Labor Organization Officer and Employee Reports, 51166-51225 [05-16907]

Agencies

• DEPARTMENT OF LABOR
• Office of Labor-Management Standards
• Labor-Management Standards Office

[Federal Register Volume 70, Number 166 (Monday, August 29, 2005)]
[Proposed Rules]
[Pages 51166-51225]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-16907]



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Part III





Department of Labor





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Office of Labor-Management Standards



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29 CFR Part 404



Labor Organization Officer and Employee Reports; Proposed Rules

Federal Register / Vol. 70, No. 166 / Monday, August 29, 2005 / 
Proposed Rules

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DEPARTMENT OF LABOR

Office of Labor-Management Standards

29 CFR Part 404

RIN 1215-AB49


Labor Organization Officer and Employee Reports

AGENCY: Office of Labor-Management Standards, Employment Standards 
Administration, Department of Labor.

ACTION: Notice of proposed rulemaking; request for comments.

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SUMMARY: The Employment Standards Administration (ESA) of the 
Department of Labor (Department) is proposing to revise the Form LM-30 
and its instructions. The Form LM-30 implements section 202 of the 
Labor-Management Reporting and Disclosure Act of 1959 (LMRDA or Act), 
29 U.S.C. 432, whose purpose is to require officers and employees of 
labor organizations to publicly disclose possible conflicts between 
their personal financial interests and their duty to the labor union 
and its members. The proposed rule would clarify the Form LM-30, and 
its instructions, by explaining key terms and providing examples of the 
financial matters that must be reported, eliminate exemptions in the 
current Form LM-30 that permit filers to not report financial matters 
that would otherwise be required to be reported under the Act, and 
improve the usability of the reports by union members and the public. 
The Department invites general and specific comment on any aspect of 
the rule; it also invites comment on specific points, as noted 
throughout the text of this preamble.

DATES: Comments must be received on or before October 28, 2005.

ADDRESSES: You may submit comments, identified by RIN 1215-AB49, by any 
of the following methods:
    Federal eRulemaking Portal: https://www.regulations.gov.
    E-mail: OLMS-REG-1215-AB49@dol.gov.
    FAX: (202) 693-1340. To assure access to the FAX equipment, only 
comments of five or fewer pages will be accepted via FAX transmittal, 
unless arrangements are made prior to faxing, by calling the number 
below and scheduling a time for FAX receipt by the Office of Labor-
Management Standards (OLMS).
    Mail: Mailed comments should be sent to Kay Oshel, Director of the 
Office of Policy, Reports and Disclosure Office of Labor-Management 
Standards, U.S. Department of Labor, 200 Constitution Avenue NW., Room 
N-5605, Washington, DC 20210. Because the Department continues to 
experience delays in U.S. mail delivery due to the ongoing concerns 
involving toxic contamination, you should take this into consideration 
when preparing to meet the deadline for submitting comments.
    OLMS recommends that you confirm receipt of your comment by 
contacting (202) 693-0123 (this is not a toll-free number). Individuals 
with hearing impairments may call (800) 877-8339 (TTY/TDD).
    Comments will be available for public inspection during normal 
business hours at the above address.

FOR FURTHER INFORMATION CONTACT: For further information contact Kay H. 
Oshel, Director of the Office of Policy, Reports and Disclosure, at: 
Kay H. Oshel, U.S. Department of Labor, Employment Standards 
Administration, Office of Labor-Management Standards, 200 Constitution 
Avenue NW., Room N-5605, Washington, DC 20210, olms-public@dol.gov, 
(202) 693-1233 (this is not a toll-free number), (800) 877-8339 (TTY/
TDD).

SUPPLEMENTARY INFORMATION:

I. Background

    The Form LM-30 is used by officers and employees of labor 
organizations subject to the Labor-Management Reporting and Disclosure 
Act of 1959 (LMRDA or Act). The Act requires public disclosure of 
certain financial interests held, income received, and transactions 
engaged in by labor organization officers and employees and their 
spouses and minor children. Subject to certain exclusions, these 
interests, incomes, and transactions include: (1) Payments or benefits 
from, or interests in, an employer whose employees the filer's union 
represents or is actively seeking to represent; (2) transactions 
involving interests in, or loans to or from, an employer whose 
employees the filer's union represents or is actively seeking to 
represent; (3) interests in, income from, or transactions with a 
business a substantial part of which consists of dealing with an 
employer whose employees the filer's union represents or is actively 
seeking to represent; (4) interests in, income from, or transactions 
with a business that deals with the filer's union or a trust in which 
the filer's union is interested; (5) transactions or arrangements with 
an employer whose employees the filer's union represents or is actively 
seeking to represent; and (6) payments from an employer or labor 
relations consultant.
    The Form LM-30, which implements in part the financial disclosure 
provisions of Title II of the LMRDA, has remained essentially unchanged 
in the more than 40 years since 1963, when the Labor Department first 
approved the form LM-30. Over the past several years, the Department 
has engaged in a process to improve the administration of the LMRDA, 
including the design and usefulness of the financial reports required 
by the Act. In the course of this process, a number of problems were 
identified with Form LM-30. This proposed rule would address these 
problems by
     Clarifying the instructions by explaining the key terms 
used in the Act and instructions, and by providing examples of the 
financial matters that must be reported under each subsection of the 
Act;
     Eliminating exemptions that permit filers to not report 
financial matters that would otherwise be required to be reported under 
the Act, and which present the potential of conflicts of interests for 
union officers and employees;
     Improving disclosure by creating a summary table on the 
front page of the report, supported by schedules, for disclosing (1) 
The filer's interests, payments, loans, transactions or arrangements, 
(2) the other party to these financial practices, and (3) the dealings, 
if any, between the party and the filer's labor organization or the 
employer whose employees the filer's labor organization represents or 
actively seeks to represent.
    The Department invites comment on this proposed rule with respect 
to the benefits of these changes, the ease or difficulty with which 
labor organization officers and employees will be able to comply with 
these changes, and whether the changes will be meaningful, useful, and 
in accordance with the purposes of the LMRDA, which are to disclose to 
union members and the public information about certain financial 
interests of union officials. Interested parties and the public are 
invited to draw upon their experience with similar conflict and 
disclosure standards in other settings such as government employment, 
accounting, corporate governance, legal and judicial practice, 
medicine, and journalism. The Department invites general and specific 
comment on any aspect of the rule; it also invites comment on specific 
points, as noted throughout the text of this preamble.

A. Financial Transparency

    This proposed rule seeks to revise the Form LM-30, the form used by 
labor

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organization officers and employees to file the annual financial 
reports required by section 202 of the LMRDA, 29 U.S.C. 432. The 
rulemaking continues the Department's efforts over the past four years 
to improve voluntary compliance with, and enforcement of, the LMRDA. In 
response to requests from union members, members of Congress, public 
interest groups, and others, the Department:
     Launched a new disclosure web site (https://www.union-
reports.dol.gov), where individuals may view union financial reports 
and conduct data searches;
     Added reports filed by labor union officers and employees, 
employers, and labor relations consultants (Forms LM-10, LM-20, LM-21, 
and LM-30) to the disclosure web site;
     Modernized the annual financial disclosure report (Form 
LM-2) filed by the largest labor organizations (see 68 FR 58374, Oct. 
9, 2003);
     Raised the filing threshold for Form LM-2, thereby 
increasing the number of labor organizations that may file a simplified 
version of the annual financial disclosure report;
     Enhanced compliance assistance programs for filers; and
     Increased the investigative resources of OLMS field 
offices to facilitate enforcement of the Act.
    The Secretary also created a new annual financial disclosure report 
(Form T-1) for use by the largest labor organizations to report on the 
financial operations of certain trusts in which they are interested 
(see 68 FR 58374, Oct. 9, 2003), but the requirement that union file 
this information report was vacated by the District of Columbia Circuit 
on appeal. See American Federation of Labor and Congress of Indus. 
Organizations v. Chao, 409 F. 3d 377 (D.C. Cir. May 31, 2005), petition 
for rehearing and rehearing en banc filed July 15, 2005. The goal of 
these initiatives, like this proposal, has been to achieve more 
detailed and transparent reporting of the financial information that 
Congress, in enacting the LMRDA, intended to be made public for the 
benefit of union members and the public. Such transparency allows union 
members to obtain information needed by them to monitor their union's 
affairs and to make informed choices about the leadership of their 
union and its direction. At the same time, this transparency promotes 
the unions' own interests as democratic institutions and the interests 
of the public and the government. Financial transparency also deters 
fraud and self-dealing, and facilitates the discovery of such 
misconduct when it does occur. In these ways, the Department's reforms 
advance the LMRDA's declared purpose ``that labor organizations, 
employers, and their officials adhere to the highest standards of 
responsibility and ethical conduct in administering the affairs of 
their organizations.'' LMRDA Sec.  2(a), 29 U.S.C. 401(a).

B. The History of the LMRDA

    In enacting the LMRDA in 1959, a bipartisan Congress expressed the 
conclusion that in the labor and management fields ``there have been a 
number of instances of breach of trust, corruption, disregard of the 
rights of individual employees, and other failures to observe high 
standards of responsibility and ethical conduct which require further 
and supplementary legislation that will afford necessary protection of 
the rights and interests of employees and the public generally as they 
relate to the activities of labor organizations, employers, labor 
relations consultants, and their officers and representatives.'' LMRDA 
Sec.  2(a), 29 U.S.C. 401(a).
    The legislation was the direct outgrowth of a Congressional 
investigation conducted by the Select Committee on Improper Activities 
in the Labor or Management Field, commonly known as the McClellan 
Committee, chaired by Senator John McClellan of Arkansas. In 1957, the 
committee began a highly publicized investigation of union racketeering 
and corruption; and its findings of financial abuse, mismanagement of 
union funds, and unethical conduct provided much of the impetus for 
enactment of the LMRDA's remedial provisions. See generally Benjamin 
Aaron, The Labor-Management Reporting and Disclosure Act of 1959, 73 
Harv. L. Rev. 851, 851-55 (1960). During the investigation, the 
committee uncovered a host of improper financial arrangements between 
officials of several international and local unions and employers (and 
labor consultants aligned with the employers) whose employees were 
represented by the unions in question or might be organized by them. 
Similar arrangements also were found to exist between union officials 
and the companies that handled matters relating to the administration 
of union benefit funds. See generally Interim Report of the Select 
Committee on Improper Activities in the Labor or Management Field, S. 
Report No. 85-1417 (1957) (``Interim Report of the McClellan 
Committee''). For examples of some of the improper arrangements 
directly or indirectly involving officials of these unions, see pp. 42-
86, 122-30, 150-57, 222-55, 376-420, 441-50. See also Robert F. 
Kennedy, The Enemy Within (1960) (discussing the committee's 
investigation).
    The statute was designed to remedy these various ills through a set 
of integrated provisions aimed at union governance and management. 
These include a ``bill of rights'' for union members, which provides 
for equal voting rights, freedom of speech and assembly, and other 
basic safeguards for union democracy, see LMRDA Sec. Sec.  101-105, 29 
U.S.C. 411-415; financial reporting and disclosure requirements for 
unions, union officers and employees, employers, labor relations 
consultants, and surety companies, see LMRDA Sec. Sec.  201-206, 211, 
29 U.S.C. 431-436, 441; detailed procedural, substantive, and reporting 
requirements relating to union trusteeships, see LMRDA Sec. Sec.  301-
306, 29 U.S.C. 461-466; detailed procedural requirements for the 
conduct of elections of union officers, see LMRDA Sec. Sec.  401-403, 
29 U.S.C. 481-483; safeguards for unions, including bonding 
requirements, the establishment of fiduciary responsibilities for union 
officials and other representatives, criminal penalties for 
embezzlement from a union, loans by a union to officers or employees, 
employment by a union of certain convicted felons, and payments to 
employees for prohibited purposes by an employer or labor relations 
consultant, see LMRDA Sec. Sec.  501-505, 29 U.S.C. 501-505; and 
prohibitions against extortionate picketing and retaliation for 
exercising protected rights, see LMRDA Sec. Sec.  601-611, 29 U.S.C. 
521-531.
    The reporting requirement for officers and employees operates in 
tandem with the Act's establishment of a fiduciary duty for union 
officials and representatives. 29 U.S.C. 501. Congress addressed 
conflicts of interest in both section 202 and section 501(a) of the 
Act. 29 U.S.C. 432, 501(a). The latter provides in part:

    The officers, agents, shop stewards, and other representatives 
of a labor organization occupy positions of trust in relation to 
such organization and its members as a group. It is, therefore, the 
duty of each such person, taking into account the special problems 
and functions of a labor organization, to hold its money and 
property solely for the benefit of the organization and its members 
and to manage, invest, and expend the same in accordance with its 
constitution and bylaws and any resolutions of the governing bodies 
adopted thereunder, to refrain from dealing with such organization 
as an adverse party or in behalf of an adverse party in any matter 
connected with his duties and from holding or acquiring any 
pecuniary or personal interest which conflicts with the interests of 
such organization, and to account to the

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organization for any profit received by him in whatever capacity in 
connection with transactions conducted by him or under his direction 
on behalf of the organization.

    29 U.S.C. 501(a). Both provisions address the potential and actual 
conflict between a union representative's personal interests and his or 
her duty to the union and its members. See Theodore Clark, Jr., The 
Fiduciary Duties of Union Officials under Section 501 of the LMRDA, 52 
Minn. L. Rev. 437, 458-60 (1962).
    The need for the officer and employee disclosure provisions was not 
seriously debated during the consideration of the LMRDA legislation. 
The McClellan Committee hearings disclosed a history of self-dealing by 
certain union officials, often at the expense of their union's 
membership. Then Senator John F. Kennedy was the chief sponsor of the 
Senate bill, S. 505, which served as the foundation for the LMRDA. In 
introducing the bill for the Senate's consideration, Senator Kennedy 
addressed concerns about the involvement of union officials in matters 
that blurred their personal interests and their union's interests, 
which would be remedied by the legislation. Senator Kennedy used the 
experience of the Teamsters union, as revealed by the investigation of 
the McClellan Committee, to underscore the purposes to be achieved by 
the Act:

    First. It will no longer be possible for the dues of Teamster 
members to be paid out to hoodlums posing as business agents, or be 
invested in improper or risky racetrack or real estate deals, or to 
be used by [the union's] officers to build their own personal 
financial empires without the knowledge of the members themselves--
or without investigation by the press and public authorities.
    Second. [A union official] would be required to disclose all his 
business dealings with insurance agents handling the union's welfare 
funds, his private arrangements with employers, his hidden 
partnerships in business ventures foisted upon his members, and all 
other possible conflicts of interest.
* * * * * * *
    Sixth. [Union officials] will find future collusion with 
employers vastly restricted--with no more loans from employer 
groups, no more attacks on rival unions through middlemen * * *, and 
no more secrecy shrouding the use of union funds to bail out a 
collaborating employer.

    105 Cong. Rec. S817 (daily ed. Jan. 20, 1959), reprinted in 2 NLRB 
Legislative History of the Labor-Management Reporting and Disclosure 
Act of 1959 (``Leg. History''), at 969. The improper dealings by the 
Teamster officials, to which Senator Kennedy refers, are detailed in 
the Interim Report of the McClellan Committee, at, e.g., 48, 59-60, 64-
86, 222-54, 443-50. These dealings, like those identified by officials 
of other unions in the Interim Report, included actions undertaken by 
national officers, or others acting at their behest, involving matters 
affecting not only the national union's operation but also matters of 
importance to local and intermediate bodies of their union. See e.g., 
Interim Report, at 4-7, 46-49, 51, 55, 59-60, 63, 69, 74, 81, 87, 122-
25, 128, 130, 179, 186-87, 224, 228, 230-40, 244, 250, 252, 284-85, 
295, 297, 300, 444-48, 264-66, 268, 281. See also The Enemy Within, at 
97, 99, 104-05, 106, 221-24.
    The Senate Committee Report provided an overview of section 202 of 
the LMRDA:

    [This section] requires a union officer or employee to disclose 
any securities or other interest which he has in a business whose 
employees his labor union represents or ``seeks to represent'' in 
collective bargaining. When a prominent union official has an 
interest in the business with which the union is bargaining, he sits 
on both sides of the table. He is under temptation to negotiate a 
soft contract or to refrain from enforcing working rules so as to 
increase the company's profits. This is unfair to both union members 
and competing businesses.

    S. Rep. No. 187 (``Senate Report'') (1959), at 15, reprinted in 2 
Leg. History, at 411. As explained in the Senate Report: ``The hearings 
before the McClellan committee brought to light a number of instances 
in which union officials gained personal profit from a business which 
dealt with the very same employer with whom they engaged in collective 
bargaining on behalf of the union.'' Id. The committee endorsed the 
concern expressed in the AFL-CIO's ethical practices code that the 
union official ``may be given special favors or contracts by the 
employer in return for less than a discharge of his obligations as a 
trade-union leader.'' Id.
    In explaining the purpose of the disclosure rules for union 
officers and employees, the Senate Report presented ``three reasons for 
relying upon the milder sanction of reporting and disclosure [relative 
to establishing criminal penalties] to eliminate improper conflicts of 
interest,'' which can be summarized as follows:
     Disclosure discourages questionable practices. ``The 
searchlight of publicity is a strong deterrent.'' Disclosure rules 
should be tried before more severe methods are employed.
     Disclosure aids union governance. Reporting and 
publication will enable unions ``to better regulate their own affairs. 
The members may vote out of office any individual whose personal 
financial interests conflict with his duties to members,'' and 
reporting and disclosure would facilitate legal action by members 
against ``officers who violate their duty of loyalty to the members.''
     Disclosure creates a record. The reports will furnish a 
``sound factual basis for further action in the event that other 
legislation is required.''
    Senate Report, at 16, reprinted in 1 Leg. History, at 412. The 
Report further stated:

    The committee bill attacks the problem [of conflicts of 
interest] by requiring union officers and employees to file reports 
with the Secretary of Labor disclosing to union members and the 
general public any investments or transactions in which their 
personal financial interests may conflict with their duties to the 
members. The bill requires only the disclosure of conflicts of 
interest as defined therein. The other investments of union 
officials and their sources of income are not matters of public 
concern. No union officer or employee is obliged to file a report 
unless he holds a questionable interest in or has engaged in a 
questionable transaction. The bill is drawn broadly enough, however, 
to require disclosure of any personal gain which an officer or 
employee may be securing at the expense of the union members.

    Senate Report, at 14-15, reprinted in 1 Leg. History, at 410-11. 
The House Committee Report (``House Report''), H.R. Rep. No. 741 
(1959), at 11, reprinted in 1 Leg. History, at 769, conveyed the same 
message. Both the Senate and House Reports recognize that a reportable 
interest is not necessarily an illegal practice. As the House Report 
stated:

    In some instances matters to be reported are not illegal and may 
not be improper but may serve to disclose conflicts of interest. 
Even in such instances, disclosure will enable the persons whose 
rights are affected, the public, and the Government, to determine 
whether the arrangements or activities are justifiable, ethical, and 
legal.

    House Report, at 4, reprinted in 1 Leg. History, at 762. See Senate 
Report, at 38, reprinted in 1 Leg. History, at 434 (``By requiring 
reports * * *, the committee is not to be construed as necessarily 
condemning the matters to be reported if they are not specifically 
declared to be improper or made illegal under other provisions of the 
bill or other laws.''). ``Reports are required as to matters which 
should be public knowledge so that their propriety can be explored in 
the light of known facts and conditions.'' Id. As stated by Senator 
Barry Goldwater after the Act had been passed:

    Briefly, what must be reported are holdings of interest in or 
the receipt of economic benefits from employers who deal or might 
deal with such union official's union, or

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holdings in or benefits from enterprises which do business with such 
union official's union.

    105 Cong. Rec. A8512 (daily ed. Oct. 2, 1959), reprinted in 2 Leg. 
History, at 1846.
    Conflict of interest standards, including disclosure obligations of 
individuals and entities occupying positions of trust, are well 
grounded in U.S. law. As stated in the House Report, repeating almost 
verbatim the same point in the Senate Report:

    For centuries the law of fiduciaries has forbidden any person in 
a position of trust subject to such law to hold interests or enter 
into transactions in which self-interest may conflict with complete 
loyalty to those whom he serves. Such a person may not deal with 
himself, or acquire adverse interests, or make any personal profit 
as a result of his position. The same principle has long been 
applied to trustees, to agents, and to bank directors. It should be 
equally applicable to union officers and employees [quoting the AFL-
CIO's ethical practices code]: ``[A] basic ethical principle in the 
conduct of union affairs is that no responsible trade union official 
should have a personal financial interest which conflicts with the 
full performance of his fiduciary duties as a worker's 
representative.''

    Senate Report, at 11, reprinted in 1 Leg. History, at 769. See 
generally Restatement (Second) of Trusts (1959) Sec. Sec.  170, 173; 
Restatement (Second) of Agency (1958) Sec. Sec.  381, 387-98.
    Section 202 is an effort, in part, to make effective the disclosure 
requirements associated with the fiduciary standards applied to union 
officials in Title V of the LMRDA, which, in turn, reflect the 
requirements of the extensive code voluntarily adopted by the AFL-CIO 
in 1957 and applied to its affiliated unions and officials. See Senate 
Report, at 12-16, reprinted in 1 Leg. History, at 408-12; House Report, 
at 9-12, reprinted in 1 Leg. History, at 767-70. See also Archibald 
Cox, Internal Affairs of Labor Unions under the Labor Reform Act of 
1959, 58 Mich. L. Rev. 819, 824-29 (1960). The following excerpts from 
this code demonstrate the nexus between the voluntary code and the 
disclosure requirements of section 202.

    [A] basic ethical principle in the conduct of trade union 
affairs is that no responsible trade union official should have a 
personal financial interest which conflicts with the full 
performance of his fiduciary duties as a workers' representative.
* * * * *
    [U]nion officers and agents should not be prohibited from 
investing their personal funds in their own way in the American free 
enterprise system so long as they are scrupulously careful to avoid 
any actual or potential conflict of interest.
* * * * *
    In a sense, a trade union official holds a position comparable 
to that of a public servant. Like a public servant, he has a high 
fiduciary duty not only to serve the members of his union honestly 
and faithfully, but also to avoid personal economic interest which 
may conflict or appear to conflict with the full performance of his 
responsibility to those whom he serves.
* * * * *
    There is nothing in the essential ethical principles of the 
trade union movement which should prevent a trade union official, at 
any level, from investing personal funds in the publicly traded 
securities of corporate enterprises unrelated to the industry or 
area in which the official has a particular trade union 
responsibility.
* * * * *
    The policies * * * apply to: (a) all officers of the AFL-CIO and 
all officers of national and international unions affiliated with 
the AFL-CIO, (b) all elected or appointed staff representatives and 
business agents of such organizations, and (c) all officers of 
subordinate bodies of such organizations who have any degree of 
discretion or responsibility in the negotiation of collective 
bargaining agreements or their administration.
* * * * *
    [These principles] apply not only where the investments are made 
by union officials, but also where third persons are used as blinds 
or covers to conceal the financial interests of union officials.

    Ethical Practices Code IV: Investments and business interests of 
union officials (``AFL-CIO Ethical Practices Code''), 105 Cong. 
Rec.*16379 (daily ed. Sept. 3, 1959), reprinted in 2 Leg. History, at 
1408.
    The Department intends by the proposals set forth herein to better 
achieve the purposes of the LMRDA, as demonstrated by the legislative 
history. To that end, and by this reform, the Department will increase 
compliance with the financial disclosure requirements in the Act, 
clarify the form and instructions by use of examples and defined terms, 
remove counterproductive exemptions to the filing requirements, and 
organize the information in a more useful format.

C. Statutory Language

    Section 202 provides in its entirety:

    SEC. 202. (a) Every officer of a labor organization and every 
employee of a labor organization (other than an employee performing 
exclusively clerical or custodial services) shall file with the 
Secretary a signed report listing and describing for his preceding 
fiscal year--
    (1) Any stock, bond, security, or other interest, legal or 
equitable, which he or his spouse or minor child directly or 
indirectly held in, and any income or any other benefit with 
monetary value (including reimbursed expenses) which he or his 
spouse or minor child derived directly or indirectly from, an 
employer whose employees such labor organization represents or is 
actively seeking to represent, except payments and other benefits 
received as a bona fide employee of such employer;
    (2) Any transaction in which he or his spouse or minor child 
engaged, directly or indirectly, involving any stock, bond, 
security, or loan to or from, or other legal or equitable interest 
in the business of an employer whose employees such labor 
organization represents or is actively seeking to represent;
    (3) Any stock, bond, security, or other interest, legal or 
equitable, which he or his spouse or minor child directly or 
indirectly held in, and any income or any other benefit with 
monetary value (including reimbursed expenses) which he or his 
spouse or minor child directly or indirectly derived from, any 
business a substantial part of which consists of buying from, 
selling or leasing to, or otherwise dealing with, the business of an 
employer whose employees such labor organization represents or is 
actively seeking to represent;
    (4) Any stock, bond, security, or other interest, legal or 
equitable, which he or his spouse or minor child directly or 
indirectly held in, and any income or any other benefit with 
monetary value (including reimbursed expenses) which he or his 
spouse or minor child directly or indirectly derived from, a 
business any part of which consists of buying from, or selling or 
leasing directly or indirectly to, or otherwise dealing with such 
labor organization;
    (5) Any direct or indirect business transaction or arrangement 
between him or his spouse or minor child and any employer whose 
employees his organization represents or is actively seeking to 
represent, except work performed and payments and benefits received 
as a bona fide employee of such employer and except purchases and 
sales of goods or services in the regular course of business at 
prices generally available to any employee of such employer; and
    (6) Any payment of money or other thing of value (including 
reimbursed expenses) which he or his spouse or minor child received 
directly or indirectly from any employer or any person who acts as a 
labor relations consultant to an employer, except payments of the 
kinds referred to in section 302(c) of the Labor Management 
Relations Act, 1947, as amended.
    (b) The provisions of paragraphs (1), (2), (3), (4), and (5) of 
subsection (a) shall not be construed to require any such officer or 
employee to report his bona fide investments in securities traded on 
a securities exchange registered as a national securities exchange 
under the Securities Exchange Act of 1934, in shares in an 
investment company registered under the Investment Company Act or in 
securities of a public utility holding company registered under the 
Public Utility Holding Company Act of 1935, or to report any income 
derived therefrom.
    (c) Nothing contained in this section shall be construed to 
require any officer or employee of a labor organization to file a

[[Page 51170]]

report under subsection (a) unless he or his spouse or minor child 
holds or has held an interest, has received income or any other 
benefit with monetary value or a loan, or has engaged in a 
transaction described therein.

29 U.S.C. 432.

D. Increases in Sophistication and Complexity of Financial Practices

    The Form LM-30 has remained essentially unchanged since 1963, when 
the Department first approved the Form LM-30. See 28 FR 14384 (Dec. 27, 
1963). During this time the operations of unions have changed and 
financial matters affecting institutions and individuals have become 
more sophisticated. While the same statutory disclosure standard 
applies now as it did when the Act took effect, the financial 
activities of individuals and organizations have increased 
exponentially in scope, complexity and interdependence over the past 
four decades.
    For example, many unions manage benefit plans for their members, 
maintain close business relationships with financial service providers 
such as insurance companies and investment firms, operate revenue-
producing subsidiaries, and participate in foundations and charitable 
activities. The complexity of union financial practices, including 
business relationships with outside firms and vendors, increases the 
likelihood that union officers and employees may have interests in, or 
receive income from, these businesses. As more labor organizations 
conduct their financial activities through sophisticated trusts, 
increased numbers of businesses have commercial relationships with such 
trusts, creating financial opportunities for union officers and 
employees who may operate, receive income from, or hold an interest in 
such businesses. In addition, employers also have fostered multi-
faceted business interests, creating further opportunities for 
financial relationships between employers and union officers and 
employees. In this context, disclosure is critical to promoting good 
union governance, fostering ethical behavior, and deterring and 
detecting self-dealing.
    Moreover, present-day concerns about the intersection of personal 
interest and professional responsibilities are no longer associated 
only with traditional trustees, but are matters of central importance 
to the securities industry, corporate governance, and, among other 
professional groups, lawyers, physicians, accountants, researchers, 
journalists, and government employees.
    The Department believes that the purposes of the Act could be 
better accomplished by promoting increased compliance with the 
financial disclosure requirements in the Act, clarifying the form and 
instructions by use of examples and defined terms, removing 
counterproductive exemptions to the filing requirements, and organizing 
the information in a more useful format. By improving the form and 
promoting compliance with reporting requirements, union members will 
obtain a more accurate picture of the personal financial interests of 
their union's officers and employees, as those interests may bear upon 
their actions on behalf of the union and its members. Publicly 
available information concerning potential conflicts of union officials 
allows union members to better understand any financial incentives or 
disincentives faced by their union's officers and employees, and to 
make informed choices about the leadership of their union and its 
management of the union. Additional disclosure promotes the unions' own 
interests as democratic institutions responsive to the concerns of 
union members, and deters, as well as facilitates the discovery of, 
fraud and self-dealing.

E. The Current Form LM-30

    The Department initiated its enforcement of the section 202 
reporting requirements within months of the enactment of the LMRDA in 
1959, and a regulation making the Form LM-30 effective was published in 
1963. See 28 FR 14384 (Dec. 27, 1963).
    The current Form LM-30 consists of four sections: a section for 
identifying data about the filer, and Parts A through C. (The current 
form and instructions are available at www.olms.dol.gov.) Part A of the 
form seeks transactions that would be reportable under sections 
202(a)(1), (a)(2), and (a)(5). See 29 U.S.C. 432(a)(1), (2), (5). Part 
A thus generally requires reporting of holdings in, transactions and 
arrangements with, and income and loans from the employer whose 
employees the filer's labor organization represents or actively seeks 
to represent. Part B attempts to implement sections 202(a)(3), and 
(a)(4). See 29 U.S.C. 432(a)(3), (4). Part B thus generally captures 
holdings in and income from businesses that deal either with the labor 
organization, a trust in which the labor organization is interested, or 
the employer whose employees the filer's labor organization represents 
or actively seeks to represent. Part C attempts to implement section 
202(a)(6). See 29 U.S.C. 432(a)(6). Part C thus generally requires 
reporting of payments of money or other things of value from employers 
and labor relations consultants.
    Specifically, the first section gathers basic information about the 
filer, including the name of the organization in which the filer is an 
officer or employee, the filer's position with the organization, and 
the fiscal year covered by the report.
    In the ``General Instructions'' filers are informed: ``You do not 
have to report any sporadic or occasional gifts, gratuities, or loans 
of insubstantial value, given under circumstances or terms unrelated to 
the recipient's status in a labor organization, or anything excluded in 
the specific instructions in Parts A, B, or C below.''
    Part A instructs the filer: ``Complete [this part] if you (1) held 
an interest in, (2) engaged in transactions (including loans) with, or 
(3) derived income or other economic benefit of monetary value from, an 
employer whose employees your organization represents or is actively 
seeking to represent. Complete a separate Part A for each such employer 
and for each such interest, transaction, or item of income or other 
economic benefit connected with that employer.'' For each such 
interest, transaction, or income, the filer is requested to disclose 
its nature, value, and date of receipt. With regard to the nature of a 
discloseable transaction, the instructions provide as examples: 
``Continuing use of automobile for personal purposes, gift of 
refrigerator, payment for services.'' Additional examples provided 
include: ``Loan of money from employer, rental of loft building, 
located at X street, Y city, Z State, to employer.'' The instructions 
provide additional information for reporting interests in, and 
transactions involving, stocks, bonds, securities, options and similar 
interests.
    After identifying the matters that have to be reported, the 
instructions advise the potential filer that he or she should not 
report holdings of, transactions in, or income from bona fide 
investments in registered securities; holdings of, transactions in, or 
income from other securities if they are of ``insubstantial value or 
amount'' (defined as holdings or transactions of $1,000 or less and 
income of $100 or less in any one security) and occur under terms 
unrelated to the filer's status in the labor organization; transactions 
involving purchases and sales of goods and services in the regular 
course of business at prices generally available to any employee of the 
employer; and ``payments and benefits received as a bona fide employee 
of the employer for past or present services, including wages, payments 
or benefits received under a bona fide health, welfare, pension, 
vacation, training or other

[[Page 51171]]

benefit plan; and payments for periods in which such employee engaged 
in activities other than productive work, if the payments for such 
period of time are: (a) Required by law or a bona fide collective 
bargaining agreement, or (b) made pursuant to a custom or practice 
under such a collective bargaining agreement, or (c) made pursuant to a 
policy, custom, or practice with respect to employment in the 
establishment which the employer has adopted without regard to any 
holding by such employee of a position with a labor organization.''
    Part B instructs the filer to report ``an interest in or * * * 
income or other economic benefit with monetary value, including 
reimbursed expenses, from a business (1) a substantial part of which 
consists of buying from, selling or leasing to, or otherwise dealing 
with the business of an employer whose employees your labor 
organization represents or is actively seeking to represent, or (2) any 
part of which consists of buying from or selling or leasing directly or 
indirectly to, or otherwise dealing with your labor organization or a 
trust in which your labor organization is interested.'' Filers are 
instructed that they are not required to report any of the interests or 
income identified in two exceptions to Part A (holdings in, 
transactions in, and income from bona fide investments in registered 
securities and insubstantial holdings in, transactions in, and income 
from other securities). The filer must identify the name and address of 
the business involved, describe the type of organization the business 
deals with (employer, labor organization, trust), enter the nature of 
the dealings between the two parties and the value of these dealings, 
enter the interest held or income received by the filer, and the dollar 
amount of such income or interest.
    In Part C, the filer is advised to ``Complete Part C if you 
received from any employer (other than an employer covered under Parts 
A and B above), or from any labor relations consultant to an employer, 
any payment of money or other thing of value.'' The instructions 
identify the following as items that are not required to be reported: 
(1) Payments of the kind referred to in section 302(c) of the Labor 
Management Relations Act (LMRA); (2) bona fide loans, interest or 
dividends from banks, other bona fide credit institutions, and 
insurance companies; and (3) interest on bonds or dividends on stock, 
provided such interest or dividends are received, and such bonds or 
stock have been acquired, under circumstances and terms unrelated to 
the recipient's status in a labor organization and the issuer of such 
securities is not an enterprise in competition with the employer whose 
employees the filer's labor organization represents or actively seeks 
to represent. The instructions then advise that notwithstanding the 
exceptions, the filer must report any payments ``(1) not to organize 
employees; (2) to influence employees in any way with respect to their 
rights to organize; (3) to take any action with respect to the status 
of employees or others as members of a labor organization; and (4) to 
take any action with respect to bargaining or dealing with employers 
whose employees [the filer's] organization represents or seeks to 
represent.'' For each interest or transaction to be reported under Part 
C, filers must identify the name of the employer or labor relations 
consultant and the nature and amount of the payment.
    The LMRA section 302(c) exclusions are not explained in the 
instructions. Instead, the instructions provide a full-page quotation 
of that section. As a general rule, the section 302(c) exclusions make 
the following payments non-reportable: (1) Any money or other thing of 
value payable by an employer to (a) an employee whose established 
duties include acting openly for the employer in matters of labor 
relations or personnel administration, or (b) any officer or employee 
of a labor organization who also is an employee or former employee of 
such employer, as compensation for, or by reason of, his service as an 
employee of such employer; (2) money or other thing of value payable in 
satisfaction of a judgment, arbitral award, settlement or release of 
any claim in the absence of fraud or duress; (3) with respect to the 
sale or purchase of an article or commodity at the prevailing market 
price in the regular course of business; (4) with respect to deductions 
from wages in payment of dues in a labor organization by written 
assignment; (5) with respect to money or other thing of value paid to a 
trust fund established by the representative of an employer's employees 
for the sole benefit of these employees, their families and dependents 
to pay for medical care, pensions, compensation for occupational 
injury, unemployment benefits, life insurance, disability insurance or 
accident insurance; (6) with respect to money or other thing of value 
paid by any employer to a trust fund established by the representative 
of the employer's employees for the purpose of pooled vacation, 
holiday, severance or similar benefits, or apprenticeship or training 
programs; (7) with respect to money or other thing of value paid by any 
employer to an individual or pooled trust fund for the purpose of (a) 
educational scholarships for the benefit of employees, families, and 
dependents, (b) child care centers, or (c) employee housing; (8) with 
respect to money or other thing of value paid by any employer to a 
trust for defraying the costs of legal services; or (9) with respect to 
money or other thing of value paid by any employer to a labor 
management committee.

F. Number of Current Form LM-30's Filed

    Prior to initiating this rulemaking, the Department sought to 
determine the number of Form LM-30s filed, and the number of union 
officers and employees. The following table represents all reports 
filed in fiscal years 2001 through 2004:

------------------------------------------------------------------------
                                                               Number of
                         Fiscal year                            reports
                                                                 filed
------------------------------------------------------------------------
2001.........................................................         59
2002.........................................................         49
2003.........................................................         41
2004.........................................................         95
                                                              ----------
    Total....................................................        244
------------------------------------------------------------------------

    Next, the Department attempted to identify the universe of people 
who are potentially subject to the reporting requirements by 
calculating the number of union officers and employees. The only source 
reasonably available to the Department was reports filed on Forms LM-2, 
LM-3 and LM-4. These reports are filed by labor organizations to 
disclose their financial conditions and operations, as well as limited 
information concerning officers and employees. The following table sets 
forth the Form LM-30 data gleaned from the FY 2002 LM reports:

------------------------------------------------------------------------
                                                             Number of
                                                            officers or
                     Source of data                          employees
                                                             reported
------------------------------------------------------------------------
LM-2 Officers...........................................          66,749
LM-2 Employees..........................................          47,371
LM-3 Officers...........................................          86,808
LM-4 Officers...........................................           3,706
                                                         ---------------
    Total...............................................         204,634
------------------------------------------------------------------------

    Using these 2002 figures and the annual average of approximately 61 
Form LM-30 filings for this 4-year period, the Department computed a 
filing rate for Form LM-30 of 0.03% (61/204,634 x 100 = 0.03%). The 
Form LM-2, used by the largest labor organizations, requires the filer 
to list all the union's officers and the employees

[[Page 51172]]

who received more than $10,000 in salary, allowances, and other direct 
and indirect disbursements from the union. Form LM-3, used by unions 
with under $200,000 in annual receipts (raised to $250,000 for fiscal 
years beginning July 1, 2004 and thereafter), requires the filer to 
list all the union's officers, but report employees who received more 
than $10,000 in salary, allowances, and other direct and indirect 
disbursements from the union only in the additional information item on 
the form. This information is not available in the OLMS disclosure 
database. Form LM-4 filers (unions with annual receipts of less than 
$10,000) do not report either officers or employees. Form LM-4 is 
signed by two officers of the union. Although an estimate, the 0.03 
percentage can be used to gauge the filing rate in the absence of more 
precise figures.
    Recently, OLMS evaluated a small number of union employees to 
determine how many may have been required to file Form LM-30, but 
failed to do so. Employees of unions with titles identifying them as 
legal professionals, mostly lawyers, legislative affairs specialists, 
and lobbyists, were culled from information derived from Form LM-2 
reports filed in FY 2002. Legal professionals were selected because it 
is possible, using Internet-based data, to investigate links between 
these employees or their spouses and firms that do business with the 
union, thereby indicating a potentially reportable interest under 
section 202(a)(4). None of the 438 employees had filed Form LM-30. 
These 438 individuals' full names were used in Internet searches for 
information indicating that they had outside legal employment. The use 
of the surname, coupled with other Internet-based biographical data, on 
one or two occasions revealed that an official's spouse had such 
outside legal employment. Then, an Internet search of the name of the 
outside employer was conducted to determine whether the employer listed 
the union official's union as a client, or otherwise indicated that it 
provided services to the union official's union. OLMS contacted eight 
individuals who, based on the Internet research, appeared to have 
received, or whose spouse appeared to have received, payments from an 
employer that dealt with the individual's union. Through these 
contacts, OLMS sought additional information from them to determine 
whether the individuals should have filed the Form LM-30 based on a 
reportable interest under section 202(a)(4). Of these eight, six 
completed and filed a Form LM-30 following the OLMS contact. Three of 
the six reports had to be returned to the filers for revisions or 
additional information. Review of the final amended reports confirmed 
that these six individuals had disclosed reportable interests. When 
asked, some filers did not give a reason for failing to earlier file 
the reports. Others said they had been unaware of the reporting 
requirements. Of the remaining two individuals, one had severed his 
relationship with the employer before becoming a union employee. In the 
final case, it was determined that the individual did not receive any 
benefits other than from the two unions that employed him. The filing 
rate for this group was 1.37% (6/438 x 100 = 1.37%). This filing rate 
is probably understated for the 438 employees because OLMS was able to 
research only potential section 202(a)(4) reporting situations. Others 
in the group may well have owed reports based on payments from, 
transactions with, or holdings in, employers or businesses that deal 
with an employer whose employees the labor organization represents or 
is actively seeking to represent.
    Available data does not allow the Department to precisely measure 
the current filing rate of union officers and employees or predict what 
that rate would be if all individuals with reportable interests or 
transactions filed Form LM-30. The individuals covered by the informal 
inquiry discussed above may or may not be indicative of a typical union 
employee. Legal professionals may be more likely or less likely to 
engage in financial activities covered by the Form LM-30 than union 
employees in other professions. Further, the circumstances of these 
professionals may be different from those of union officers. As earlier 
mentioned, the number of estimated union officers and employees is 
necessarily understated, in that mid-size unions report in a readily 
available manner only officers, not employees, on their Form LM-3, 
small unions list only two signatory officers on their Form LM-4, and 
employees who receive $10,000 or less in a year are not reported on any 
of these forms. Certainly, the Department recognizes that not all union 
officers or employees have reportable interests or transactions. 
Nevertheless, it is clear that the identified employees had not filed 
Form LM-30 until they were contacted by OLMS, and half of them did not 
complete the report correctly on their first attempt. If union legal 
professionals had to be informed of their obligation to file the 
reports and failed to correctly complete the report, it is reasonable 
to conclude, in the Department's view, that other employees are 
similarly unaware of their obligation to file and similarly confused by 
the form. The Department will continue to research the extent to which 
current Form LM-30 submissions are deficient, and requests comment on 
further data on this question.
    On many other occasions, OLMS has discovered during an audit or 
investigation that a union officer or employee was engaged in a 
reportable situation but had not filed the required Form LM-30 until 
OLMS became involved. For example:
     A local president owned 50% of a business that resurfaced 
the union's parking lot. Over two years, the business received $9,000 
from the union. See section 202(a)(4), 29 U.S.C. 432(a)(4).
     A union designated certain attorneys to represent injured 
members. Some of these attorneys, who were employers, furnished cash or 
items of value such as trips and golf clubs to union officials. See 
section 202(a)(6), 29 U.S.C. 432(a)(6).
     A union hired the accounting firm of an employee's spouse. 
The firm received over $29,000 from the union over two years. See 
section 202(a)(4), 29 U.S.C. 432(a)(4).
     An officer of a union, whose members worked at a theater, 
formed a business with two partners. He put his share of the business 
in his wife's name although he actually managed the business which 
employed members of his local to work for the theater. He and his wife 
received almost $75,000 in profits, expense reimbursements, and salary 
from the business. See section 202(a)(1), 29 U.S.C. 432(a)(1).
     A union president owned the building in which the union 
rented office space. See section 202(a)(4), 29 U.S.C. 432(a)(4).
     A union officer's spouse owned a janitorial business that 
provided daily janitorial services to the union at $800 per month. See 
section 202(a)(4), 29 U.S.C. 432(a)(4).
     A union employee's spouse owned an advertising company 
which printed materials for the union and its funds. In one year, the 
company received over $245,000 from the union and the funds. See 
section 202(a)(4), 29 U.S.C. 432(a)(4).
     Four local officers formed a company that provided payroll 
services to the local as well as to theatrical companies that employed 
members of the local. Two other officers of the local received over 
$20,000 as employees of the company. See section 202(a)(4), 29 U.S.C. 
432(a)(4) (due to services provided to the local union); section

[[Page 51173]]

202(a)(3), 29 U.S.C. 432(a)(3) (due to services provided to the 
theatrical company employers).
     The spouse of a union officer owned a company that 
provided cleaning and maintenance services to the union and its trust. 
In one year, the company received over $94,000 from the union and the 
trust. See section 202(a)(4), 29 U.S.C. 432(a)(4)
     During a campaign for a state government office, a 
business agent received contributions from employers who were covered 
by the union's collective bargaining agreement. See section 202(a)(1), 
29 U.S.C. 432(a)(1)
     A union officer was part-owner, along with his wife and 
daughter, of a copier supply company. He was the officer of several 
unions, including one which employed his daughter as a benefit 
representative and union trustee. All of the unions purchased office 
equipment and services from the family's company. See section 
202(a)(4), 29 U.S.C. 432(a)(4)
     A union employee owned a heating and air conditioning 
business that performed HVAC work for the union. See section 202(a)(4), 
29 U.S.C. 432(a)(4)
    In these instances, compliance with the Form LM-30 requirements 
would have provided union members with valuable information concerning 
the finances of their unions' employees and officers. This would have 
assisted union members in evaluating the efficacy of the work performed 
by union employees and the leadership provided by union officers. The 
information would have alerted them to potential conflicts of 
interests, and guided them as to which actions or decisions of their 
officers and employees might require greater scrutiny, to determine 
whether the conflicts have affected the union official's service to the 
union. Armed with this information, union members could express their 
concerns at membership meetings, see 29 U.S.C. 411(a), cast a more 
informed vote at the next internal union election, see 29 U.S.C. 481-
483, employ union procedures for removal of officers guilty of serious 
misconduct, see 29 U.S.C. 481(h), or exercise their right to obtain 
judicial relief for violations of the fiduciary responsibilities of 
union officials, see 29 U.S.C. 501(b).
    In other instances, compliance with Form LM-30 requirements would 
have revealed criminal conduct. For example, the president of a 
national union had the sole authority to appoint or remove attorneys 
from a list of ``Designated Legal Counsel.'' These attorneys 
represented injured union members who sought compensation from the 
railroad for on-the-job injuries. Rather than selecting attorneys on 
the basis of their skills, the president awarded the designation to 
attorneys who paid the union president with cash or other things of 
value. In another instance, contractors were hired to make repairs and 
improvements to the offices of a local union. The contractors also 
performed work on the officers' homes. However, all the expenses of the 
work, including about $1.2 million for work on the officers' homes, was 
charged to and paid by the union. A third example involves a 
contractor, an investment firm that managed pension and investment 
accounts for unions. This company collapsed in September 2000, costing 
its clients about $355 million. The company's former chairman was 
indicted on counts of fraud, money laundering, witness tampering and 
making illegal payments to union benefit plan trustees. As part of its 
scheme to buy the influence of pension fund trustees, who were union 
officers, the investment firm hired relatives of pension trustees as 
well as provided plan trustees with gifts including rifles, season 
tickets to sporting events, and fishing and hunting trips to various 
locations in the western U.S., Canada, Africa, Argentina and Mexico.
    OLMS expects that by clarifying the form and instructions, adding 
examples to the instructions, eliminating administrative exemptions, 
and providing extensive compliance assistance, the filing rate will 
increase. During the course of a meeting held under E.O. 12866, a 
stakeholder asserted that the Department receives few Form LM-30 
reports because union officers and employees engage in few covered 
transactions. The Department invites comments concerning the number of 
union officers and employees, and the number of union officers and 
employees who have not filed a Form LM-30 but who have engaged in a 
transaction, or held an interest that required them to do so.
    The Department seeks comments on whether to promulgate a regulation 
that requires labor organizations to notify their officers and 
employees of the annual reporting obligations under the LMRDA. No 
notification obligation currently exists under the Department's 
regulations, and the regulation proposed herein does not contain such a 
provision. Notification by labor organizations would, nevertheless, 
help ensure that officers and employees are aware of their reporting 
obligations under the LMRDA. An increase in awareness by union officers 
and employees could increase the number of reports filed each year, 
enabling union members and the public to learn more about financial 
transactions in which the union's officers and employees are involved 
and, as needed, further inquire into the circumstances of these 
dealings to ensure that the interests of the members and the public are 
properly being served.
    Under one option, each labor organization would be required to 
inform its officers and employees, excluding those employed solely in 
clerical or custodial positions, of their obligation to annually file a 
Form LM-30 if they, their spouse, or minor children, hold any 
interests, receive any payments, or engage in any transactions or 
arrangements covered by section 202 of the Act. See 29 U.S.C. 432. 
Notification would have to be in writing and inform officers and 
employees that, subject to certain exemptions, they must file a report 
with the Department if they have interests in, receive payments or 
income from, or engage in transactions or arrangements with (1) an 
employer whose employees the labor organization represents or actively 
seeks to represent, (2) a business that deals with the labor 
organization, or a trust in which the labor organization is interested, 
(3) a business a substantial part of which consists of dealing with the 
business of an employer whose employees the labor organization 
represents or is actively seeking to represent, (4) any employer, or 
(5) a labor relations consultant to an employer. The union would inform 
its officers and employees that if they have any questions concerning 
which financial matters are reportable and whether they are required to 
file a report, they should consult the Form LM-30 and its instructions, 
and the union would provide the web site address where the form and 
instructions may be found. Notification would be provided by the union 
to an officer within 30 days of installation into office and to an 
employee within 30 days of the date of hire. Initial notification would 
be provided to officers and employees within 60 days of the effective 
date of the regulation, and thereafter to each on an annual basis. A 
labor organization could meet this requirement by providing employees 
and officers with a copy of the Form LM-30 and its instructions. E-mail 
notification might be considered an acceptable means of informing 
officers and employees.
    An alternative to providing a separate notice to each officer and 
employee would be to provide a general notice in a union publication 
that is addressed to every officer and employee.
    The Federal government informs employees at the time of their hire 
and reminds them on a regular basis

[[Page 51174]]

thereafter about their various ethical responsibilities, including 
conflict of interest rules and disclosure requirements. See E.O. 12674 
(Apr. 12, 1989), as modified by E.O. 12731 (Oct. 17, 1990). The 
Department seeks comments on whether a similar approach is taken by 
other organizations and professions. The public is asked to comment on 
other ways in which employers and professional associations educate 
their employees and association members about their obligation to 
disclose possible conflicts between their personal interests and the 
interests of their employer or clients.
    The Department invites comments as to the need for and efficacy of 
a regulation that requires labor organizations to notify their officers 
and employees of the annual reporting obligations under the LMRDA. In 
this connection, it would be helpful to learn what steps are now being 
taken by labor organizations to inform their officers and employees 
about conflict-of-interest situations, including disclosu