Proposed Rule Effecting Intermediate Labor Organizations

Intermediate unions representing public sector employees may soon be subject to the Labor Management Reporting and Disclosure Act (LMRDA); again.

The proposal effects intermediate bodies that are wholly composed of public sector organizations but are subordinate to an international or national labor organization that is subject to the LMRDA. Under the proposed rule, the intermediate bodies would now be subject to the LMRDA and, in-accordance with Title II of the LMRDA, would be required to file an annual financial report: Form LM-2, Form LM-3, or Form LM-4 with the Department of Labor’s (DOL) Office of Labor-Management Standards.

This proposal is nothing new. The DOL proposed revisions to the annual reports required by intermediate labor organizations in 2002. As a part of this earlier proposal, the DOL sought to revise their interpretation of the definition of “labor organization… deemed to be engaged in an industry affecting commerce” under the LMRDA. After a comment period, in 2003, the DOL issued their final interpretation stating that intermediate bodies that are subordinate to a national or international labor organization that includes a covered labor organization will also be covered by the LMRDA, even if the intermediate body’s constituents are solely public sector local labor unions not covered by the Act. Prior to this, an intermediate body was subject to the LMRDA only if one or more of its constituent local labor unions represented private sector employees.

This new interpretation was challenged in federal district court by labor organizations affected by this ruling. In 2005, the court granted a summary judgement in favor of labor unions. This ruling was appealed and reversed in 2006 by the United States Court of Appeals for the District of Columbia. However, the court also concluded that the DOL had not provided a “reasoned analysis” supporting its change of position. The appeals court remanded the rule to the DOL to provide such analysis.

In 2007, the DOL issued their “reasoned analysis” to support the change based on the following three arguments:

• The policy advanced the twin Congressional goals that labor organizations’ financial conditions and operations should be subject to public disclosure to benefit employees who participate in those organizations, and that the definition of “labor organizations” should be interpreted broadly to advance union democracy, financial transparency, and integrity.
• Expanded coverage promoted disclosure of financial disbursements and receipts to and from structurally related labor organizations, thus enhancing members’ ability to trace their dues money and to identify any potential financial irregularities.
• The revised interpretation gave full meaning to the statute, which focuses on covering intermediate bodies precisely because they are subordinate to a covered national or international labor organization, even though they may consist only of unions that do not bargain with private sector employers.

Labor organizations challenged this interpretation in the United States District Court. However, in 2008, the ruling was upheld. The courts agreed with the position taken by the Secretary of Labor, that once there is more than a single interpretation that is permissible, the Secretary may select between or among them if a reasoned explanation for the choice is provided.

In 2009, the DOL engaged in notice-and-comment rulemaking to return to its pre-2003 policy, which interpreted the LMRDA to exclude, rather than cover, intermediate labor organizations that contain no local labor organization members representing employees in the private sector.

In 2010, the DOL reversed their issued interpretation from 2003 and reverted to the pre-2003 interpretation.

Now, the DOL is stating that their interpretation in 2003 was correct, and their reversal in 2010 was incorrect and is pursuing the inclusion of intermediate bodies in the definition of labor organizations covered by the LMRDA if the parent union is covered by the LMRDA.

The DOL is seeking written comments by February 18, 2020, submitted electronically only through the Federal eRulemaking Portal. Comments should be identified by RIN-1245-AA08.

Information in this article was obtained from the Federal Register