Facing the tidal wave of unions’ political power and their reluctance to be held more accountable to their members, the Department of Labor is fighting to implement the first major reform of labor union disclosure requirements in 40 years.
The reform would require specific disclosures to the Department of Labor of expenses greater than $2,000 from unions with receipts over $200,000.
These public forms, known as LM2 forms, would give union members insight into the spending of their compulsory dues. But the increased disclosure could cost unions millions of dollars and much of their sweeping political influence.
Though this rule change requires no action by Congress, moderate Republicans and Democrats have tried to ‘de-fund’ this decision by Secretary Elaine Chao by preventing her from spending funds enforcing it in next year’s budget, which is currently moving through Congress.
Twenty-eight Republicans signed a letter to Chao on April 7, asking her to “withdraw” the rule due to the burden it would impose on the unions. AFL-CIO Chairman John Sweeney said that it would cost over a billion dollars for unions to comply with the new rule.
These pro-labor Republicans proposed the de-funding amendment, only to retract it when President Bush replied that he would veto the entire spending bill if the rule were de-funded.
This all takes place in the wake of the 1988 Communications Workers v Beck Supreme Court decision where the court ruled that expenses made by a union not attached to the “financial core” of collective bargaining and other legitimate union functions, could not be made compulsory.
In other words, money spent by the union on political activity had to be refunded to any members who objected to the expense. In 2001, the AFL-CIO had $164,246,963 in expenses and 13,250,198 members. It spent over $40 million in the 2000 elections, engaging over 1,600 “coordinators” in 35 states, according to a February 2000 article in the Washington Post.
A 2001 paper by Charles Baird written for the Smith Center, projects that total union in-kind donations in the 2000 election cycle alone, if similar to that of the AFL-CIO, could reach $900 million.
Unions have tried to avoid the Beck decision and retain their political influence by listing no political expenses on their LM2 disclosure forms. Because Beck was never enforced, they were never required to list their political expenses, and even their legitimate expenses were grouped in such large amounts as to be almost meaningless.
Funding Political Activities
The AFL-CIO listed $14,376,048 in “Contributions, Gifts and Grants” for 2001, without any further clarification. The new rule would break those down to any expense greater than $2,000. The result will be that union members who saw how their unions spend their dues would then have a claim on funds spent on activities not related to collective bargaining and other core union expenses.
In 1959, Congress passed the Labor-Management Reporting and Disclosure Act due to what it called the “breach of trust, corruption, disregard of the rights of individual employees, and other failures to observe high standards of responsibility and ethical conduct” found in Labor Unions at the time.
The current LM2 form evolved out of that legislation and has remained relatively unchanged for 40 years. Since then, unions with receipts over $200,000 have been required to disclosure their finances, but have never had to itemize those expenses in a way similar to what Secretary Chao is proposing. Several recent corruption scandals, including one involving the Washington Teacher’s Union, have given political momentum to the rule change.
Even those who supported campaign finance reform agreed that greater union disclosure was worthwhile. Don Simon, the General Counsel for Common Cause, said that union disclosure, within the context of campaign finance, has “long been one of the issues that needs strengthening.”
Other groups that supported campaign finance legislation generally agreed that more union disclosures were a positive development.
“Transparency is important and the more information citizens have the better,” said Larry Noble, the Chairman of the Center on Responsive Politics. “The adequacy of labor disclosures have traditionally been a problem, and it’s a worthwhile cause.”
Unions’ political power comes partly from their direct campaign contributions to candidates, a reported $351 million since 1990, with 93% going to Democrats. These direct donations are regulated and watched much more closely than the “in-kind” donations not covered by current elections law. Get out the vote drives and other political activities fall off of the disclosure radar. This is where the Beck decision becomes very important. The in-kind donations, the money spent by the union for things other than direct donations, would be disclosed.
Most news reports have focused on the direct contributions, but Beck would apply and indirectly affect the unions’ in-kind donations. It would add those to the overall disclosure of the union, resulting in greater funds spent on actions not related to collective bargaining. The lack of detailed union disclosures has, until now, made any enforcement of illegal in-kind expenses impossible.
However, the enforcement of Beck could be endangered if the amendment to de-fund it comes up in the Senate.
The Labor appropriations bill passed the House July 10 by a vote of 215-208, and it is unclear how some moderate Republican Senators, such as Arlen Specter (R.-Pa.) who chairs the Senate Appropriations committee’s Labor subcommittee, will address the rule change.
Pro-labor forces have also tried to slow the change by submitting over 35,000 comments to the Labor Department on the rule. The Senate is expected to consider Labor appropriations in late August or September.
David Kendrick of the National Legal and Policy Center has said this will be “the key vote on union corruption in a decade.”
Stefan Gleason, Vice President of the National Right to Work Foundation, a group that advocates for worker rights, said that the Bush Administration has watered down the disclosure requirements. He said the itemization requirement will make unions “simply spend in smaller amounts that they won’t have to report.” He also said Bush dropped the independent audit requirement which was essential. Gleason said that this was part of a “misguided attempt on the part of the Bush administration to court the Carpenter’s and Teamster’s unions” by compromising.
This compromise has not satisfied the unions, however. A source in the Labor Department says that a recent documentary by Labor on union members during 9/11 and the cleanup at ground zero is meeting “total resistance” from the unions due to the LM2 rule change.
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