Office of Labor-Management Standards (OLMS)

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OLMS News

Number: 17-07

October 29, 2007

New Form LM-10 FAQs

The Department of Labor’s Office of Labor-Management Standards (OLMS) has added three new or expanded Form LM-10 FAQs to our Web site at http://www.olms.dol.gov as set forth below.

OLMS is also preparing forthcoming Form LM-10 FAQs relating to those current FAQs, such as FAQ 12 and FAQ 73, that specifically indicate that further written guidance will be issued now that the Form LM-30 rulemaking has been completed. See http://www.dol.gov/esa/regs/compliance/olms/RevisedLM30_FAQ.htm.

New FAQs:

EXPANDED! Q7 (A). Are service providers to labor organizations and Taft-Hartley funds agents of a labor organization?

A7(A). A person or entity who is an "employer" under the LMRDA and makes "any payment or loan, direct or indirect, of money or other thing of value (including reimbursed expenses), or any promise or agreement therefore, to any labor organization or officer, agent, shop steward, or other representative of a labor organization, or employee of any labor organization" must file a report, unless a specific exemption is applicable. 29 U.S.C. § 433. As a result, by its terms, the statute requires reports of payments from an employer to an agent of a union.

Labor unions routinely contract with vendors and service providers. Some of these contracts create an agency relationship. For example, a financial institution may be acting as an agent of a labor organization when carrying out its responsibilities to make investment decisions for the union. The Department has been asked whether employers must report payments to such service providers or vendors that are unrelated to the vendor or service provider's status as an agent.

The Department will not require employers, except in unusual circumstances, to report payments to such service providers or vendors on Form LM-10. Ordinarily, a payment to a service provider serving as a labor organization's agent will be reportable only if the payment is made as a result of, or pursuant to, the agency relationship. For example, payments by employers to a service provider, such as a law firm hired by a labor organization, would ordinarily not be reportable, unless such payments were made with the intent or purpose of influencing the manner in which the law firm executed its agency obligations, such as the positions it would advocate while representing a labor organization in collective bargaining.

Without additional facts, it is not apparent how a service provider or vendor to a Taft-Hartley fund could be viewed as an agent of the labor organization by virtue of that relationship. Therefore, employers will not ordinarily be required to report on Form LM-10 payments made to service providers or vendors to a Taft-Hartley fund. [new language is in bold]

NEW! Q61(A). A number of employers sponsor a union-conducted meeting attended by many union officers and employees (the meeting does not meet the definition of a widely-attended gathering). The employers make payments directly to the vendors leasing the space for the meeting and who are supplying the food and beverages to those attending the meeting. The union that is conducting the meeting does not require individuals to sign-in or register. How can a participating employer obtain the required information to complete Form LM-10?

A61(A). When an employer makes a payment to a vendor or to a union itself for a union-conducted meeting, the issue of whether the payment should be reported as a payment to the union or as a payment to the union officers and employees in attendance depends on whether the union controls who attends or if the employer has a role in that decision. If the union determines who will attend, the employer should report the payment as either a direct or indirect payment to the union, as appropriate. The employer does not have to maintain records of those in attendance and the union officers and employees do not have to file Form LM-30 to report such payment. If, on the other hand, the employer has a role in determining which union officers and employees attend the meeting, the employer must maintain a record of the amount that it contributed to the meeting and the names of the union officers and employees who attended. In this last instance, it is the employer’s responsibility to request that the union use reasonable methods, such as a sign-in sheet, to ensure that it records and can provide the employers with the names of the attendees and their union status. An employer who does not make such arrangements with the union prior to the meeting will have failed to establish procedures necessary to file an accurate and complete Form LM-10. See also FAQ 61. When determining whether a Form LM-10 is actually required, the employer should always consider the applicability of the reporting exemptions, including the de minimis exemption.

I. Payments to and from Tax Exempt Organizations

NEW! Q62. Are payments from an employer to a tax exempt organization reportable on Form LM-10?

A62. Payments made by an employer to a tax exempt organization are generally not reportable on Form LM-10, as they are not payments made to a labor organization. An organization, including a tax exempt organization, is not a labor organization unless it meets the LMRDA definition of a “labor organization.” See Form LM-10 FAQ 42. The Act provides as follows:

“Labor organization” means a labor organization engaged in an industry affecting commerce and includes any organization of any kind, any agency, or employee representation committee, group, association, or plan so engaged in which employees participate and which exists for the purpose, in whole or in part, of dealing with employers concerning grievances, labor disputes, wages, rates of pay, hours, or other terms or conditions of employment, and any conference, general committee, joint or system board, or joint council so engaged which is subordinate to a national or international labor organization, other than a State or local central body. 29 U.S.C. § 402(i).

If the organization does not meet this definition, it is not a labor organization, and payments to it are generally not reportable. Two exceptions to this rule follow.

Indirect payments. Under highly unusual circumstances, payment to a tax-exempt organization may be considered an indirect payment to a labor union or labor union official. Payments to a charity created to fraudulently enrich the union officials that chartered it, for example, or to provide educational scholarships to their own children, would be reportable. On the other hand, the mere fact that a union official sits on the board of the charity would not in itself make the payment reportable.

Tax exempt funds that constitute union funds. Payments made to a tax exempt organization are reportable on Form LM-10 if the union manages the organization’s assets and controls its expenditures. For example, payments from employers to a tax-exempt union relief fund, would be reportable if the union manages its assets and controls its expenditures. For further example, payments to a union-sponsored PAC would be reportable if the union manages the PAC’s assets and controls its expenditures, as these payments are made to a union. 29 U.S.C. § 433.

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Last Updated: 10/29/07