03.16.2018 0

Restore Union Transparency

By Richard McCarty

Union members deserve to know where their dues money is going. For too long, union members have been largely kept in the dark about their unions’ finances, which has allowed corrupt union bosses to line their pockets with their members’ money and get away with it for years.

Labor Secretary Elaine Chao, who served during the George W. Bush Administration, sought to change that. Of course, union bosses were adamantly opposed to additional scrutiny and spent their members’ money trying to block some of Chao’s reforms in the courts; the courts ultimately sided with Chao.  Unfortunately, after Obama won the presidency with the strong support of union bosses, his Labor Department was in no mood to demand much transparency from them; so the agency rolled back Chao’s reforms or simply refused to enforce the law. With Obama long gone, the Trump Labor Department needs to get to work reinstating these critical reforms immediately.

Specifically, the Labor Department needs to reinstate Chao’s reforms of the following filings.

LM-2 filings were supposed to include the full value of compensation packages, including things like free housing and deferred compensation; they were also supposed to include the names of buyers and sellers of union assets of $5,000 or more, and they were to include an itemized listing of receipts.

T-1 filings were supposed to cover trusts such as strike funds, training funds, and building funds.

LM-3 filings are simpler than the LM-2; Chao’s regulation concerning this filing “set the procedure by which a labor organization would lose the privilege of filing a simplified report.”

LM-30 filings, which disclose union officers and employees’ conflicts of interest, were enhanced to include more details, but the Obama Administration announced that it wouldn’t enforce the regulation as long as those required to file the report complied “in some manner.”

For anyone who doubts the importance of union transparency regulations, it should be noted that hundreds of union officials were indicted and convicted on charges of embezzlement, filing false documents, and other crimes during Chao’s tenure at the Labor Department. Additionally, union officials control hundreds of billions of dollars; and unions are some of the most generous and influential political contributors.

While union transparency might seem like a dry, obscure topic, regulations like these can help prevent and reveal corruption by union bosses. If union bosses are tempted to misappropriate funds, they might think twice about it if they know that the union will have to file detailed reports with the Department of Labor. Those union bosses who choose to roll the dice hoping no one will notice their inappropriate expenditures may learn to their chagrin that an eagle-eyed union member or journalist has pored over their union’s reports and spotted the misallocated funds.

Once it’s discovered that union officials have misspent union members’ funds, members can demand that the individuals responsible for the expenditures resign or be fired, or they can vote them out of office. Furthermore, union members can report such offenses to authorities for investigation and potential prosecution. Knowledge really is power.

“Overall, the Trump Labor Department has done a good job of rolling back Obama’s detrimental regulations. Now, we need the Department to seize the opportunity and reinstate Secretary Chao’s union transparency reforms. We’re over a year into the Trump Administration, and the clock is ticking. We know union bosses will likely try to tie these regulations up in the courts. So there’s no time to waste,” said Rick Manning, a member of Trump’s Labor Department transition team.

President Trump was elected with the support of many labor union members, but without the support of virtually any union bosses – nearly all of them supported Hillary Clinton. The Trump Administration should, once again, stand with workers and give them more tools to help determine whether their union’s funds are being spent appropriately. Best of all, the Labor Department doesn’t need to reinvent the wheel; it just needs to reinstate the transparency rules crafted during Chao’s tenure at the Department.

Richard McCarty is the Director of Research at Americans for Limited Government Foundation.

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