Labor Department Moves Against Union Corruption

New disclosure rules from the Department of Labor have infuriated the leaders of Big Labor because they will force large labor unions to reveal more about their finances-and also prepare for the day when workers can withhold the portion of their union dues that goes to political activity. Despite labor’s screams, the revised Form LM-2, which must be filed by unions with $250,000 or more in annual receipts beginning in 2005, does not require as much as some critics of Big Labor would like.

“Over the past five years, OLMS [Office of Labor-Management Standards] convictions for union corruption have averaged 11 per month,” says the final rulemaking report on LM-2 from Secretary of Labor Elaine Chao’s department. For example, Washington (D.C.) Teachers Union head Barbara Bullock pleaded guilty October 7 to fraud and conspiracy charges. She stole $2.5 million, said prosecutors.

Critics of Big Labor such as Ken Boehm, chairman of the National Legal and Policy Center (NLPC), have long complained about the government’s lax union disclosure rules. The Labor Department’s new rule says “reporting requirements in the revised Form LM-2 are far less intrusive and less burdensome than reports corporations file” and notes that “the revised Form LM-2 does not require any independent, outside oversight of union financial reporting.” Public corporations and non-profits are required to have independent auditors review their books.

“It’s not as much as we would like, but it’s a good step in the right direction,” said Boehm. The “biggest shortcoming,” he said, is that unions will not have to itemize expenses under $5,000.

By contrast, said Boehm, “Federal political campaigns have to itemize office coffee if it costs more than $200.”

Ed Frank, director of media relations for the Labor Department, said, “No congressional action is needed to implement these rules.” He refused to comment on criticism of the $5,000 threshold.

Boehm said unions will now have to report, in a combined category, expenditures for lobbying and political activism. That will provide ready-made data to show how much workers should get back if they don’t want their money used for such purposes.

Many workers are forced to contribute dues to unions that they do not join, Boehm said, because laws allow unions to claim exclusive collective bargaining rights in many workplaces. “Agency shop members, as opposed to full union members, can claim their portion of this money back under Beck,” Boehm said. “Beck was very clear that these workers can be forced to pay only for collective bargaining and contract administration.” The U.S. Supreme Court’s Communications Workers v. Beck (1988) decision delineated that right, but neither Congress nor the Executive Branch has implemented rules to enforce it.

Union bosses have threatened to challenge the new LM-2 rules in court. But, said Boehm, “They won’t win. The law is clear.” But advocates at the Labor Department are not so sure.

Mark Mix, president of the National Right to Work Legal Defense Foundation, is also concerned about the $5,000 threshhold. “There’s an awful lot of activity that can be disguised at $4,999,” he said. Boehm said that the $5,000 threshold may allow lesser forms of union corruption to continue, such as $500 steak dinners on the union tab. He noted, “The ex-boss of the Ironworkers union, Jake West, was sentenced to three years in jail this week for corruption.” West ran up thousands of dollars in expenses at a posh Washington, D.C. steakhouse, the Prime Rib.