After a series of reforms under the Bush administration increased financial transparency of labor union activities, the new administration appears to be scaling back the effort.
Transparency improved under the Bush administration, but the new administration’s Office of Labor-Management Standards (OLMS) on February 3 announced transparency regulations approved on January 17 would be delayed. OLMS called for comments on the regulations’ merits and whether the delay should be extended.
Sixty years ago, after extensive hearings into union racketeering and corruption, Congress enacted the Labor Management Reporting and Disclosure Act (LMRDA). A major provision required labor unions to file annual financial reports with the U.S. Department of Labor.
But until the leadership of Labor Secretary Elaine Chao, who served during the entire tenure of President George W. Bush, those reports were virtually inaccessible, and the information in the reports was for all practical purposes worthless.
A significant reform came in 2008, when union trusts were added to the reporting requirements. The first full year of reporting will begin in 2010.
A further reform dealt with the cost of benefits for union officers and employees. The new regulations require the cost of benefits (pensions, insurance, etc.) attributable to each officer and employee to be listed along with information about that employee’s pay and expenses. Currently, all the costs of benefits for officers and employees are listed in lump sums in another area of the report.
This reform will help union members identify the true cost of union officers and employees and discourage unions from padding their compensation with unduly expensive benefits. But it falls short of letting union members know what those benefits actually are. For example, an officer might have what appeared to be an unusually expensive pension benefit, but it will still be impossible to determine how much the pension benefit pays and what the vesting requirements are.
Evading Reporting Requirements
The reports are supposed to provide information about union finances union members can use to monitor what union officials are doing with their dues dollars.
This was almost impossible for the rank and file to do until Chao instructed OLMS to post the forms on the Internet (at http://www.union-reports.dol.gov) and instituted a series of regulatory reforms to require meaningful information.
The reports (Form LM-2) always have required disclosure of the pay, expenses, and allowances of union officers and employees. Union officials found it easy to avoid any problems with excess salaries, however, by drawing multiple salaries from different levels of the union organization. For example, a local officer might be paid by the local, the district council, and the national union.
The OLMS reforms included addition of an “Officer/Employee” search function to the Web site, so that by entering the name of an officer or employee a union member can find all the salaries and expenses that person is receiving from multiple union levels.
Those interested in commenting on the delayed transparency regulations can find information at the Department of Labor’s Web site, http://www.dol.gov.
David Denholm ([email protected]) is president of the Public Service Research Foundation, an independent, nonprofit organization that studies labor unions and union influence on public policy.