Office of General Counsel Memo
IMMEDIATE ATTENTION REQUESTED
TO: Statewide Officers
FROM: William P. Seamon
Scott Michael Goodspeed
DATE: December 18, 2007
RE: Reminder of LM-30 Reporting Obligations and Update on Changes in the Law Beginning January 1, 2008
Our File No: 7029-P
The purposes of this memorandum are: (1) to alert officers, stewards, leaders, employees and other personnel who were not previously subject to the LMRDA of changes in the filing and reporting requirements which take effect at the beginning of 2008; and (2) to again remind all officers, covered employees of PEF and other personnel of the substantive LM-30 filing requirements.
This office previously distributed a memo to all statewide officers, executive board members, and staff of PEF in February of 2006, reminding certain officers and employees of PEF of their obligations to file the LM-30 form with the U.S. Department of Labor. Federal law requires that union officers and employees file the LM-30 if they, their spouses or their minor children have certain financial dealings with: (1) any employer whose employees the union represents or seeks to represent; or (2) any vendor with whom the union conducts business.
In that memorandum, we also described a number of changes to the filing requirements which were being proposed in regulations then-pending before the U.S. Department of Labor. Since the publication of our last memorandum, some of the changes we discussed therein as “pending” have been enacted by the Department of Labor and are scheduled to take effect at the beginning of the year. These changes include not only substantive changes with respect to what is reportable under the LMRDA, but also changes with respect to those to whom the reporting obligations apply including, for the first time, shop stewards and other personnel that engage in labor relations activity while on employer time. Thus, there has been a significant expansion in the number of union officials covered by the law that may need to file the LM-30 form in the future.
Please note: the changes discussed in this memorandum became law in August of 2007, but do not take effect until the beginning of the individual’s first fiscal year after that date. Thus, for PEF officers and employees who are already covered by the reporting requirements, the standards of reporting set forth in the previous memoranda still apply. Those officers and employees must file a report for all activity during the calendar year 2007 by March 31, 2008. However, for PEF stewards and other personnel who were not previously covered by the LMRDA before the recent changes, they will be required to track or log their reportable activity as of January 1, 2008, the typical beginning of the individual’s next fiscal year, even though such activity will not have to be reported until March 31, 2009.
As stated in our previous memoranda, the PEF Legal Department cannot advise you with respect to whether your particular circumstances require the filing of an individual LM-30 report. This memorandum is intended only to provide general information concerning the reporting requirements and the reach of the law. Of course, we remain available to answer any general questions you still may have.
For those already required to file for 2007 under current regulations, the LM-30 form covering the 2007 calendar year must be filed by March 31, 2008.
I. CHANGES WHICH ARE APPLICABLE TO THE 2008 FISCAL YEAR AND THE MARCH 31, 2009 FILING DEADLINE
A. Expansion of the Reporting Requirements to Non-PEF Employees, Union Stewards and others who conduct labor relations activities on their employer’s time in excess of 250 hours per reporting cycle.
The U.S. Department of Labor has enacted significant changes relating to union officials who are not employed by the union, but spend a significant amount of time assisting other union members with labor-management issues, or engaging in other union activity, while on company time. This includes persons who conduct labor-management relations activity of any kind under “no docking,” “release time” or “union leave” provisions of a collective bargaining agreement. Formerly, a person on contractual or past-practice union leave, such as an Executive Board member or a union shop steward, did not have to report salary he or she received from his or her employer while attending to such business. Under the old rule, contractual leave benefits were considered part of an employee’s salary, and “bona fide payments received as salary” were excluded from reporting obligations. Monetary union leave benefits, which were received by employees pursuant to collective bargaining agreements, were simply treated as “wages” received for employment.
The new regulations no longer include contractual payments made to employees conducting union business as “bona fide payments received as salary.” Contractual benefits, which permit union members to conduct union business during what is otherwise considered “working time”, are no longer considered “wages” for purposes of the LMRDA. In fact, the Department of Labor has determined that an employee conducting any union business on company time is no longer performing as an “employee” of the employer at all, but rather, as an “employee” of the union. We strongly disagree with this interpretation. However, because the Department of Labor has deemed such employees to be “working” for the union during such activity, wages and benefits received from the employer are, under the new rules, considered a “thing of value” received by a union officer from an employer whose employees the union represents. Therefore, effective January 1, 2008 (the beginning of the next fiscal year for most individuals), once a 250-hour threshold is met, such wages are reportable until further notice.
The new rules do not necessarily require union representatives to report all wages that are paid by an employer to such union for any activity which is related to union business. Whether and to what extent such wages are reportable depends on whether the wages are paid pursuant to a release time or union leave provision in a collective bargaining agreement, or pursuant to some other kind of arrangements. Each of these situations is addressed separately below.
B. Unreimbursed Wages Paid During Union Leave or Release Time Under a Collective Bargaining Agreement.
For individuals who are provided union leave time or release time under a collective bargaining agreement, wages paid pursuant to such collective bargaining agreement are not reportable until such time reaches 250 hours in a single year. This type of union leave or release time is permitted under the collective bargaining agreement and is not reimbursed to the employer. This regulation affects Executive Board members, shop stewards, and any other PEF officer or employee who receives contractually-guaranteed pay under Article 4 of the PEF/State Agreement while he or she participates in union activities which take place during normal working hours for more than 250 hours per year. Thus, if union leave or release time encompasses less than 250 hours in a given year, the wages received during such leave are not reportable. However, once this 250-hour threshold is met, all wages paid are reportable, including the first 250 hours. Be aware that because of the broad language of the new regulations, a wide variety of “union activity” counts toward the 250-hour limit. Any time that the employee is not completely under the control of the employer counts. Thus, all wages paid during an officer or employee’s attendance at negotiations, labor/management meetings, the PEF Convention, representational activities and any other union leave or release time that is not reimbursed to the employer by PEF would become reportable on the LM-30 after a covered employee reaches the 250-hour threshold.
C. Unreimbursed Wages Paid During Union Leave or Release Time Under a Local Arrangement Outside the Collective Bargaining Agreement
The 250-hour threshold applies only to contractually guaranteed union leave or release time. Individuals who are on union leave from their employer, and whose leave is given by the employer under a “local” arrangement other than the collective bargaining agreement must report all wages paid during such leave, irrespective of whether the employee is paid for less than 250 hours under his or her arrangement. Thus, employees who receive pay from their employer but are out on union leave pursuant to an individual agreement with a particular agency must report all such pay received from their employer beginning January 1, 2008. There is no exception for less than 250 hours.
D. Employees on Union Leave and Whose Wages are Reimbursed by PEF to the Employer.
A third class of employees on release time or union leave are those who receive wages from the employer while on leave, but whose wages are reimbursed to the employer by PEF. An employee who is on union leave and whose wages are reimbursed to the employer by PEF need not report any wage payments. It is our opinion that because the union reimburses the employer for the wages paid to such employees, the employee is not receiving a “thing of value” from the employer. In effect, such employees’ wages are paid by PEF, not the employer. However, union stewards and other officers, whose union leave pay is not reimbursed, will definitely have to consider contractual wages, which are paid during the conduct of union business, as reportable beginning January 1, 2008. As noted above, whether an employee or officer who spends less than 250 hours on paid union business needs to report depends on whether wages are paid pursuant to a collective bargaining agreement, or pursuant to another arrangement which is outside the collective bargaining agreement, and whether such wages are reimbursed to the employer.
In sum, stewards and others who receive contractual or other pay while on union business during 2008 need to keep track of all time spent on “union business” after January 1, 2008. For those whose leave is contractual, all wages received must be reported if wages are received for more than 250 hours of union business during 2008. For those whose leave is outside the collective bargaining agreement, all wages must be reported, even if they are for less than 250 hours of union business. Therefore, any steward and other union officer or employee, who receives wages from his or her employer while on union leave during fiscal year 2008 and beyond should keep careful track of such time spent on union business and the corresponding wage payments.
The PEF Legal Department is researching ways to minimize the impact of the new rules, and is currently conferencing with affiliates about a number of options. We are closely monitoring developments and additional information will follow at the appropriate time.
II. The “De Minimis” Gift Exception
In our previous memoranda, we advised officers and employees of the “de minimis” gift exception. Under that exception, a union officer or employee, who received something of value from a covered vendor or employer, would not have to report such gifts (for example, meals, tickets, gratuities) if they had an aggregate value of two hundred and fifty dollars ($250.00) or less. Thus, as long as the total value of all gifts received from a covered vendor or employer is less than $250.00, the gifts are not reportable. The Department of Labor has retained the “de minimis” exception. However, beginning with the 2008 fiscal year, individual payments or gifts, valued at less than twenty dollars ($20.00) will not need to be counted in determining whether the $250.00 threshold has been met, even if the gifts were given routinely. For example, if a covered employer or vendor regularly takes an officer or employee to lunch during lengthy negotiations, none the lunches count toward the $250.00 reporting limit so long as the value of each lunch is $19.99 or less. Meals which exceed the $20.00 threshold would be counted.
In addition, the Department has added a reporting exclusion for a union official or employee whose admission is paid to one or two “widely attended events,” where the cost for the official or employee to attend is one hundred twenty five ($125.00) dollars or less. A “widely attended event” is one in which a large number of persons are expected to attend, and one which will be attended by both union officials and persons who are not related to a union. This exception was intended to allow union officers and employees to attend neutral education seminars, conferences and other events, at the expense of third parties, without incurring reporting obligations. The exception would include, for example, up to $125.00 tuition received by an officer or employee to attend a seminar on the FMLA which was open to both union and non-union attendees, or a seminar on employee benefit plans which was attended (or could be attended) by both union and non-union employees. It would not include attendance at union-sponsored steward training classes or the PEF annual convention.
III. REVIEW OF THE LMRDA AND LM-30 FILING REQUIREMENTS
The Labor-Management Reporting and Disclosure Act (LMRDA) requires virtually all union officers (including Executive Board members) and employees to file a Labor Organization Officer and Employee Report, known as form “LM-30,” if they, their spouses or their minor children have certain financial interests or dealings with either of the following: (1) any employer whose employees the union represents or seeks to represent; or (2) any vendor with which the union does business. Any financial dealings or interests, which a union officer or employee has with such vendor or employer is known as a “reportable interest”.
The LM-30 concerns a particular officer’s or employee’s personal potential conflicts of interest. Therefore, it is the responsibility of the individual officer or employee to complete and file the report if he or she thinks that he or she has a reportable interest or dealing with an employer. For those required to file, the LM-30 form must be filed by March 31, 2008. An officer or employee of a union, who has a reportable interest and fails to report such interest, may face criminal penalties for such failure to report.
As a reminder, the LMRDA requires every “officer” and every “employee” of a labor union, who has a reportable interest or dealing with an employer whose employees the union represents or seeks to represent, to disclose such reportable interest on the LM-30. 29 U.S.C. § 432(a).
An “officer” is broadly defined to include the following:
- Any constitutional officer;
- Any person authorized to perform the functions of President, Vice President, Secretary, Treasurer or any executive function; or
- Any member of the executive board or governing body.
29 C.F.R. § 404.1(a)(2)(b)
An “employee” is likewise broadly defined to include “any individual employed by a labor organization.” Excluded from the definition of “employee” are those employed to perform exclusively clerical or custodial duties. 29 C.F.R. § 404.1(a)(2)(c). Note: As a result of recent changes, which are explained in detail above, the definition of “employee” has been expanded to include persons conducting a certain amount of “union business,” even though they are not actually “employed” by PEF. Every employee, except those employed solely in a clerical and custodial capacity, must disclose any reportable interests on the LM-30.
If you are an “employee” or “officer” as defined above, you must file an LM-30 with the U.S. Department of Labor if any of the following were true at any time during the preceding year:
1. You, your spouse, or your minor child possessed any direct or indirect financial, legal or equitable interest in any vendor which does business with the union or any employer whose employees PEF represents or seeks to represent. Such interests include, but are not limited to stocks (other than publicly traded stocks), bonds, securities or any other ownership or equity interest.
2. You, your spouse or your minor child received any direct or indirect income, other than as an employee of the employer, from any vendor or any employer whose employees PEF represents or seeks to represent.
3. You, your spouse or your minor child engaged in any business transaction involving the exchange or loan of money, stocks, bonds or other interests with any vendor or employer whose employees PEF represents or seeks to represent.
4. You, your spouse or your minor child derived any economic benefit whatsoever from any business dealing which involved any vendor or other entity buying, selling, or leasing to or from any employer whose employees PEF represents or seeks to represent.
5. You, your spouse or your minor child personally transacted any business with any vendor who does business with the union, or any employer whose employees PEF represents or seeks to represent, unless such transaction involved work for the employer as an employee of the employer, or the purchase or sale of goods in the ordinary course of business.
6. You, your spouse or your minor child received anything of value from any vendor with which the union does business or any employer whose employees PEF represents or seeks to represent, unless the value received is compensation or salary earned in the course of employment with the employer. This includes gifts, such as concert tickets or meals.
7. You have received wages from your employer under a collective bargaining agreement for time spent in excess of 250 hours conducting union business, or you have received any wages from your employer under an arrangement other than a collective bargaining agreement for time conducting union business.
If you are an employee or officer of PEF, and any one of the above statements (except number 7) is true, then you must file the LM-30 form no later than March 31, 2008. If number 7 applies to you, you must begin to track all wages received by your employer while on union business beginning January 1, 2008 and report those that are required by your situation no later than March 31, 2009.
IV. FREQUENTLY ASKED QUESTIONS
Q. I am an employee of PEF. My spouse and I own a large amount of stock in Dell Computer Company. Dell has a business relationship with PEF, and is a major vendor to PEF. Must I report my ownership interest in Dell Computer, and the dividends and profits I receive on my stock?
A. Generally, under LMRDA, you must file an LM-30 if, your spouse or your minor child personally transacted any business with any vendor who does business with the union, or if you, your spouse or your minor child received anything of value from any vendor with which the union does business. However, certain business transactions with vendors are excluded from the reporting requirement. One such exclusion relates to publicly traded stock. If your “business transaction” with a vendor involves the purchase or sale of publicly traded stock, or your “value” received from such vendor is a result of dividends or increased stock value, you are not required to report.
Q. I am an employee of PEF, and I have an insurance policy with Liberty Mutual, which is a vendor to the PEF Membership Benefits fund. Does this constitute a reportable “business transaction” with a PEF vendor? If so, do I need to file and LM-30?
A. The LMRDA requires you to report only certain interests or dealings that you have with PEF vendors. The Membership Benefits Trust is a separate corporate and legal entity, which exists independently from PEF. Therefore, the fact that a particular business may have a vendor relationship with the Trust does not make it also a vendor of PEF.
The LMRDA only applies to employees’ and officers’ relationships with PEF vendors. Thus, in the question presented, the business transaction that the employee has with Liberty Mutual, a vendor to the Trust (and not PEF), is not a reportable interest.
Q. I am an employee of PEF, and I have an insurance policy through a vendor that does business with PEF directly, and not just Membership Benefits. Do I need to report this transaction with a PEF vendor?
A. Business transactions with PEF vendors are reportable under the LMRDA unless such transactions involve the purchase or sale of goods or services in the ordinary course of business. Therefore, if you bought the insurance policy as a member of the public at large, in the ordinary course of business, the transaction need not be reported. However, if you received special rates or additional coverage which are not available to the public at large, and you think that you received the benefits because of your position with PEF (assuming you did NOT get the discount through Membership Benefits), you may need to report the discount or additional coverage.
Q. I am an employee of PEF, and I receive a number of discounts and other benefits through Membership Benefits. Is Membership Benefits an entity which does business with PEF? And if so, do I need to report anything of value I receive from them?
A. As noted above, the Membership Benefits Trust is a separate business entity. Although the benefits are available through membership in or employment by PEF, the Membership Benefits Trust does not “do business” with PEF. PEF does not fund the Membership Benefits Trust, nor does it negotiate with its vendors to get members the discounts they receive. Thus, the Trust is not an entity which deals with PEF or does business with PEF. Things of value, received from the Membership Benefits program, are therefore not reportable interests.
Q. I am an employee of PEF, and my spouse works for Dell, a major vendor to the union. She receives a significant amount of salary, benefits and regular bonuses from Dell as an employee. Do we need to report this income?
A. The LMRDA excludes from its reporting requirements any value from a vendor which is received as “compensation or salary earned in the course of employment” with the vendor. Therefore, salary, benefits and bonuses paid to an employee of a vendor with whom PEF does business is not reportable. However, if your spouse receives gifts from his/her employer that are not part of the regular salary and bonus structure, such gifts may have the appearance of seeking influence and may be reportable.
Q. I am a part-time steward. I punch out to perform labor organization business. I am reimbursed by the union for my lost pay. Am I considered an employee of the labor organization and, if so, am I required to report these payments?
A. While performing work on the local's behalf, a steward who is paid lost time serves as an employee of the local. If the union is making the payments (i.e., the employer is reimbursed), there is no Form LM-30 reporting obligation for the lost-time pay. However, if a steward is paid by the employer for this time, the steward will have to report all wages paid once the 250-hour threshold is met.
Q. Is there a de minimis exception where I don't have to report payments under a certain amount?
A. Yes. The LMRDA has historically not required reports of payments or gifts of insubstantial value. For purposes of Form LM-30, labor organization officers and employees do not have to report any payments or gifts totaling $250 or less from any one source. Payments or gifts valued at $20 or less do not need to be included in determining whether the $250 threshold has been met. For example, if a labor organization officer or employee receives from an employer two gifts worth $20 each and two restaurant meals worth $150 each, the official need only keep records of the restaurant meals, and report the receipt of this $300 value. However, a series of payments or gifts designed to circumvent the $20 threshold must be reported.
Q. How does the bona fide employee exception apply to payments received as a result of a "union leave," “release time” or "no-docking" arrangement with the employer?
A. Compensation received under a "union-leave," “release time” or "no-docking" policy is not received as a bona fide employee of the employer making the payment. Under a union-leave policy, the employer continues the pay and benefits of an individual who works full time for a union. Under a “release time” or no-docking policy, the employer permits individuals to devote portions of their workday or workweek to union business, such as processing grievances, with no loss of pay. Under the new rules, such payments are received as an employee of the labor organization and thus, such payment must be reported by the labor organization officer or employee unless they (1) totaled 250 or fewer hours during the filer's fiscal year and (2) were paid pursuant to a bona fide collective bargaining agreement. If a filer must report payments for union-leave, release time or no-docking arrangements, the filer must enter the actual amount of compensation received for each hour of union work.
Q. What if I receive payments under a union leave or no-docking policy that is simply a longstanding practice and not in the collective bargaining agreement?
A. If the union-leave, release time or no-docking policy does not appear in the collective bargaining agreement, the 250-hour threshold does not apply. In that situation, employer payments for all time spent performing union business during company time must be tracked and reported by the employee.
Q. I don’t have any reportable interests. Do I need to fill out the LM-30 to reflect the absence of reportable interests?
A. The filing of an LM-30 is only required if you have a reportable interest. Therefore, if you have none, there is no need to file a report to that effect.