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Pursuant to the Landrum-Griffin Act of 1959, also known as the Labor-Management Reporting and Disclosure Act (LMRDA or act), 29 USC ��401 et seq., employers have for some time been required to file annual disclosure reports on Form LM-10 with the U.S. Department of Labor (DOL), setting forth details concerning certain financial transactions with labor organizations, union officials, employees or labor relations consultants. The full breadth and extent of this requirement, however, had until recently been unclear. On Nov. 9, 2005, the DOL issued new guidance clarifying and refining the scope of employer disclosure obligations under LMRDA (guidance). The guidance is expected to lead to a significant increase in the number of employers filing Form LM-10s for the first time, as the guidance sets forth an expansive view of employers and activities subject to the disclosure requirements of LMRDA. In conjunction with this initiative, and in an effort to encourage employer compliance, the DOL has provided a limited grace period and modified attestation standard for first-time filers for 2005. The 2005 Form LM-10 reports must be filed within 90 days of the end of the employer’s fiscal year commencing on or after Jan. 1, 2005. Thus, employers who operate on a calendar-year basis must file their reports by March 31, 2006. This article will address the new reporting guidelines outlined in the guidance. LMRDA PURPOSE Congress enacted LMRDA as a measure to discourage improper relationships and transactions between labor organizations and employers. In fulfilling its purpose, the act requires officers and employees of unions to disclose “income or any other benefit with monetary value (including reimbursed expenses)” received from an employer over a certain amount. 29 USC 432(a)(1). This disclosure is provided through Form LM-30. Similarly, pursuant to �203(a) of LMRDA, employers are required to file Form LM-10, an annual report that identifies payments to unions and their officers. A copy of the Form LM-10 is available at the DOL’s Web site. These reports are intended to disclose all transactions that may give the appearance that an employer is attempting to influence a union or the bargaining rights of employees. To ensure that the reports are truthful, LMRDA provides for a fine up to $10,000 and/or one-year imprisonment for willful violations. Although the DOL had not engaged in widespread enforcement of the reporting requirements under LMRDA in the past, the DOL appears recently to have made increasing compliance a priority. In August 2005, the DOL issued proposed significant new guidance addressing reporting procedures for unions. As a consequence of the DOL’s enforcement initiative of LMDRA with respect to disclosure obligations of unions, employers likewise are facing greater reporting scrutiny under the act. In particular, the DOL issued the guidance this past fall, instructing potential filers that the disclosure requirements apply not only to employers whose employees are represented by a labor organization, but also to employers that have business dealings with labor organizations. This includes service providers to union-affiliated trusts, such as broker-dealers, investment advisers, investment companies and investment banks. A copy of the guidance is available at the DOL’s Web site. As a result of these changes, many employers will be first-time filers this reporting year. COVERAGE As explained in the guidance, an “employer” is any employer or any group or association of employers engaged in an industry affecting commerce, that: is an employer within the meaning of any U.S. law relating to the employment of any employees; may deal with any labor organization concerning grievances, labor disputes, wages, rates of pay, hours of employment or conditions of work; or acts directly or indirectly as an employer or an agent of an employer in relation to an employee. The classification of employer does not include the United States or any corporation wholly owned by any level of government or any state or municipality. Accordingly, this definition encompasses a broad segment of private sector businesses. Section 203 of LMRDA provides that employers who satisfy the above definition must disclose on Form LM-10 each instance when the employer made a payment or loan, direct or indirect, of money or other thing of value to any union or union official, subject to certain exceptions described below. In addition, the employer must report payments made to any employee in order to persuade employees in the exercise of their rights to union representation, unless other employees are told about the payments. Payments made to restrain union activity or obtain information on employee or union activities in connection with labor disputes involving the employer must also be reported, except when the information is obtained solely for use in a judicial, administrative or arbitral proceeding. Finally, employers must report arrangements with and payments to a labor relations consultant or other person for the purpose of persuading employees in the exercise of their rights to union representation, or obtaining information on employee or union activities in connection with labor disputes involving the employer, except information obtained solely for use in a judicial, administrative or arbitral proceeding. The guidance notes examples of covered items triggering the reporting obligations, including meals, travel expenses, tickets to sporting events and certain charitable contributions for the benefit of the union. The report must provide a full explanation of the circumstances of the reported agreements and transactions. The DOL noted in the guidance that generally payments by employers to any union officer are reportable if: the recipient’s union represents or seeks to represent the employer’s employees; the recipient’s union represents or seeks to represent the employees of another employer with which the employer buys, sells or has dealings; the recipient’s labor organization buys, sells or has dealings with the employer; the recipient’s labor organization has an interest in a trust with which the employer buys, sells or has dealings; or the employer is in active and direct competition with an employer described above. EXCEPTIONS The DOL also indicated in the guidance that it was increasing the de minimis exception from $25 to $250. Under this exception, an employer does not have to disclose payments to a labor organization or its officers, agents or employees if the aggregate of all “sporadic or occasional gifts, gratuities, or favors of insubstantial value” to a single union or union official is below $250 and the payment is unrelated to the recipient’s status in a labor organization. Employers should be aware that the reporting requirements under LMRDA intersect with �302 of the Labor Management Relations Act (LMRA), 29 USC �186, a separate statutory scheme that prohibits employers from giving anything of value to unions and their representatives, subject to certain enumerated exceptions. Payments that fall under the exceptions of �302(c) of the LMRA are not subject to reporting in Form LM-10. The exceptions under �302(c) include payments to union representatives or employees as compensation for services, union dues deducted from employees’ pay, payments made in satisfaction of judgment or settlement of claims, or payments made to trust funds in certain circumstances. In addition, among other things, the Form LM-10 provides that a employer does not have to report payments made in the regular course of business to persons regardless of union affiliation, and loans made in the regular course of business while acting as a bank, credit union, insurance company, savings and loan association or other credit institution. It is also important to note the differences between LMRDA and LMRA. The LMRDA and the guidance are administered by the DOL, and LMRA violations are remedied by the Department of Justice. Recognizing this difference in enforcement mechanisms, the guidance does not specifically address whether payments were reported on Form LM-10 would be a violation of �302 of the LMRA. ENCOURAGING COMPLIANCE In issuing the guidance, the DOL has recognized that many employers were not aware of these reporting requirements until late in 2005. As an incentive for timely filing, the guidance provides that new filers who submit their reports on time will not be required to file for prior fiscal years or be penalized for failure to file in prior years, absent “extraordinary circumstances.” The DOL’s ordinary practices allow it to seek delinquent Form LM-10s for the past five years. In an effort to accommodate the difficulties that arise in connection with filing an initial LM-10 report, the DOL has waived the requirement that the president and treasurer sign the report under “penalty of perjury” as long as they were previously unaware of the reporting obligations. Instead, the individuals who gather the information for the report may sign and first-time filers may substitute the “penalty of perjury” attestation with alternative language provided by the DOL if the employer did not have a procedure for tracking reportable payments in 2005 due to a good faith belief that it did not have an LM-10 reporting obligation. The signed report must be the result of a good faith search through the employer’s records. An attestation signed by the president and treasurer will be required for reports in subsequent years. John P. Furfaro is a partner at the firm of Skadden, Arps, Slate, Meagher & Flom. Louis D. Wilson and Julie R. Boden, associates at Skadden, assisted in the preparation of this article.

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