Enforcement of union funds’ transparency is long overdue

In 1959, the Labor-Management Reporting and Disclosure Act (LMRDA) passed with the support of a large bipartisan majority of Congress, including Sen. John F. Kennedy, who cosponsored the legislation. The law sought financial transparency and accountability in unions for the benefit of union members. The model for this is the Securities and Exchange Commission, which enforces public corporation transparency and accountability standards for the benefit of shareholders.

Many critical provisions of the 1959 union disclosure law were hardly enforced, if they were enforced at all, until the current decade when the Department of Labor instituted easy online filing and began implementing the law as was intended 50 years ago. Union members are now getting the clearest-ever look at where their dues money is going with the establishment of www.unionreports.gov.

An ongoing deficiency in union financial reporting concerns trust funds that unions have been using for many years. Union trusts are funded from union members’ pay and are supposed to be used for specified purposes such as strike funds, training funds, retirement plans or health insurance. These trusts have grown to encompass huge sums of money and some union trusts even capitalize banks, building funds, credit unions and life insurance companies.

Some unions have much of their dues-funded assets in trusts. Union members are entitled, and should be allowed, to find out what their union’s trusts are doing with their money. The LMRDA expressly authorizes the Department of Labor to issue regulations ensuring that trusts are not used to shield union finances from union members’ scrutiny.

Yet that authority has never been fully exercised, and almost a half-century after the LMRDA was passed, some union trusts effectively remain just as secretive and hidden from view as offshore bank accounts.

To bring union trusts into the sunlight, the Department of Labor is proposing new disclosure requirements. The trust disclosures, contained in a publicly accessible T-1 form, would provide union members a more accurate and Internet-available picture of their union’s finances. AFL-CIO President George Meany told Congress in 1959 that “reporting requirements will make a major contribution towards the elimination of corruption and questionable practices” if the act is “vigorously and properly used.” Unfortunately, the current AFL-CIO leadership has twice sued to prevent trust account disclosures.

Improving the transparency of union trusts and making that information easily accessible by union members is an essential reform to ensure union integrity. This Department of Labor believes it is long past time for full enforcement of the 1959 union financial transparency law which was deemed by Sen. John F. Kennedy and a majority of his colleagues to be critical to combating abuse of union member rights and corruption.