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ESA News Release: [05/20/2008]
Contact Name: Loren Smith or Richard Manning
Phone Number: (202) 693-4676
Release Number: 08-0693-NAT

Court upholds U.S. Department of Labor reporting requirements on employer payments to unions

Workers to benefit from increased transparency

WASHINGTON — On May 5, the U.S. District Court for the Northern District of Georgia dismissed a challenge to the U.S. Department of Labor's authority to require reports from attorneys who make payments to unions or union officials. The Labor-Management Reporting and Disclosure Act (LMRDA) requires employers to file reports if, among other things, they provide money or other things of value to a union or a union officer or employee.

In this case, Warshauer v. Chao, an attorney who had been appointed as a designated legal counsel by the United Transportation Union (UTU) sued to enjoin the secretary of labor from requiring him to file a Form LM-10 (Employer Report). Designated legal counsel are lawyers recommended by a union to its members for representation in workers' compensation, personal injury or other matters.

The attorney challenged certain Web site advisories that the department's Office of Labor-Management Standards (OLMS) had issued in 2005 and 2006 to provide guidance on Form LM-10 reporting requirements. These included advisories stating that designated legal counsel who make certain payments must file Form LM-10 reporting the payments. The advisories also provided guidance that payments of $250 or less need not be reported.

The Web site advisory followed an OLMS investigation of corruption in the UTU that resulted in the felony conviction of four union officials. These officials pled guilty to conspiring with others to violate federal mail and wire fraud statutes, among others, by using their positions of authority to solicit and collect cash payments and other things of value from attorneys doing business or seeking to do business as designated legal counsels of the UTU.

The Web site advisory made plain that designated legal counsel must file a Form LM-10 reporting payments from the lawyer to the union or its officials because union members have a right to evaluate whether a lawyer's presence on a list of designated legal counsel is based on merit rather than a financial relationship between the lawyer and union officials.

The court held that the Web site advisories were interpretative guidance not subject to the notice and comment rulemaking requirements of the Administrative Procedure Act as the plaintiff had argued. The court also found that the evidence presented by the plaintiff failed to support a determination that the advisories departed from previously established official policy concerning Form LM-10.

"This decision is a victory for America's working men and women, helping them learn who is making payments to their unions and union leaders, and is part of the department's continuing efforts to ensure transparency and accountability required by LMRDA from employers as well as labor organizations," said Gregory F. Jacob, solicitor of labor.

OLMS is the federal law enforcement agency responsible for administering most provisions of the LMRDA. The agency's criminal enforcement program includes investigations of embezzlement from labor organizations, extortionate picketing, deprivation of union members' rights by force or violence, and fraud in union officer elections. The agency's civil program receives and publicly discloses unions' annual financial reports, conducts compliance audits of labor unions and seeks civil remedies for violations of union officer election procedures. In certain cases, OLMS also conducts joint investigations with other Labor Department agencies, including the Employee Benefits Security Administration and the Office of Inspector General, as well as other law enforcement agencies including the Federal Bureau of Investigation.

OLMS's public disclosure Web site at www.unionreports.gov contains union annual financial reports and reports required to be filed under the LMRDA by employers, labor relations consultants, and union officers and employees, as well as copies of collective bargaining agreements. Other information, including synopses of OLMS enforcement actions, is available at www.olms.dol.gov.