WASHINGTON (CN) – Large labor unions must be transparent in their financial reporting, as companies are required to be, to prevent mismanagement of funds, according to a new Labor Department regulation.
The rule requires the largest unions to provide more information, clarify certain items, and establish a procedure for revoking a union’s privilege to file a simplified annual report after investigation, due notice, and opportunity for a hearing. The rule states that a reason the Secretary of Labor may revoke the privilege to use the simplified form is if the union left out information that would have changed or influenced the mind of a reasonable person relying upon the report.
Form LM-2 will be revised to require additional information on Schedules 3 (Sale of Investments and Fixed Assets) and 4 (Purchase of Investments and Fixed Assets), to allow verification that these transactions are performed at arm’s length and without conflicts of interest, and 11 and 12 (the value of benefits paid to and on behalf of officers and employees). The change to Schedules 11 and 12 are to provide a more accurate picture of total compensation received by labor organization officers and employees. There also will be new instructions for Forms LM-2 and LM-3.
A company may file a simplified form, LM-3 or LM-4, when it has annual receipts of less than $250,000 per fiscal year.
Click the document icon on the front page for details and links to the regulations. The document icon under the “Mine Dust, Lead, Fish & More” heading leads to other new regulations.