Labor Organization Officer and Employee Reports, 66442-66504 [2011-26816]

Agencies

• DEPARTMENT OF LABOR
• Office of Labor-Management Standards

[Federal Register Volume 76, Number 207 (Wednesday, October 26, 2011)]
[Rules and Regulations]
[Pages 66442-66504]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-26816]



[[Page 66441]]

Vol. 76

Wednesday,

No. 207

October 26, 2011

Part III





Department of Labor





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 Office of Labor-Management Standards





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29 CFR 404





 Labor Organization Officer and Employee Reports; Final Rule

Federal Register / Vol. 76 , No. 207 / Wednesday, October 26, 2011 / 
Rules and Regulations

[[Page 66442]]


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DEPARTMENT OF LABOR

Office of Labor-Management Standards

29 CFR Part 404

RIN 1215-AB74
RIN 1245-AA01


Labor Organization Officer and Employee Reports

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

ACTION: Final rule.

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SUMMARY: The Office of Labor-Management Standards of the Department of 
Labor (Department) is revising the Form LM-30 Labor Organization 
Officer and Employee Report and its instructions upon review of the 
comments received in response to its August 10, 2010 Notice of Proposed 
Rulemaking (NRPM). The Form LM-30 implements section 202 of the Labor-
Management Reporting and Disclosure Act of 1959 (LMRDA or Act), the 
purpose of which is to require officers and employees of labor 
organizations (unions) to publicly disclose possible conflicts between 
their personal financial interests and their duty to the labor union 
and its members. The rule revises the Form LM-30 and its instructions, 
based on an examination of the policy and legal justifications for, and 
utility of, changes enacted in the Form LM-30 Final Rule (2007 rule), 
published on July 2, 2007. The principal revisions are: Union leave and 
no docking payments are not required to be reported on the Form LM-30; 
union stewards and others representing the union in similar positions 
are not covered by the Form LM-30 reporting requirements; the 
requirement to report certain bona fide loans is limited, as is 
reporting of payments from certain trusts, unions, and employers in 
competition with employers whose employees are represented by an 
official's union; and the scope of reporting required of officers and 
employees of international, national, and intermediate body unions is 
revised. This rule also establishes a new form and instructions, as 
well as regulatory text concerning certain reporting obligations. This 
rule largely implements the Department's proposal in the NPRM, with 
modifications of several minor aspects of the layout of the form and 
instructions.

DATES: This rule is effective on November 25, 2011, and it is 
applicable to Form LM-30 filers with fiscal years beginning on or after 
January 1, 2012. For filers with fiscal years beginning prior to 
January 1, 2012, the Department will accept either the Revised Form LM-
30 published with this rule, the pre-2007 Form LM-30, or the 2007 Form 
LM-30.

FOR FURTHER INFORMATION CONTACT: Andrew R. Davis, Chief of the Division 
of Interpretations and Standards, Office of Labor-Management Standards, 
U.S. Department of Labor, 200 Constitution Avenue, NW., Room N-5609, 
Washington, DC 20210, olms-public@dol.gov, (202) 693-0123 (this is not 
a toll-free number), (800) 877-8339 (TTY/TDD).

SUPPLEMENTARY INFORMATION: The Regulatory Information Number (RIN) 
identified for this rulemaking changed with publication of the Spring 
2010 Regulatory Agenda due to an organizational restructuring. The old 
RIN (1215-AB74) was assigned to the Employment Standards 
Administration, which no longer exists; a new RIN (1245-AA01) has been 
assigned to the Office of Labor-Management Standards.

I. Background

A. Introduction

    This final rule, which revises the Form LM-30 and its instructions, 
is part of the Department's ongoing effort to effectively administer 
the reporting requirements of the LMRDA. The Form LM-30 Labor 
Organization Officer and Employee Report is designed to provide for the 
disclosure of payments to, and interests held by, union officers and 
employees, when such payments and interests pose an actual or potential 
conflict of interest. In developing the proposed rule and considering 
and responding to the comments submitted on the proposal, the 
Department has kept in mind that a fair and transparent reporting 
system for union officers and employees must consider the interests of 
unions, their members, and the public, and must balance the benefits 
served by disclosure with the burden placed on reporting individuals 
and labor organizations.
    The Form LM-30 implements section 202 of the LMRDA, 29 U.S.C. 432. 
Under section 202,\1\ union officers and employees (collectively, union 
officials) are required to file reports if they, or their spouses or 
minor children, engage in certain transactions or have financial 
holdings that may constitute a conflict of interest with their union 
responsibilities. The Act requires public disclosure of certain 
financial interests held, transactions engaged in, and income received. 
Subject to certain exclusions, these interests, transactions, and 
incomes include:
    1. Payments or benefits with monetary value from, or interests in, 
an employer whose employees the filer's union represents or is actively 
seeking to represent;
    2. Transactions involving any stock, bond, security, or loan to or 
from, or other interest in, an employer whose employees the filer's 
union represents or is actively seeking to represent;
    3. Income or any other benefit with monetary value from, or other 
interest in, a business a substantial part of which consists of buying 
from, selling or leasing to, or otherwise dealing with an employer 
whose employees the filer's union represents or is actively seeking to 
represent;
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    \1\ Unless otherwise stated all references to statutory 
provisions, e.g., ``section 202,'' are to provisions in the LMRDA. 
29 U.S.C. 401-531.
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    4. Income or any other benefit with monetary value from, or other 
interest in, a business any part of which consists of buying from, or 
selling or leasing directly or indirectly to, or otherwise dealing with 
the filer's union or a trust in which the filer's union is interested; 
\2\
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    \2\ These trusts are defined by section 3(l) of the Act as:
    a trust or other fund or organization (1) Which was created or 
established by a labor organization, or one or more of the trustees 
or one or more members of the governing body of which is selected or 
appointed by a labor organization, and (2) a primary purpose of 
which is to provide benefits for the members of such labor 
organization or their beneficiaries.
    Unless otherwise specified, references to ``trust'' in this 
preamble are to these statutorily defined trusts, which are 
sometimes referred to as ``section 3(l) trusts.''
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    5. Business transactions or arrangements with an employer whose 
employees the filer's union represents or is actively seeking to 
represent; and
    6. Payment of money or any other thing of value from any employer 
not covered under the above categories, or payment of money or other 
thing of value from a person who acts as a labor relations consultant 
to an employer.
    The Form LM-30 had remained essentially unchanged from 1963 until 
2007. In 2005, the Department published a Notice of Proposed Rulemaking 
that proposed far-reaching changes to the form. 70 FR 51165 (Aug. 29, 
2005). After a notice and comment period, the Department issued the 
2007 final rule. 72 FR 36105 (July 2, 2007). The 2007 rule brought 
significant changes to the LM-30 and its instructions and represented, 
in some instances, a sharp departure from the Department's previous 
interpretations of section 202. The rule completely revised the layout 
and overall structure of the Form LM-30, lengthening the form from two 
to nine pages with the creation of

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five schedules, continuation pages, and various sections consisting of 
instructions and examples. (The 2007 form and instructions are 
available at https://www.dol.gov/olms.)
    Upon review of the 2007 rule, and input from the regulated 
community, the Department issued its proposed revisions to that rule on 
August 10, 2010, stating its view that many of the objectives sought to 
be met by the 2007 rule--including simplification of the reporting 
requirements and adherence to the reporting scheme intended by 
Congress--had not been accomplished. See 75 FR 48416. The Department, 
at 75 FR 48417, explained that the 2007 rule left unresolved 
fundamental questions about the reporting obligations of union 
officials and raised policy and legal issues warranting reexamination 
by the Department. These fundamental questions regarding the Form LM-30 
reporting requirements included--the coverage of stewards and other 
union representatives serving in similar positions; the reporting of 
certain loans and union leave and no docking payments; the reporting of 
payments from certain trusts and unions; the reporting of payments from 
businesses that compete with an employer whose employees are 
represented by an official's union or whose employees the union is 
actively seeking to represent; and reporting by higher level union 
officials about relationships with businesses and employers that pose 
conflicts concerning subordinate affiliates of their union. In 
addition, the Department identified questions concerning the layout of 
the 2007 Form LM-30 and instructions and whether they provided useful 
and adequate assistance to filers.
    Prompted by these uncertainties about the 2007 rule, the 
Department, on March 19, 2009, issued a non-enforcement policy 
regarding the 2007 Form LM-30 reporting requirements, allowing filers 
to use either the pre-2007 or 2007 Form LM-30 report.\3\ Further, the 
Department held a stakeholder meeting on July 21, 2009 to solicit 
comments regarding the 2007 rule and potential revisions to the Form 
LM-30. In the NPRM, the Department invited comment on the proposed 
changes with respect to their benefits, the ease or difficulty with 
which union officers and employees would be able to comply with these 
changes, and whether the changes would better implement the LMRDA. The 
Department invited general and specific comments on any aspect of this 
proposal; it also invited comment on specific points, as noted 
throughout the text of the notice.
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    \3\ The Department modifies this non-enforcement policy with the 
publication of today's rule. For filers with reportable payments or 
interests in fiscal years beginning prior to January 1, 2012, the 
Department will accept either the Revised Form LM-30 published with 
this rule, the 2007 Form LM-30, or the pre-2007 Form LM-30. For 
filers with reportable payments or interests in fiscal years 
beginning on or after January 1, 2012, the Department will accept 
only the Revised Form LM-30.
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B. History of the LMRDA's Reporting Requirements

    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.'' 
Section 2(b), 29 U.S.C. 401(b).
    The LMRDA 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. The 
LMRDA addressed various ills through a set of integrated provisions 
aimed at labor-management relations governance and management. These 
provisions include financial reporting and disclosure requirements for 
labor organizations, their officers and employees, employers, labor 
relations consultants, and surety companies. See 29 U.S.C. 431-36, 441.
    To highlight the potential conflicts of interest to which union 
officers and employees could be susceptible, the Senate Committee 
Report explained:

    [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.

    Senate Report No. 187 (1959) (Senate Report) at 15, reprinted in 
NLRB Legislative History of the Labor-Management Reporting and 
Disclosure Act of 1959 (2 volumes) (Leg. History), 1 Leg. History, at 
411.
    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 the 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 other sources of income are left private because 
they 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.
    Both the Senate and House Reports recognized that a reportable 
interest was 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 No. 741 (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

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made illegal under other provisions of the bill or other laws'').
    Conflict-of-interest standards, including disclosure obligations of 
individuals and entities occupying positions of trust, are firmly 
established 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. * * * The same principle * * * 
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.''

    House Report, at 10-11, reprinted at 1 Leg. History, at 768-69. 
Senate Report, at 14, reprinted in 1 Leg. History, at 410. See 
generally Restatement (Second) of Trusts (1959) Sec. Sec.  170, 173; 
Restatement (Second) of Agency (1958) Sec. Sec.  381, 387-98.
    The reporting provisions of the Act represent, in part, an effort 
to codify various requirements contained in an extensive code of ethics 
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 
similarities between a union official's fiduciary duty and the 
disclosure requirements of section 202.

    [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 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.
    [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, 105 Cong. Rec.*16379 (daily ed. Sept. 3, 1959), reprinted in 2 
Leg. History, at 1407-08. See also Ethical Practices Code II: Health 
and Welfare Funds, Id., 2 Leg. History, at 1406-07.
    The Act was crafted with particular regard for the unique function 
and status of labor unions. Then Senator John F. Kennedy, who was the 
chief sponsor of the Senate bill, S. 505, which served as the 
foundation for the LMRDA, stated that the legislation was ``designed to 
permit responsible unionism to operate without being undermined by 
either racketeering tactics or bureaucratic controls. It is designed to 
strike a balance between the dangers of to [sic] much and too little 
legislation in this field.'' 105 Cong. Rec. S816 (daily ed. Jan. 20, 
1959), reprinted in 1 Leg. History, at 969.
    As noted by Senator Kennedy, a balance of these interests was 
central to the enactment of the LMRDA. Congress sought to address 
legitimate concerns about illegal and undemocratic behaviors without 
permitting that concern to be used as an excuse for undermining 
organized labor. Further, Congress sought to address the importance of 
balancing necessary disclosure and regulation with undue intrusion on 
union operations and the protection of union officers' privacy 
interests. As stated in the Senate Report, ``[t]he committee recognized 
the desirability of minimum interference by Government in the internal 
affairs of any private organization * * * in establishing and enforcing 
statutory standards great care should be taken not to undermine union 
self-government or weaken unions in their role as collective-bargaining 
agents.'' Senate Report, at p. 7, reprinted in 2 Leg. History, at 403.
    Professor Archibald Cox played a pivotal role in drafting the 
legislation that ultimately became the LMRDA. His testimony before the 
Senate subcommittee that was considering this legislation presaged the 
language in the Senate Report, describing the reporting obligation as a 
limited one. He testified: ``The bill is narrowly drawn to meet a 
specific evil. It requires only the disclosure of conflicts of 
interest. The other investments of union officials and their other 
sources of income are left private because they are not matters of 
public concern.'' Hearings on S. 505 before the Subcommittee on Labor 
of the Senate Committee on Labor and Public Welfare (1959) (Senate 
Hearings), at 123; see Senate Report, at 15, reprinted in 1 Leg. 
History, at 411. Professor Cox additionally noted that because the 
reporting requirements were based, in part, upon the Ethical Practices 
Code formulated by the AFL-CIO, union officials who adhered to this 
code would have ``virtually nothing to disclose in his report to the 
public.'' Senate Hearings, at 123.

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;

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    (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 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. Rationale for Rulemaking on Form LM-30

    The Department is modifying the Form LM-30 for the following 
reasons, which the Department identified in the NPRM as the bases for 
its proposed changes:
    (1) The 2007 Form LM-30 rule created uncertainty for the regulated 
community, presented unresolved questions regarding the rule's 
reporting requirements, engendered strong objections to key aspects of 
the rule, such as the reporting of certain loans, including mortgages 
and student loans; the reporting of union leave and no docking 
payments; and the extension of the Form LM-30 reporting requirement to 
individuals serving as union stewards or in similar positions 
representing the union.
    (2) The revisions adopted in this rule better balance the 
disclosure of information and the burden imposed on union officials.
    (3) The revisions in this rule better clarify the form and 
instructions and organize the information in a useful format.
    As explained in the NPRM, the Department fully recognizes the 
importance of union officer and employee reporting and the disclosure 
of pertinent financial information to union members and the public. 
This rule effectuates these purposes and reflects a proper balancing of 
transparency with the need to maintain union autonomy and to avoid 
overburdening unions and their officials with unnecessary reporting 
requirements. Because the 2007 rule did not adequately consider this 
balance, it did not succeed in properly implementing the LMRDA. The 
Department has carefully considered the comments received from the 
regulated community and the public about the 2007 rule and the changes 
proposed by the Department. Generally, the Department has included in 
the final rule the changes proposed. Unless otherwise stated herein, 
the Department has made these changes for the reasons stated in the 
NPRM. Rather than restate in full the reasons set out at length in the 
NPRM, the Department has attempted to limit repetition to those 
instances where a more detailed discussion is needed to provide context 
to comments received on the proposed rule and the Department's response 
to those comments.

E. Review of General Comments Received in Response to NPRM

    The Department received 62 unique comments to the NPRM, from 286 
commenters.\4\ Of the 62 unique comments received, 39 expressed 
opposition to the Department's proposal to revise Form LM-30, 22 
supported the proposal, and an additional comment, from a labor 
organization, expressed neither support nor opposition to the proposal, 
but requested an industry-specific exemption to the LM-30 reporting 
requirement.\5\
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    \4\ One of the unique comments was a form letter submitted by 
225 individuals. Additionally, one commenter submitted two versions 
of the same comment.
    \5\ The labor organization suggested that the Form LM -30 
reporting obligation should not apply to union officials who receive 
free admission to performances for union-related purposes, or for 
purposes of voting for industry awards. The union offered clarifying 
language that would exempt these examples of free admission from 
Form LM-30 reporting. The issue will be addressed in section III.E. 
of the preamble.
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    Comments that expressed, in whole or in part, general support or 
opposition to the NPRM will be discussed in this section of the rule. 
Comments on specific changes and revisions to Form LM-30 will be 
addressed in subsequent sections, which are organized by topic.
Review of General Comments in Support of NPRM
    Comments submitted by 17 national/international unions, two 
federations of labor organizations, one local union, one law firm (on 
behalf of various clients, including unions, insurance companies, and 
service providers to unions and benefit plans), and one public policy 
organization generally expressed strong support for the Department's 
proposed revisions to Form LM-30.
    Multiple union commenters, a public policy organization, and a law 
firm generally supported the Department's NPRM, but expressed concerns 
about certain aspects of the proposal or suggested certain 
modifications. These issues and proposed modifications will be 
discussed later in this rule, in the relevant sections to which each 
topic applies.
Review of General Comments in Opposition to NPRM
    The comments submitted in opposition to the NPRM include the above-
referenced form letter, 36 additional comments submitted by 
individuals, and two comments submitted by public policy organizations. 
A third public policy organization opposed some aspects of the 
proposal.
    Most of the opposing comments, apart from those submitted by the 
public policy organizations, were general in nature and did not 
directly, if at all, address the Form LM-30 or the Department's 
proposed revisions. The above-referenced form letter stated that the 
proposed Form LM-30 regulations should be rejected because they would 
undermine efforts regarding recent changes made to unions' reporting 
and disclosure requirements, which were designed to increase 
transparency. The letter also stated that union members have relied on 
the LMRDA to ``discourage and expose'' corruption.
    Two individuals that identified themselves as union members 
asserted that conflict-of-interest reporting requirements should not be 
lessened, and voiced their support of transparency. While some private 
citizens limited their comments to expressing general dissatisfaction 
with the current political administration, other commenters expressed 
general anti-union sentiment, and did not refer to the proposed 
revisions to Form LM-

[[Page 66446]]

30 or any aspect of LMRDA reporting requirements. Additional commenters 
made general statements that unions should be held accountable for 
potential conflicts of interest, and generally should not be exempt 
from reporting requirements. Apparently misunderstanding the 
Department's proposal, multiple commenters erroneously characterized 
the NPRM as an effort to eliminate conflict-of-interest reporting 
altogether.
    In response to these comments, the Department notes that its 
proposal and this final rule have been drafted with the purpose of best 
effectuating the disclosure requirements of the LMRDA. The goal has 
been to revise the 2007 rule in a way that achieves that purpose. 
Contrary to the suggestions by several commenters, the Department's 
proposals are not designed to achieve arbitrary goals or political 
objectives. Indeed, many commenters appear to have overlooked that most 
aspects of the 2007 rule were left unchanged by the Department's 
proposal and this final rule. As a matter of policy and statutory 
interpretation, the Department believes that the approach adopted in 
this rule reflects an improvement over those aspects of the 2007 rule 
that have been revised.
    One public policy organization disputed the Department's statement 
that the 2007 rule raised ``significant policy and law questions.'' 
Rather, in the commenter's view, the objections to the 2007 rule are 
``political'' in nature, deriving from the ``regulated community.'' The 
commenter stated that the NPRM should be immediately withdrawn ``due to 
the Department's inconsistent application of the term ``employer'' to 
different parts of the LMRDA'' (discussed below in section III, part D, 
of this preamble). The commenter explained its view that the 2007 
changes were necessary additions to ensure needed transparency, and 
urged the Department to enforce the 2007 rule. The Department disagrees 
with these general comments. In the Department's view, it is evident 
from a cursory review of the 2007 rule, the compliance issues it 
presented, the history surrounding the Form LM-30 and its enforcement, 
and the comments received at the July 21, 2009 stakeholder meeting, 
that the 2007 rule presented fundamental policy and legal questions 
deserving of the Department's scrutiny. As a result of its review of 
the 2007 rule, the Department has developed an approach that more 
effectively targets actual or potential conflict-of-interest payments 
and balances the need for transparency with the legitimate interests of 
union officials and transparent labor-management relations.
    Another public policy organization voiced strong opposition to the 
NPRM, and stated that the NPRM ``provides no evidence that is 
consistent with LMRDA language'' to justify its proposed revisions to 
Form LM-30. The commenter stated that ``[s]ince 1959, the Department 
has essentially ignored Form LM-30 reporting and disclosures.'' The 
commenter argued that the NPRM proposes to ``hide [union-employer] 
collusions,'' and ``essentially abandons individual workers in its 
analysis.'' For the reasons mentioned above in response to a similar 
comment, the Department disagrees with the assertions. The interest of 
workers, union members, and the public in labor-management transparency 
is a significant goal of the statute, and has been a primary 
consideration in this rulemaking. The importance of balancing the 
benefits of disclosure against the burdens that recordkeeping and 
reporting imposed on the legitimate activities of unions and their 
officials likewise undergirds the proposal and the final rule. The 
Department fully explains in the sections that follow in this preamble 
the rationale for the changes made by this final rule and how they 
comport with the LMRDA's disclosure provisions.
    One public policy organization challenged the Secretary's authority 
to make the proposed revisions under section 208 of the LMRDA, and 
suggested that the proposed rule, therefore, is inval Id. Section 208 
of the LMRDA, 29 U.S.C. 438, authorizes the Secretary of Labor to 
issue, amend, and rescind rules and regulations to implement the 
LMRDA's reporting provisions. The commenter reads section 208 as a 
``one-way ratcheting mechanism'' that only permits the Secretary to add 
additional reporting requirements, not revise existing requirements. In 
its view, the changes proposed by the Department could be effectuated 
only if Congress amends the Act.
    The Department disagrees with the commenter's distinctive view of 
section 208. Section 208 grants the Secretary authority ``to issue, 
amend, and rescind rules and regulations prescribing the form and 
publication of reports required to be filed under Title II of the 
Act.'' The verbs ``amend'' and ``rescind'' do not constrain this 
authority; they allow the Secretary to make changes, but do not compel 
any particular modification. Further, the words themselves do not 
connote that amendments and rescissions must add to (rather than 
subtract from) the reporting requirements. The verb ``rescind,'' for 
example, suggests removal or abrogation in general, and is equally 
applicable to both reporting requirements and reporting exemptions.
    The Department fully understands that its ``rules and regulations 
prescribing the form and publication of reports required to be filed'' 
must conform to the statute. As explained throughout this preamble, the 
proposed changes, as adopted in this final rule, are entirely 
consistent with the language and purpose of the LMRDA. By revising the 
Form LM-30 to feature a simplified format and more concise, clear 
instructions, the final rule will facilitate filers' compliance with 
Form LM-30 reporting requirements and increase the form's utility to 
the public.
    The same commenter suggests that the Department has disregarded the 
intent of Congress and conferred upon itself the authority to create 
administrative exemptions in derogation of the statutory requirements. 
The Department disagrees, noting, as discussed throughout this 
preamble, that the changes are based upon the Department's reasoned 
interpretation of the Act. The Department additionally notes that while 
the term ``administrative exemption'' has long been used to describe 
certain exceptions from a general reporting obligation (as the term was 
also used in the 2007 rule), they have always been based on a 
reasonable interpretation of the statute. The commenter overlooks that 
the Department retains discretion under the statute in crafting rules, 
and that how this discretion is exercised is appropriately based on 
policy considerations.
    The commenter added that the Secretary may limit disclosure by 
utilizing de minimis thresholds, but argued that union officials must 
still adhere to record retention requirements in LMRDA section 206. 
While the intent of the comment is not clear, such recordkeeping 
requirements apply to records needed to verify required reports and the 
detail required to be included on the reports. They do not apply to 
information not required to be reported.
    Finally, the commenter suggested that a statement used in the 2010 
NPRM demonstrates the Department's intention to undermine congressional 
intent. The NPRM, at 75 FR 48416, states that the LMRDA reporting 
provisions ``are designed to empower labor organizations, their 
members, and the public.'' The commenter reads the statement as proof 
that ``DOL embraces a view that part of the LMRDA's purpose is to 
`empower labor unions'

[[Page 66447]]

when, in fact, its purpose is to shield union members and the public 
from corrupt union officials.'' In response, the Department in no way 
intended to intimate that the LMRDA was designed to ``empower labor 
organizations,'' as distinct from their membership. As the commenter 
also recognizes, the LMRDA's disclosure provisions provide information 
that empowers union members and the public by promoting union self-
governance and financial integrity. At the same time, and as recognized 
in the NPRM, the Department cannot disregard the burden that reporting 
places on unions and union officials. As stated in the 1959 Senate 
Committee Report and repeated in the NPRM: ``The committee recognized 
the desirability of minimum interference by Government in the internal 
affairs of any private organization * * * in establishing and enforcing 
statutory standards great care should be taken not to undermine union 
self-government or weaken unions in their role as collective-bargaining 
agents.'' Senate Report No. 187, at p. 7, reprinted in 2 Leg. History, 
at 403, quoted at 75 FR 48418. Thus, in regard to its impact upon 
unions, the intent of the LMRDA is not to intrude on the legitimate 
role of unions in labor-management relations, but, rather, to advance 
the interests of employees by furthering union and workplace democracy 
and reducing or eliminating labor-management financial corruption.
Comments on Reporting Burden Created by 2007 Rule
    Most union commenters asserted that the 2007 changes to the Form 
LM-30 reporting requirements are not justified in light of the burden 
they impose, and voiced support for the rescission of some of these 
requirements, which one commenter described as ``extremely burdensome 
to filers, and confusing and misleading to the public.'' Another 
international union commented that the 2007 revisions to Form LM-30 
``impose[d] a severe burden on union filers with no corresponding 
benefit to union members or the public and raised fundamental legal and 
policy questions with which OLMS is still struggling.''
    A federation of labor organizations stated that in challenging the 
2007 rule it had argued that the 2007 ``changes in the universe of 
potential Form LM-30 filers and in the scope of interests and receipts 
subject to reporting exceeded the Department's statutory authority.'' 
The commenter concurs with the NPRM that the 2007 changes to the Form 
LM-30, had they gone into effect, would have been unduly burdensome and 
could have deterred people from running for union office. One commenter 
concurred with the comments submitted by the federation, and stated 
that ``the prior regulatory scheme * * * was unduly burdensome and far 
beyond the original intent of the law.'' Another commenter stated that 
the 2007 LM-30 reporting requirements ``create a trap for even the most 
scrupulous and detail-oriented union official,'' adding that [``b]y 
setting [a]standard that in some respects is impossible to meet, the 
current rules discourage involvement in union activities.''
    Echoing the burden theme, one international union commenter stated 
that the Form LM-30 reporting requirements outlined in the 2007 rule 
require ``unnecessary reporting of many financial transactions and 
arrangements that pose no threat of a conflict of interest,'' and 
create a ``crushing burden on [its] officers and employees.'' It added 
that these new requirements ``discourage[ ] involvement in union 
activities to the detriment of both the union and its employer 
partners.'' Yet another commenter supported the Department's proposal, 
as it targeted the ``unnecessary over-complication, confusion, and 
burden caused by its 2007 rule.''
    One union commenter challenged the 2007 rule as claiming to enhance 
``transparency,'' but rather imposed ``expensive and time-consuming'' 
requirements, to the detriment of the members. Noting the increased 
volume of information required to be reported on the 2007 Form LM-30, 
another international union questioned whether such additional 
information would effectively reveal actual or potential conflicts of 
interest.
Comment on 2007 Rule's Impact on Compliance Assistance Efforts
    One local union commenter cited the intensive, multi-faceted 
training and compliance assistance efforts undertaken by the 
commenter's union when the 2007 rule was adopted, and supports the 
proposed changes, as they would reduce the ``complication associated 
with compliance.'' The commenter stated that its union ``would much 
rather devote these human resources to matters that have more 
widespread and direct benefits for our members,'' such as negotiating 
contracts, processing grievances, and organizing unrepresented workers 
to protect the wages and fringe benefits of its membership.
Comments on Striking a Fair Balance Between the Conflict-of-Interest 
Disclosure Requirement and Union Officials' Legitimate Privacy 
Interests
    Numerous commenters supported the Department's proposal in its 
effort to balance the legitimate needs and interests of unions and 
their officials with the need for conflict-of-interest reporting that 
advances labor-management relations, union democracy, and union 
financial integrity. For example, one commenter stated, ``The goal of 
the proposed Rule, to restore a fair balance between the interests of 
unions, their members and the public, is appropriate and necessary.'' 
Following this theme, another commenter stated that the Department's 
proposal better balances union officials' privacy interests with the 
need for members to have information concerning conflicts of interest 
that could undermine the union's ability to represent the employees. 
Another commenter, a federation of labor organizations, stated that it 
supported the Department's proposal ``because, in the main, the 
proposal accomplishes the Department's statutory purpose of striking 
the proper `balance' between `the interests of labor organizations, 
their members, and the public, including the benefits served by 
disclosure, the burden placed on reporting entities, and preserving the 
independence of unions and their officials from unnecessary government 
regulation.'' 75 FR at 48416. An international union commenter offered 
support for the proposed changes, stating that they are well grounded, 
consistent with congressional purpose in drafting the Act, and 
successful in striking an appropriate balance between the goals of 
greater conflict-of-interest transparency while not establishing 
unnecessary burden for union officials.

II. Authority

A. Legal Authority

    The legal authority for this rule is set forth in sections 202 and 
208 of the LMRDA, 29 U.S.C. 432, 438. Section 208 of the LMRDA provides 
that the Secretary of Labor shall have authority to issue, amend, and 
rescind rules and regulations prescribing the form and publication of 
reports required to be filed under Title II of the Act and such other 
reasonable rules and regulations as she may find necessary to prevent 
the circumvention or evasion of the reporting requirements. 29 U.S.C. 
438.

B. Departmental Authorization

    Secretary's Order 08-2009, issued November 6, 2009, contains the

[[Page 66448]]

delegation of authority and assignment of responsibility for the 
Secretary's functions under the LMRDA to the Director of the Office of 
Labor-Management Standards and permits re-delegation of such authority. 
See 74 FR 58835 (Nov. 13, 2009).

III. Revisions to the 2007 Form LM-30 Reporting Requirements

    This rule implements five changes to the Form LM-30 reporting 
requirements, as proposed in the NPRM: (1) The elimination of reporting 
of union leave and no docking payments, and, more broadly, a revised 
interpretation of the bona fide employee exception; (2) the removal 
from coverage of individuals serving as union stewards or in similar 
positions representing the union, such as a member of a safety 
committee or a bargaining committee; (3) the elimination of reporting 
for certain bona fide loans and other financial transactions on Parts A 
and B of the form; (4) the limitation on reporting of payments from 
employers competitive to the represented employer, certain trusts, and 
unions; and (5) a revision of the reporting required of national, 
international, and intermediate union officers and employees.
    First, this rule returns to the historical practice whereby union 
officers and employees were not required to report compensation they 
received under union leave and no docking policies established under 
collective bargaining agreements or pursuant to a custom and practice 
under such collective bargaining agreements. These payments are made by 
a represented employer to its employees who are serving on behalf of 
the union on labor-management relations matters. Under a union leave 
policy, the employer continues the pay and benefits of an individual 
who often works full time on such matters. Under a no docking policy, 
the employer permits individuals to devote portions of their work day 
or work week to labor-management relations business, such as processing 
grievances, with no loss of pay. The requirement in the 2007 rule that 
union officials must report union leave and no docking payments has 
been strongly criticized as unduly burdensome. The Department agrees 
that this reporting requirement imposes undue burden and may impede 
individuals from running for union office and otherwise serving in 
important union roles. The 2007 rule was based on the premise that such 
payments are for work performed on the union's behalf, rather than the 
employer's, and are thus not payments made under the ``bona fide 
employee'' exception of section 202 of the LMRDA. Upon reconsideration, 
the Department has determined that the term ``bona fide employee,'' as 
used in that section, is most naturally read to distinguish between, on 
the one hand, payments that are made to a union official by virtue of 
his or her employment by the company making the payment, and, on the 
other hand, payments that are made to union officials without regard to 
such employment. This interpretation better accords with the purposes 
of the statute than the interpretation embodied in the 2007 rule that 
focuses on whether the union or the employer making the payment 
exercises primary control over an individual's discrete, temporal 
activities as a union official.
    Second, this rule returns to the historical practice of excluding 
union stewards and similar union representatives from Form LM-30 
reporting. The Department believes that this practice comports with the 
language of section 202 and better effectuates labor-management 
relations than the interpretation embodied in the 2007 rule.
    Third, this rule establishes administrative exemptions for Parts A 
and B of the form, whereby union officials generally need only report 
loans from bona fide credit institutions if such loans are on terms 
more favorable than those available to the public. The 2007 rule 
required more extensive reporting and made confusing and complex 
distinctions among various relationships and credit institutions. This 
rule also incorporates the clarification, as set forth in 2007 Form LM-
30 Frequently Asked Question (FAQ) 70, that union officials as a 
general rule are not required to report on savings accounts, 
certificates of deposit (CD), credit cards, etc. where such instruments 
contain the same terms offered to other customers without regard to an 
individual's status as a union official.\6\
---------------------------------------------------------------------------

    \6\ See the 2007 Form LM-30 FAQs at https://www.dol.gov/olms/regs/compliance/RevisedLM30_FAQ.htm.
---------------------------------------------------------------------------

    Fourth, this rule limits the reporting obligation with respect to 
interests in and payments from employers that compete with employers 
represented by the official's union or that the union actively seeks to 
represent. Disclosure of such payments is important, but only where an 
official is involved with the organizing, collective bargaining, or 
contract administration activities related to a particular represented 
employer, or possesses significant authority or influence over such 
activities. Establishing such limitation on disclosure ensures that 
meaningful information will be provided to union members without 
imposing undue burden on officials who do not occupy positions of 
influence over the union's organizing, collective bargaining, or 
contract administration activities related to the represented employer. 
Similarly, this rule modifies the scope of reporting insofar as 
payments from certain trusts and unions are concerned. The Department 
returns to its historical practice of not requiring officials to report 
on payments they receive from trusts or, as a general rule, from 
unions. Officials of a staff union are, however, still required to 
report on Part A any payments they receive from the union-employer 
whose employees the staff union represents.
    Finally, this rule revises and clarifies the scope of ``top-down'' 
reporting for officials of international, national, and intermediate 
unions. This rule effectuates the Department's proposal in the NPRM 
that officers and certain employees of these higher level unions must 
look at payments they receive from employers and businesses with 
relationships with lower levels of their unions (e.g., a local or other 
subordinate body), as well as with their own level of the union, when 
applying the Form LM-30 reporting requirements. However, based on a 
review of the comments, the Department has determined to adopt a 
modification of its proposed expansion of the scope of top-down 
reporting for union employees of national, international, and 
intermediate body labor organizations. All higher-level union employees 
that have significant authority or influence with respect to affiliates 
will also need to report these matters in relation to subordinate 
affiliates. Higher-level union employees without such significant 
authority or influence over affiliates or officials of affiliates will 
not be subject to these top-down reporting obligations.
    The 2007 rule also established confusing exceptions to the ``top-
down'' reporting obligations. Payments from businesses that dealt with 
represented employers were exempt, while the instructions did not 
specify the reportability of payments from businesses that dealt with 
lower level unions. Further, these officials were not required to 
report any payments or other financial benefits received by their 
spouses and minor children from employers and businesses involved with 
a lower level union. This rule effectuates the Department's proposal to 
remove these exceptions.
    In developing this rule, the Department has reviewed the reporting

[[Page 66449]]

examples utilized in the 2007 rule and the substantial guidance issued 
after the rule's publication as answers to FAQs in order to identify 
the extent to which, if at all, reporting will be changed under this 
rule. This rule supersedes any inconsistent interpretation or other 
guidance. The Department identifies in the margin those instances where 
the rule does not change the reporting obligations under the examples 
and FAQs.\7\ As discussed later in the text, examples will generally 
not be included in the revised instructions.
---------------------------------------------------------------------------

    \7\ Most of the examples in the 2007 instructions continue to 
accurately reflect reporting requirements as articulated in this 
rule. Thus, the following continue to accurately reflect reporting 
requirements: Examples 2-15, at pp. 3-4 of the instructions; 
examples 1-2, 4-5, at p. 6 of the instructions; examples 1 and 2, at 
p. 7 of the instructions; and examples 1, 3-15, and 17, at pp. 8-9 
of the instructions. Note that the NPRM had incorrectly stated that 
example 3, at p. 6 of the instructions would continue to accurately 
reflect reporting under this rule. Several of the FAQs are based on 
requirements that the Department changes with this rule.The 
following FAQs, however, continue to accurately reflect reporting 
requirements: 2-10, 12-26, 28, 30-37, 39, 44, 47, 49-50, 54, 56-59, 
72-76, and 79-88. It should be noted however, that some of the 
comments and FAQs, such as FAQs 49 and 73, while remaining accurate, 
were intended to illustrate issues that are less likely to arise 
under the revised rule. Others, such as FAQs 1 and 77, while largely 
accurate, contain some statements that are based on or refer to 
interpretations that are superseded by this rule.
---------------------------------------------------------------------------

A. The Bona Fide Employee Reporting Exception Under Section 202

    This rule effectuates the Department's proposal to return to its 
historical position that union officials should not report union leave 
and no docking payments. 75 FR 48421. As discussed above, these 
payments are made by a represented employer to its employees who are 
serving on behalf of the union on labor-management relations matters in 
accordance with the parties' collective bargaining agreement. First, 
the historical interpretation under which such compensation was not 
reported--to which this rule returns--comports more readily with the 
language in section 202, than the interpretation underlying the 
Department's 2007 interpretation. Second, such reporting imposes a 
substantial burden on union officials on matters unlikely to pose 
conflicts of interest and removing this burden ensures that there will 
be no undue interference with the internal workings of labor unions and 
labor-management relations. Third, there is no persuasive reason, as a 
matter of policy, why union officials must report such payments, while 
employers making such payments are under no similar obligation. See 75 
FR 48421-48423.
    Sections 202(a)(1) and (5) of the LMRDA require a labor 
organization officer or employee to report payments that the official, 
his or her spouse, or minor children receive from an employer whose 
employees the labor organization represents or is actively seeking to 
represent, ``except payments and other benefits received as a bona fide 
employee of such employer.'' 29 U.S.C. 432(a)(1) & (5) (emphasis 
added).
    Until the 2007 rule, the Department's policy had been to exclude 
from reporting payments and other benefits received for activities 
undertaken on behalf of the union, as well as for any other 
``activities other than productive work,'' but paid for by the 
employer. Thus, the instructions for the 1963 Form LM-30 stated that 
the following payments and benefits were exempt from Form LM-30 
reporting:

    [p]ayments 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 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.

    Pre-2007 Form LM-30 Instructions, Part A (Items 6 and 7) at (iv). 
See 28 FR 14384 (Dec. 27, 1963).
    The 2007 rule narrowed the exemption in the Form LM-30 
instructions, as quoted above, by limiting it to situations where such 
payments were made pursuant to a bona fide collective bargaining 
agreement and totaled 250 or fewer hours during the filer's fiscal 
year.
1. Review of Comments Received
    The Department received 17 substantive comments on the issue of the 
union leave and no docking payments. Of these 17 comments, 14 supported 
the removal of reporting for such payments: 12 unions, one law firm, 
and one public policy organization. Additionally, three comments 
opposed the change, including two public policy groups, and 225 
individuals who sent in form letters.
a. Comments in Support of NPRM
    The Department received 13 comments that provided general support 
for removing union leave and no docking payments from the Form LM-30 
reporting requirements, with about one-half providing specific comments 
in support of the changes. One international union commenter concurred 
with the view that the ``legitimacy'' of such payments is established 
when they are included in a collective bargaining agreement or 
employment practice, and that they do not pose conflict-of-interest 
problems like ``no show work, featherbedding, or similar practices.'' 
The commenter further stated that requiring reporting for such payments 
for union officials, and not employers, imposes an ``unnecessary 
burden'' on the officials and deters employees from serving as 
representatives. A national union concurred with the Department's view, 
as expressed in the NPRM, that such payments do not pose a conflict of 
interest, and also noted that employers are not required to report such 
payments on the Form LM-10.
    Another international union maintained that such reporting would be 
burdensome, unrelated to the purpose and intent of the statute, and 
``disruptive of many well-established labor-management relationships.'' 
The commenter also stated that such arrangements are known to the 
employees, who benefit along with the employer from this practice, and 
it presented evidence of the burdensome nature of reporting such 
payments. It explained that union officials would be required to keep 
track of all hours worked under union leave or no docking arrangements 
and calculate benefits as well as wages earned, adding that such 
information would not easily be obtained from the employer, who may not 
desire to release it. Such reporting, the commenter contended, may 
discourage employee participation in the union, and would not disclose 
conflicts of interest in that no docking arrangements are already known 
to employees in a bargaining unit either by being required by a 
collective bargaining agreement or being made pursuant to a custom 
under a collective bargaining agreement. Further, the commenter stated 
that members know that when stewards or other union representatives 
``administer the contract, process grievances, or represent members in 
disciplinary actions,'' they are receiving payment from the employer.
    A national union discussed the burden and disincentive that 
reporting union leave and no docking payments would have on employees' 
willingness to serve the union. Another national union emphasized that 
such payments, received pursuant to a collective bargaining agreement, 
are made with full knowledge of the employees and

[[Page 66450]]

thus reporting is not needed to provide transparency. The union 
explained that the burden that such reporting would impose would 
discourage members from representing their fellow employees in 
``grievances, serving on safety and health committees, and 
participating in collective bargaining.'' An international union 
stressed that such payments do not pose conflicts of interests, as they 
``primarily serve'' the employers by promoting ``prompt and fair 
resolution of grievances and other workplace issues so that work 
continues and morale remains high.''
    Further, a national union stated that in determining whether or not 
a payment is received ``as a bona fide employee,'' a distinction must 
be made between payments made ``by virtue'' of a union official's 
employment with the employer and payments made without regard to such 
relationship. In this union's experience, employees volunteer to serve, 
on their own personal time, on joint labor-management, safety and 
health, and other committees, with the collective bargaining agreement 
only ensuring that they do not lose any compensation or benefits.
    Finally, a law firm supported the Department's proposed return to 
its historical position that union leave and no docking payments are 
not reportable. It urged the Department to clarify that employers are 
not required to report such payments under section 203 of the Act. The 
firm asserted that such payments should be considered to be made as 
``compensation for, or by reason of, [an employee's] service as an 
employee for such employer.'' \8\ It stated that without such 
clarification an employer may feel obligated to report such payments, 
even though union officials are not required to report their receipt of 
such payments. As the Department discusses in later sectio