the statutes or otherwise direct the Labor Department to account for separate segregated fund transfers on their own schedule to ensure that union members can determine without doubt whether their dues payments or optional political contributions funded independent-expenditure campaigning.

Second, Congress needs to expand coverage of the LMRDA to unions of government workers. When LMRDA was passed, most union members were private-industry workers, so focusing on private-sector unions made sense. Today, roughly half of union members work for a government, and they should have the same powers to scrutinize their unions that their private-sector counterparts enjoy.