New Interest in Enforcement of Labor

Jeff Weintraub
August 10, 2005 — 2,334 views  
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The Department of Labor (DOL) recently announced that it will depart from its longstanding policy of not aggressively enforcing the reporting requirements for employers and labor organizations under the Labor-Management Reporting Disclosure Act (LMRDA). In early July 2005, the DOL announced its intention to begin actively enforcing this reporting requirement for both employers and labor organizations. This new DOL policy is especially dangerous for employers because it can result in both criminal and civil penalties against the employer and its officers, in their individual capacity, for failing to meet the reporting requirements.

What actions by employers can trigger the statutory penalties?

The LMRDA requires employers to disclose payments or loans made during the fiscal year to labor organizations, union officials, or labor relations consultants, even if such parties or their members have no connections to the employer. Under the LMRDA, all employers must submit a LM-10 Form for each fiscal year in which they have given anything of value to a labor organization, union official, or labor relations consultant. Under the LMRDA, the employer must file an LM-10 Form within 90 days of the close of a fiscal year in which any of these transactions occurred. Similarly, labor organizations have to submit a LM-30 Form for each equivalent fiscal year within that same time frame.

Reportable transactions can include employer loans or expenditures for meals, refreshments, sporting event tickets, greens fees, gifts, hotel rooms, etc. However, certain occasional or sporadic de minimis payments (payments of less than $25) are exempt from the reporting requirements as long as the payments are given under circumstance unrelated to the recipient’s status in a labor organization.

For example, if the employer occasionally provides a catered lunch during long meetings with various groups, the lunch would not have to be reported as long as it is valued at less than $25. However, if the employer gave union officials Super Bowl tickets, then both the employer and the union officials would have to report that transaction.

Does the term “labor relation consultant” include payments made to an attorney?

“Labor relations consultant” refers to an agreement or arrangement with a consultant or other independent contractor, which would include attorneys. Employers must report any agreement or arrangement under which the consultant/attorney attempts to persuade employees to exercise or not exercise their right to organize or bargain collectively through representatives of their own choosing. In addition, employers must report any agreement or arrangement made with a consultant/attorney concerning gathering information about activities of employees or a labor organization involved in a labor dispute.
However, the employer can exclude any agreement or arrangement covering services related exclusively to the following:

  1. Giving the employer advice;
  2. Agreeing to represent the employer before any court, administrative agency, or arbitrator; or
  3. Engaging in collective bargaining or other negotiable agreement on the employer’s behalf
  4. Gathering information solely for use in conjunction with an administrative or arbitral proceeding or a criminal or civil judicial proceeding.


Thus, the employer would not have to report any payments made to an attorney exclusively for these purposes. However, if the agreement or arrangement between the employer and the consultant/attorney also covered any of the reportable activities mentioned above, this exclusion does not apply and the employer must report the entire agreement.

What will be the effect of the new DOL guidance?

In early July 2005, the Office of Labor-Management Standards (OLMS), a division of the DOL, released new guidance concerning union-reporting requirements. Although this new guidance referred only to union reporting requirements for LM-30 Forms, the OLMS issued an employer advisory on July 15, 2005 stating that it intended to issue similar new guidance for employers reporting requirement for LM-10 Forms in the near future. Further, the OLMS stated that the new employer guidance will contain many analogous considerations present in the current union guidance.

With regard to the future guidance for LM-10 Forms, the OLMS stated that employers will be given a grace period for the purpose of encouraging voluntary compliance with the requirements. Employers will not be required to submit LM-10 Forms for years prior to 2004 except in extraordinary circumstances (such as when an investigation is already in progress), as long as the employer files the 2004 report within the stated grace period. Thus, the grace period will allow employers to file their reports for 2004 without enforcement of the applicable criminal penalties for late filings. This is especially significant for employers, because the criminal penalties under the LMRDA include personal liability for an employer’s president and treasurer or other comparable principal officers. These criminal penalties are quite substantial, resulting in up to a $10,000 fine and one-year imprisonment for failing to file or making knowing misrepresentations to the DOL. In addition, employers can be liable for civil penalties as well.

What actions should you consider?

Until the OLMS releases definitive guidance concerning LM-10 Forms and the reporting requirements, employers should begin gathering information regarding any applicable payment made in fiscal year 2004. In doing so, employers should record the date of any reportable transaction, as well as the nature of the transaction and the name, address, and position of the individual or individuals who received the payments or gifts. Further, while gathering this data, employers should expect payment-verification questions from labor organizations and unions as they attempt to meet the August 15, 2005 grace-period deadline for filing LM-30 Forms.

In the meantime, the DOL encourages employers to seek compliance assistance if needed, to inform the DOL of any possible compliance difficulties that might arise, and to offer suggestions for improving compliance with the reporting requirements.

If you should have any questions concerning the reporting requirements, LM-10 Forms, or the DOL guidance once it is announced, please contact us at www.weintraubstock.com.

Jeff Weintraub

Weintraub, Stock & Grisham, P.C.