Last year the U.S. Department of Labor announced plans to lessen the paperwork burden on small unions. But under Trump’s new acting labor secretary Keith Sonderling, the DOL wants to go in the opposite direction, adding new reporting requirements and overhauling how some unions do their bookkeeping.
Under the Labor-Management Reporting and Disclosure Act of 1959 (LMRDA), private-sector unions are required to file annual financial disclosures. The smallest unions fill out one-page forms known as LM-3s or LM-4s. The largest unions file a much more detailed form called the LM-2. All are searchable online. Last year, DOL proposed to raise the LM-2 threshold from $250,000 in annual revenue to $400,000 a year — the first increase since 2003. That’s a good thing from the standpoint of paperwork reduction because it means fewer small unions would have to file the detailed report.
But on June 1, the DOL announced another new rule that it said would take effect July 1 — changing the questions on the LM-2 form and adding a new “Form LM-2 Long Form” for roughly 100 of the largest labor organizations — those that have more than $40 million in annual revenue.
The new LM-2 rules would require unions to break down expenditures that up to now were classified as “representational activities” into two new categories — organizing or contract negotiation and administration. And for expenditures that were previously classed as “political activities and lobbying” unions would now have to spell out which were for political activities and which were for lobbying. That’s not all: It also orders unions to break out meeting expenses by employee. Before, if a union sent a group of staff members to another city to negotiate a contract, their airfare, hotel, and meal expenses would be grouped all together as an expense related to bargaining the contract; now unions would have to assign each employee a share — as if it were a disbursement directly to that employee.
The changes would affect about 600 labor organizations.
In a lawsuit filed June 10 in U.S. District Court, the national AFL-CIO argues that rushing the rule through with 30 days notice and no public comment violates a law called the Administrative Procedure Act — and that the July 1 effective date is arbitrary and capricious. The labor federation says such a change would require labor organizations to dramatically retool their accounting systems and procedures almost immediately.
In October 2020, Trump administration officials at the DOL proposed a similar rule, but it was withdrawn by the Biden administration before it was to take effect. Now the administration says that earlier period of public comment satisfied its obligations under the Administrative Procedure Act even though the new rule isn’t identical.
The AFL-CIO requested a court injunction, but in a June 30 ruling, the judge declined.
“We are disappointed the court did not immediately block the rule from taking effect, which will cause an immediate burden for the AFL-CIO and unions whose fiscal years start July 1,” said AFL-CIO General Counsel Matt Ginsburg in a statement to the Labor Press. “However, we are pleased the court set an expedited briefing schedule on the merits and remain confident we will prevail later this year.”
