GAO

United States General Accounting Office

Report to the Chairman, Subcommittee

on Employer-Employee Relations,

Committee on Education and the

Workforce, House of Representatives

June 2000 DEPARTMENT OF

LABOR

Administering the

Labor-Management

Reporting and

Disclosure Act

GAO/HEHS-00-116

Page 1 GAO/HEHS-00-116 Labor-Management Reporting

Contents

Letter 3

Appendixes Appendix I: Labor’s Organizational Structure and Use of Fiscal

Year 1999 Resources to Administer the Act 14

Appendix II: Title I: Bill of Rights of Union Members 22

Appendix III: Title II: Reporting Requirements and Public

Disclosure 25

Appendix IV: Title III: Trusteeships 34

Appendix V: Title IV: Union Elections 40

Appendix VI: Title V: Safeguards for Labor Organizations 50

Appendix VII: Title VI: Miscellaneous Provisions 59

Appendix VIII:International Compliance Audit Program 61

Appendix IX: Compliance Audit Program 65

Appendix X: Justice’s Role in Enforcement 68

Appendix XI: Compliance Assistance 70

Appendix XII: Comments From the Department of Labor 72

Appendix XIII:Comments From the Department of Justice 73

Appendix XIV:GAO Contacts and Staff Acknowledgments 75

Tables Table 1: LMRDA Provisions 6

Table 2: OLMS Staffing, Fiscal Year 1999 18

Table 3: OLMS Field Investigators’ Workload and Use of Time by Title,

Fiscal Year 1999 20

Table 4: Resolution of Collective Bargaining Agreement Cases,

Fiscal Years 1998 and 1999 24

Table 5: Reports Required From Unions 26

Table 6: Reports Required for Unions Under Trusteeship 27

Table 7: Reports Required From Other Entities 27

Table 8: Number of Unions and Type of Report Filed 31

Table 9: Trusteeships Imposed and Ended, Fiscal Years 1995-99 36

Table 10: Results in Trusteeship Complaint Cases, Fiscal

Years 1995-99 37

Table 11: Field Recommendations and Headquarters Decisions in

Trusteeship Cases, Fiscal Years 1995-99 38
Contents

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Table 12: Unions Represented in Election Cases Investigated,

Fiscal Years 1998-99 45

Table 13: Resolution of Election Cases, Fiscal Years

1998-99 45

Table 14: Waivers in Election Cases, Fiscal Years 1998-99 46

Table 15: Election Rerun Cases and Corresponding Union

Characteristics, Fiscal Years 1998-99 49

Table 16: Reasons Cases Were Not Delegated, Fiscal Years 1998-99 56

Table 17: Prosecution Results of Embezzlement Cases, Fiscal

Years 1998-99 57

Table 18: Bases for Indictments, Convictions, and Monetary

Restitution for Embezzlement Cases, Fiscal Years 1998-99 57

Table 19: I-CAP Cases Processed, Fiscal Years 1995-99 61

Table 20: Types of Violations Found in I-CAP Cases, Fiscal Years

1995-99 63

Table 21: Resolution of Particular Violations Found in CAP Cases,

Fiscal Years 1998-99 67

Figures Figure 1: OLMS Organization Chart 15

Figure 2: OLMS Budget Expenditures, Fiscal Year 1999 17

Figure 3: Field Recommendations and Headquarters Decisions in

162 Cases, Fiscal Years 1998-99 47

Figure 4: Embezzlement Cases, Fiscal Years 1998-99 55

Figure 5: Resolution of 591 Compliance Audit Cases, Fiscal Years

1998-99 66

Abbreviations

CAP Compliance Audit Program

CSRA Civil Service Reform Act of 1978

ESA Employment Standards Administration

FTE full-time-equivalent

I-CAP International Compliance Audit Program

LMRDA Labor-Management Reporting and Disclosure Act

MOU memorandum of understanding

OLMS Office of Labor-Management Standards
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United States General Accounting Office

Washington, D.C. 20548

Health, Education, and

Human Services Division

B-282983 Letr

June 30, 2000

The Honorable John A. Boehner

Chairman, Subcommittee on

Employer-Employee Relations

Committee on Education and

the Workforce

House of Representatives

Dear Mr. Chairman:

The Labor-Management Reporting and Disclosure Act (LMRDA) of 1959

was enacted to prevent and eliminate improper practices by labor

organizations after the Congress identified numerous instances of

unethical conduct among labor unions.1 The act focuses on union

democracy—that is, the democratic rights of union members—and the

financial integrity of unions’ assets. The Secretary of Labor, the Attorney

General, and union members each play roles in enforcing provisions of six

of the act’s seven titles. The enforcement responsibility of the Attorney

General is carried out under a memorandum of understanding (MOU) with

the Secretary of Labor.2 The Secretary of Labor’s responsibilities are

carried out through the Employment Standards Administration’s Office of

Labor-Management Standards (OLMS) and its field offices. As of February

2000, more than 31,000 private and federal employee labor unions with

1

Initially, LMRDA covered private sector employees only, but coverage under the act was

extended to Postal Service employees under the Postal Reorganization Act of 1970.

Subsequent legislation—the Civil Service Reform Act of 1978, the Foreign Service Act of

1980, and the Congressional Accountability Act of 1995—provided similar coverage to

federal employees. However, neither LMRDA nor this related legislation covers employees

of state, county, or municipal governments.

2

The MOU describes the types of cases that Justice is to pursue and those that Labor is to

pursue. Union members may enforce certain provisions of the act through private suits in

federal district court. This report does not address the seventh title of the act, which

amended the National Labor Relations Act and is the responsibility of the National Labor

Relations Board.
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about 13.5 million members nationwide and total receipts estimated at over

$15.3 billion were subject to LMRDA or related legislation.3

Concerns about impediments to union democracy have been the subject of

a series of congressional hearings since May 1998. Congressional interest

has focused on the degree to which the rank-and-file members of unions

have been able to secure their rights under LMRDA and whether additional

legislation or changes to the act are needed. Accordingly, you requested

that we review (1) Labor’s organizational structure and use of fiscal year

1999 resources to implement LMRDA and (2) how Labor administers and

enforces each title of the act for which it is responsible.

To respond to your request, we reviewed Labor’s organizational

documents, budget, and regulations for carrying out LMRDA. We also

reviewed and analyzed computerized data on nearly 7,000 cases that Labor

processed in fiscal years 1998 and 1999 to determine its efforts relative to

the six titles of the act involving the Department. For trusteeship4 and

certain compliance audit program cases, we reviewed case file data from

fiscal years 1995 through 1999 because few or no cases were processed in

fiscal years 1998 and 1999. Labor processed 116 of these two types of cases

over the 5-year period. Because Labor does not separate cases by the

different laws, our analysis covers cases under both LMRDA and related

legislation. Also, Labor does not maintain case data by title, but the

program codes for its work activities clearly defined which cases belonged

to various titles in most instances. However, for three titles we assigned

cases for three provisions of the titles using additional information from

OLMS.5 Our review of certain cases in Labor’s database identified errors

such as missing data fields, miscoded cases, and erroneous case results,

but these errors did not materially affect the statistical results in our

analysis. When possible, we resolved these errors with Labor officials. We

3

The 31,000 unions include national and international unions; intermediate bodies, which

are various councils, conferences, or certain types of boards; and local unions. Receipts

include dues, fees, investments, or any special-purpose funds that a labor organization

receives, regardless of source.

4

When a labor organization takes control of a subordinate body by suspending the autonomy

granted to that body under its constitution and bylaws, the subordinate body is said to be in

trusteeship.

5

See app. II (title I, collective bargaining), app. III (title II, the determination of labor

organizations subject to LMRDA), and app. VI (title V, prohibition against certain persons

holding office) for more information.
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conducted our review between April 1999 and June 2000 in accordance

with generally accepted government auditing standards.

Summary of Findings Labor’s OLMS responsibilities under LMRDA range from ensuring that

union members gain access to collective bargaining agreements to

safeguarding unions’ funds from embezzlement and other illegal actions.

OLMS’ national office and its 21 field offices had a fiscal year 1999 budget

of just over $28 million and 300 full-time-equivalent (FTE) staff working

primarily to administer LMRDA and provisions of related legislation. Our

analysis of Labor’s efforts to administer each title of the act found that

OLMS performs investigations and compliance audits, monitors reporting

and disclosure requirements, and provides compliance assistance, but

investigations are the tool most frequently used. OLMS uses voluntary

compliance and litigation to enforce the act’s requirements, but the

voluntary compliance approach is used most often. Finally, regarding

Justice’s enforcement efforts under the MOU with Labor, we found that

Justice plays a significantly greater role in litigating cases involving

embezzlement or other similar wrongdoing than cases involving reporting

violations, which are considered to be less serious infractions of the law.

Overview of LMRDA

Provisions

OLMS, Justice, unions and their members, employers, and others play

various roles under six titles of LMRDA (see table 1).
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Table 1: LMRDA Provisions

a

An intermediate body is a type of labor organization that is subordinate to a national or international

union but is not a local union. Examples include district councils, joint councils, conferences, and

certain types of boards.

Title Provisions

Title I−Bill of Rights of union members This title provides various protections for union members, such as guaranteeing

them the right to elect officers and gain access to copies of collective bargaining

agreements. Labor may bring a civil action to enforce the protection related to

collective bargaining agreements. For all parts of this title, it is up to those whose

rights have been violated (such as union members) to bring a civil action to enforce

those protections.

Title II−Reporting requirements This title requires labor unions, their officers and employees, employers, and others

to file certain reports on financial and administrative practices with Labor in a timely

and complete manner. Labor is required to make these reports publicly available.

Labor may also bring a civil action to enforce these reporting requirements. Any

willful violation of reporting requirements is a crime, which is within the responsibility

of the Department of Justice.

Title III−Trusteeships This title allows an international union or its intermediate bodya to take control of a

subordinate body by suspending its autonomy under certain conditions. Union

members or a subordinate body may file a complaint with Labor to protest a

trusteeship. Labor, union members, or a subordinate body may bring a civil action to

ensure that trusteeships are formed and operated in compliance with the law. Any

willful violation of this title is a crime, which is within the responsibility of the

Department of Justice.

Title IV−Union elections This title provides for fair and democratic union elections. Union members have the

right to protest elections’ outcomes by filing a complaint with Labor after exhausting

union remedies. Labor may bring a civil action to set aside invalid elections and hold

new elections.

Title V−Safeguards of unions’ assets This title seeks to protect unions’ funds and assets against improper activities, such

as embezzlement and certain loans to union officers and employees. Union

members may bring a civil action for relief against those who have committed certain

improper acts. Embezzlement and other willful violations of this title are crimes,

which are within the responsibility of the Department of Justice.

Title VI−Miscellaneous provisions This title makes it illegal for unions to discipline, threaten, or use violence against

union members for exercising their rights under LMRDA, and it prohibits union

members from picketing to extort money from employers. This title also provides

Labor authority to conduct investigations of violations of any provisions of the act

(other than part of title I) and issue subpoenas to secure records and compel

witnesses to testify. Certain violations of this title are crimes, which are within the

responsibility of the Department of Justice, and others are enforceable by individuals

by bringing a civil action.
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OLMS Organization

and Use of Fiscal Year

1999 Resources

Labor’s efforts under LMRDA are carried out in Washington, D.C., in the

OLMS national office and through OLMS’ 21 field offices located around the

nation.6 The OLMS budget for fiscal year 1999 was just over $28 million,

and about 300 FTE staff worked primarily to administer LMRDA and

related legislation. Most of these staff were investigators located in field

offices who investigate complaints and criminal activity in unions, initiate

compliance audits, or provide compliance assistance to unions and others.

In fiscal year 1999, OLMS field investigators spent 62 percent of their time

protecting the financial integrity of unions’ assets from criminal

wrongdoing—work that involved criminal investigations and compliance

audits (covered under title V of the act). Most of this time was devoted to

criminal investigations of embezzlement of unions’ funds. Another 26

percent of OLMS’ field investigators’ time was spent on ensuring that union

members obtained access to collective bargaining agreements, determining

whether groups met certain criteria to be considered a union, and

investigating complaints about trusteeships and union elections (referred

to as union democracy issues, covered under titles I−IV of the act). OLMS

field investigators spent another 5 percent of their time working to ensure

that reports required from unions and others were filed (covered under title

II of the act) and that the public had access to the information. Most of this

time was spent on getting unions to report required information in a

complete and timely manner. Finally, OLMS field investigators used 7

percent of their time to provide compliance assistance, address inquiries,

or plan future criminal casework. Appendix I provides details on Labor ’s

organizational structure and use of its fiscal year 1999 resources.

Labor Uses a Variety of

Methods to Administer

and Enforce the Act

Labor’s efforts to administer the act vary depending on the title involved,

but investigations are the primary method used. When OLMS investigations

and other efforts identify violations, OLMS uses voluntary compliance most

often to resolve cases involving violations. Justice’s involvement in

enforcing provisions of the act is significantly greater for criminal cases

such as embezzlement than for other cases that are considered less serious

infractions of the law. Appendixes II through XI detail Labor’s

administration of the act by title, its use of compliance audit programs,

6

Labor’s Office of Inspector General investigates racketeering in labor unions, which may

include LMRDA-related violations. The Inspector General’s focus is organized crime, which

is outside the scope of our review.
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Justice’s involvement under the MOU, and Labor’s compliance assistance

efforts.

Labor Uses Investigations,

Audits, and Other Methods

to Administer LMRDA

Investigations. Under LMRDA, OLMS conducts civil and criminal

investigations. Civil investigations are conducted in response to

complaints, if they meet certain criteria, from union members about union

elections or trusteeships. Because OLMS is statutorily required to resolve

complaints about union elections in 60 days, according to OLMS officials,

this activity generally supersedes activity in other areas and is OLMS’ top

priority. However, OLMS may request waivers of this time frame from the

union, and, according to OLMS officials, unions are generally willing to

grant these waivers. OLMS investigated over 300 cases in fiscal years 1998

and 1999 that involved complaints from union members about violations of

their rights in union elections. OLMS obtained a waiver of the 60-day time

frame in about half of these cases. Although OLMS does not have a

statutory time frame to resolve trusteeship complaints, in fiscal year 1999,

OLMS directed its field offices to complete these investigations within 45

days. Our review of the seven cases initiated after the 45-day time frame

went into effect showed that five of these cases exceeded the 45-day time

limit. In fiscal years 1995 through 1999, OLMS processed 107 cases that

involved complaints about union trusteeships.

Unlike civil investigations, OLMS generally initiates criminal investigations

to follow up on information derived from union reports, compliance audits,

or leads from individuals or other government agencies. In fiscal years 1998

and 1999, OLMS processed over 700 cases that involved possible criminal

activity.

Compliance Audits. At its own discretion, OLMS conducts compliance

audits at unions’ headquarters level—international or national—as well as

at the intermediate or local level. Although compliance audits are

important for detecting violations of the act, including embezzlement,

OLMS may temporarily suspend them to allow staff to conduct

investigations involving complaints about union elections. Moreover, the

number of OLMS compliance audits has declined over the last 10 years as

staff resources have diminished. In fiscal years 1995 through 1999, OLMS
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conducted nine compliance audits of international unions.7 In fiscal years

1998 and 1999, OLMS conducted nearly 600 compliance audits at the

intermediate and local levels of the more than 31,000 unions. These

compliance audits generated about 100 criminal investigation cases.

Monitoring Reporting and Disclosure Requirements. LMRDA requires that

labor unions report annually on financial and administrative activities.

Other entities—such as labor consultants, surety companies, and others—

report only under certain circumstances. OLMS uses similar methods for

both groups to ensure compliance. OLMS monitors unions’ reporting dates,

telephones and mails unions notices when reports are delinquent, reviews

reports for completeness, and makes these reports available to the public.

In fiscal years 1998 and 1999, OLMS identified nearly 4,500 cases in which

the more than 31,000 unions that report annually were delinquent (and 125

cases in which the information provided on these reports was deficient) as

well as about 190 delinquent or deficient reporting cases involving other

entities. OLMS also responded to over 15,000 requests to make the reports

publicly available.

Compliance Assistance. OLMS educates union members and officers about

LMRDA’s requirements by conducting seminars and providing pamphlets

and other information to promote compliance. In fiscal year 1998, OLMS

field offices completed over 600 compliance assistance activities for nearly

4,400 union officials and members and made 481 liaison contacts with U.S.

Attorneys, law enforcement agencies, and others. In fiscal year 1999, OLMS

implemented two assistance initiatives, one of which focused on

preventing delinquent reporting among unions and the other on educating

newly elected union officials about LMRDA requirements.

Labor Uses Voluntary

Compliance and Litigation

to Enforce the Act’s

Requirements

Voluntary Compliance. When OLMS finds a violation during a civil

investigation, it generally attempts to secure voluntary compliance with the

act’s provisions before initiating any type of litigation. According to OLMS

officials, voluntary compliance achieves the goal of the act but uses less

time and fewer resources than litigation. In fiscal years 1998 and 1999,

OLMS secured voluntary compliance in 47 percent of the 100 union election

7

Generally, the union headquarters is at the international level when the union has

intermediate or local bodies in more than one country.
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cases that involved violations that affected election outcomes.8 For

example, when OLMS finds that violations in union elections warrant a

rerun, OLMS may persuade unions to voluntarily rerun the election under

OLMS supervision. OLMS also secured voluntary compliance in about 34

percent of the 35 trusteeship cases that involved violations in fiscal years

1995 through 1999 and in about 80 percent of the 469 compliance audit

cases that involved violations in fiscal years 1998 through 1999. Finally,

OLMS also seeks voluntary compliance to resolve cases involving reporting

violations even though LMRDA provides for criminal penalties when

reporting violations are intentional. According to OLMS and Justice

officials, pursuing criminal prosecution of reporting violations is not

practical because Justice is not likely to prosecute these cases unless they

are associated with more significant violations. To address reporting

violations, OLMS has developed several initiatives that include working

with international unions to address cases of delinquent and deficient

reporting.

Litigation. Labor and Justice work together to prosecute criminal cases,

which can result in indictments, convictions, and monetary restitution to

unions and their members. In fiscal years 1998 and 1999, 22 percent of the

754 criminal embezzlement cases Labor processed resulted in indictments,

and more than 80 percent of these indictments resulted in convictions.

Monetary restitution for these convictions amounted to over $3.7 million.

About 70 percent of these indictments and convictions were achieved using

LMRDA, while about 30 percent were achieved using other federal or local

statutes.

Labor also works with Justice to litigate civil cases based on complaints

about union elections, trusteeships, or other activities. For example, if the

union does not voluntarily comply with the corrective action offered by

OLMS regarding elections, Labor, through Justice, may sue in federal court

to set aside a union election and require that the election be rerun. In about

75 cases in fiscal years 1998 and 1999, Labor determined that violations so

affected the outcomes of union elections that reruns had to be held under

OLMS’ supervision. OLMS decided to take legal action in four of the 35

unlawful trusteeship cases identified in fiscal years 1995 through 1999,

bringing court action against unions subject to LMRDA and initiating

8

An additional 62 cases involved violations, but the violations either did not affect the

outcome of the election or unions resolved the violations, which eliminated the need for

OLMS action.
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administrative action before an administrative law judge against federal

unions subject to CSRA and other related legislation. As discussed earlier,

voluntary compliance was obtained in other trusteeship cases.

Justice’s Involvement in

Enforcing the Act’s

Requirements

The MOU that the Departments of Justice and Labor signed in 1960

outlined their respective responsibilities under LMRDA for investigating

and litigating criminal and civil violations of the act. Under the MOU,

Justice is responsible for investigating certain criminal violations, such as

embezzlement, although at Labor’s request, Justice can delegate

investigative authority on a case-by-case basis to Labor. Labor is

responsible for investigating other types of criminal violations, such as

intentional delinquent reporting, as well as civil violations, such as

improper union election activities. Because Justice is responsible for

litigating all criminal violations of the act, Labor refers criminal violation

cases to Justice, which decides whether to litigate them. For civil

violations, Labor decides which cases it will refer to Justice for possible

litigation.

In practice, Labor generally investigates both criminal and civil cases under

LMRDA and decides which cases to refer to Justice for litigation.9

According to Labor and justice officials, Justice is less willing to litigate

such criminal cases as intentional reporting violations than embezzlement

violations because the former in and of themselves are often not

considered serious enough to warrant a court’s time.10 As a result, Justice

plays a significantly greater role in litigating embezzlement cases than

reporting cases. Labor processed 754 criminal embezzlement cases in fiscal

years 1998 and 1999, and Justice accepted 87 percent of the 279 cases

Labor referred for prosecution. When Justice declined to accept cases,

OLMS either closed the cases without additional action or worked with

state and local officials to seek litigation under applicable state or local

statutes.

9

According to OLMS officials, the redelegation of investigative authority from Justice is a

formality as Justice generally grants Labor’s request for this authority.

10When such violations are alleged in conjunction with violations such as embezzlement,

however, Justice is more likely to litigate.
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Agency Comments and

Our Evaluation

Labor and Justice provided comments on this report (see apps. XII and

XIII, respectively). Justice generally agreed with our report findings. Labor

said that, in some instances, we underestimated cases with violations. We

used automated data that Labor provided, which were the best available at

the time. We had recognized in the draft report that our numbers might

somewhat understate the actual number of cases with violations. However,

we did not believe that the possible understatement would materially affect

the results of our analysis. The information Labor provided in its comments

did not cause us to change our position because that information showed

only relatively small differences in the number of cases with violations. We

have incorporated Labor’s comments regarding these differences where

appropriate.

Justice and Labor questioned whether we had appropriately reflected the

importance of Labor’s Inspector General in enforcing LMRDA. While the

Inspector General has an important role in helping to enforce LMRDA,

OLMS is the primary Labor authority responsible for the implementation

and enforcement of LMRDA and, as such, was the major focus of this

review. The Inspector General’s role is primarily related to addressing

organized crime and racketeering. We have reflected the Inspector

General’s role where appropriate in the report.

Both agencies provided technical comments on the processes Labor uses

to administer and enforce LMRDA and on Labor’s relationship with Justice

under the MOU. We have incorporated these comments as appropriate.

We are sending copies of this report to the Honorable Robert E. Andrews,

Ranking Minority Member, House Subcommittee on Employer-Employee

Relations, Committee on Education and the Workforce; the Honorable

Alexis M. Herman, Secretary of Labor; the Honorable Janet F. Reno,

Attorney General; appropriate congressional committees; and other

interested parties. We will also make copies available to others upon

request.
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If you have any questions about this report, please call me on (202) 512-

7215. Other contacts and staff acknowledgments are listed in appendix XIV.

Sincerely yours,

Marnie S. Shaul

Associate Director, Education, Workforce,

and Income Security Issues
Page 14 GAO/HEHS-00-116 Labor-Management Reporting

Appendix I

Labor’s Organizational Structure and Use of Apendxies

Fiscal Year 1999 Resources to Administer the

Act ApendxiI

The Secretary of Labor delegated the authority to administer the LaborManagement Reporting and Disclosure Act (LMRDA) to the Office of

Labor-Management Standards (OLMS), located within the Employment

Standards Administration. OLMS and its predecessors have administered

LMRDA since its enactment. The office became known as OLMS in 1984,

when it was a separate agency in Labor headed by an Assistant Secretary.

In 1992, OLMS became a part of the Employment Standards

Administration, and in 1993, OLMS was transferred to the then newly

created Office of the American Workplace. In 1996, the Office of the

American Workplace was abolished, and OLMS was transferred back to its

current location. OLMS has about 300 full-time-equivalent (FTE) staff, and

its budget was just over $28 million for fiscal year 1999. OLMS administers

LMRDA and provisions of related legislation, along with employee

protection programs established under the Federal Transit Act and the

related provisions of that act.1

OLMS’ Organizational

Structure

A Deputy Assistant Secretary technically heads OLMS but the Director of

OLMS has the actual programmatic responsibility for LMRDA and

provisions of related legislation. OLMS has four headquarters units,2 five

regional offices, and 21 district offices (see fig. 1). In addition to these

offices, OLMS has eight smaller “resident offices” that carry out OLMS’

work and maintain a presence in locations that may be distantly removed

from the closest district office.

1

When federal funds are used to acquire, improve, or operate a transit system, federal law

requires arrangements to protect the rights of affected mass transit employees.

Arrangements must include such activities as preserving rights and benefits under collective

bargaining agreements and ensuring reemployment priority in the event of a layoff. The

Department of Labor must approve these arrangements.

2

Labor recently implemented a new Division of Reports, Disclosure and Audits, which

replaces the subordinate unit of the Division of Enforcement, formerly the Section of

Reports and Disclosure. The new division will administer all reporting and public disclosure

responsibilities and will oversee all compliance audit responsibilities formerly assigned to

the Division of Enforcement.
Appendix I

Labor’s Organizational Structure and Use of

Fiscal Year 1999 Resources to Administer the

Act

Page 15 GAO/HEHS-00-116 Labor-Management Reporting

Figure 1: OLMS Organization Chart

The four units at the OLMS headquarters level include an administrative

management and technology team and three divisions: enforcement,

statutory programs, and interpretations and standards.

• The Administrative Management and Technology Team provides

support and services to OLMS for activities related to budget planning,

Office of 

Labor-Management Standards

Deputy Assistant Secretary

Director OLMS

Operations Team

Administrative Management

and

Technology Team

Division of

Enforcement

Atlantic Region Ohio-Potomac

Region

Great Lakes

Region

Section of

Reports and Disclosure

Division of

Statutory Programs

Division of

Interpretations and

Standards

Gulf Coast Region Pacific Region

Boston Office

Buffalo Office

New York Office

Philadelphia Office

Cincinnati Office

Cleveland Office

Pittsburgh Office

Washington Office

Atlanta Office

Dallas Office

Nashville Office

New Orleans Office

Miami Office

Chicago Office

Detroit Office

Milwaukee Office

St. Louis Office

Denver Office

Los Angeles Office

San Francisco Office

Seattle Office
Appendix I

Labor’s Organizational Structure and Use of

Fiscal Year 1999 Resources to Administer the

Act

Page 16 GAO/HEHS-00-116 Labor-Management Reporting

personnel management, labor relations, and computer systems and

applications.

• The Division of Enforcement oversees OLMS’ criminal and civil

enforcement activities, including special investigations, compliance

audit programs, supervised union officer elections, and headquarters’

public disclosure operations under LMRDA and related legislation. This

division also provides advice and assistance to field offices; oversees the

International Compliance Audit Program; and coordinates criminal and

civil enforcement matters regarding LMRDA and related legislation with

the Solicitor of Labor, the Department of Justice, and representatives of

other agencies.

• The Division of Statutory Programs administers transit employee

protections established in federal transit law by certifying fair and

equitable protections for affected transit employees as a condition of

federal grant assistance.

• The Division of Interpretations and Standards develops policy guidance

and administers OLMS regulatory activities for LMRDA and related

legislation. It also develops and administers OLMS’ compliance

assistance programs for unions and others as well as training programs

for OLMS staff.

The regional offices are staffed with two people who provide

administrative support to four or five larger district offices that each cover

one or more states or parts of states. Each region is headed by a regional

director who is assigned full program and oversight responsibility over all

district offices in the region. District offices are responsible for carrying

out the provisions of LMRDA and related legislation through investigations,

audits, and compliance assistance.

Use of Resources in

Fiscal Year 1999

OLMS budgets by accounting categories, and in fiscal year 1999 it did not

track expenditures by program activity for LMRDA and related legislation

or for the Federal Transit Act. However, OLMS did track workload

information for LMRDA and related legislation and provided data on the

number and use of FTE staff and other personnel, as demonstrated through

staff’s time charges for fiscal year 1999.

Budget OLMS’ budget is part of the Employment Standards Administration’s (ESA)

budget process, and OLMS relies on ESA for its overall accounting needs.

OLMS’ budget for fiscal year 1999 was $28.1 million and was spent largely
Appendix I

Labor’s Organizational Structure and Use of

Fiscal Year 1999 Resources to Administer the

Act

Page 17 GAO/HEHS-00-116 Labor-Management Reporting

on providing personnel compensation and benefits and other services, as

shown in figure 2.

Figure 2: OLMS Budget Expenditures, Fiscal Year 1999

Note: Expenditures for “other services” included $2 million that the Congress appropriated for Labor to

develop and implement a system that allows unions and others to report electronically and a

corresponding database that is accessible to the public through the Internet. Miscellaneous

expenditures were for printing, supplies, equipment, and insurance.

The OLMS Director and the directors of the regional offices determine how

the annual budget will be spent. The OLMS Director allocates budget

resources for overtime; awards; rent for facilities; travel; printing; and

supplies for the regions, which in turn cover the districts’ expenses. The

five regions’ budgets for these categories totaled nearly $0.7 million of

OLMS’ $28.1 million budget for fiscal year 1999. The regions’ budgets did

not include personnel costs, which are centrally administered through ESA.

13%

74%

2%

Miscellaneous

3%

Travel

8%

Rent

Other Services

Personnel

Compensation
Appendix I

Labor’s Organizational Structure and Use of

Fiscal Year 1999 Resources to Administer the

Act

Page 18 GAO/HEHS-00-116 Labor-Management Reporting

Personnel The OLMS staff level for fiscal year 1999 was 303 FTE staff. As of

September 30, 1999, OLMS had 286 staff; 23 percent were located in the

headquarters office, and 77 percent were located in field offices around the

country. Managers, including two senior executive service employees and

various supervisory level employees (ranging in grade from GS/GM-13 to

GS/GM-15), accounted for 14 percent of staff; support staff accounted for

14 percent; and professional staff made up 72 percent. Investigators and

supervisory investigators accounted for 67 percent of all staff, other staff

occupations accounted for 31 percent of all staff, and auditors made up

about 2 percent of the total staff. Table 2 shows OLMS staff dedicated to

administering LMRDA and provisions of related legislation as well as

employee protection programs under the Federal Transit Act.

Table 2: OLMS Staffing, Fiscal Year 1999

Location Managers Support Staff

Professional

Auditors Investigators Other Total

Headquarters

Office of the Deputy Assistant Secretary

and the Director 1 1 0 0 3 5

Administrative Management and

Technology Team 1 0 0 0 5 6

Division of Enforcement 1a 2 0 7 0 10

Section of Reports and Disclosure 1 5 2 0 11 19

Division of Statutory Programs 2 3 0 0 12 17b

Division of Interpretations and

Standards

1 1 0 0 8 10

Subtotal 7 12 2 7 39 67

Regional, district, and resident offices

Atlantic Region 1a 1 0 a 0 2

Boston District Office 2 0 0 6 1 9

New Haven Resident Office 0 0 0 4 0 4

Buffalo District Office 1 1 0 6 0 8

New York District Office 2 2 0 7 0 11

Newark Resident Office 0 0 0 4 0 4

Philadelphia District Office 1 1 0 7 0 9

Ohio-Potomac Region 1a 1 0 a 0 2

Cincinnati District Office 2 1 0 6 0 9

Cleveland District Office 2 1 0 8 1 12

Pittsburgh District Office 2 1 0 8 0 11
Appendix I

Labor’s Organizational Structure and Use of

Fiscal Year 1999 Resources to Administer the

Act

Page 19 GAO/HEHS-00-116 Labor-Management Reporting

a

The manager is a supervisory investigator.

b

These 17 staff are dedicated to the Federal Transit Act.

Fiscal Year 1999 Workload OLMS tracked time spent by field investigators on LMRDA in four major

categories: financial integrity, union democracy, reporting/disclosure, and

other. Financial integrity consumed the largest percentage of the OLMS

field investigators’ time, followed by union democracy. Table 3 shows the

program activities and the associated titles of the act, case workload, and

percentage of time OLMS field investigators devoted to each activity in

fiscal year 1999.

Washington District Office 2 1 3 6 0 12

Great Lakes Region 1a 1 0 a 0 2

Chicago District Office 2 1 0 7 1 11

Detroit District Office 1 1 0 6 0 8

Grand Rapids Resident Office 0 0 0 1 0 1

Milwaukee District Office 1 1 0 3 0 5

Minneapolis Resident Office 0 1 0 4 0 5

St. Louis District Office 1 2 0 7 0 10

Kansas City Resident Office 0 1 0 3 0 4

Gulf Coast Region 1a 1 0 a 0 2

Atlanta District Office 1 1 0 8 0 10

Puerto Rico Resident Office 0 0 0 2 0 2

Dallas District Office 1 1 0 7 0 9

Nashville District Office 1 1 0 6 0 8

New Orleans District Office 1 1 0 5 0 7

New Orleans Resident Office 0 0 0 2 0 2

Miami District Office 1 1 0 3 0 5

Pacific Region 1a 1 0 a 0 2

Denver District Office 1 1 0 4 0 6

Los Angeles District Office 1 1 0 9 0 11

San Francisco District Office 1 1 0 6 0 8

Honolulu Resident Office 0 0 0 2 0 2

Seattle District Office 1 1 0 4 0 6

Subtotal 33 29 3 151 3 219

Total 40 41 5 158 42 286

(Continued From Previous Page)

Location Managers Support Staff

Professional

Auditors Investigators Other Total
Appendix I

Labor’s Organizational Structure and Use of

Fiscal Year 1999 Resources to Administer the

Act

Page 20 GAO/HEHS-00-116 Labor-Management Reporting

Table 3: OLMS Field Investigators’ Workload and Use of Time by Title, Fiscal Year 1999

Program activity Title

Number of cases

processed

Percentage of time

used

Financial integrity

Criminal investigations Title V 385 49.0

Auxiliariesa Title V (96)a 1.0

Bonding investigations Title V 160 0.3

Special investigationsb Title V 0 0

International compliance audits Discretionary work 0 3.5

Compliance audits−locals Discretionary work 289 7.8

International compliance audit follow-up Discretionary work 0 0

Auxiliariesa Discretionary work (15)a 0.5

Subtotal 834 62.1

Union democracy

Elections−local Title IV 145 13.7

Elections−intermediate Title IV 10 1.1

Elections−international Title IV 20 1.9

Basic investigationsc Titles I and II and Civil Service

Reform Act 90 0.7

Trusteeship investigations Title III 14 0.7

Election reruns−local Title IV 29 4.1

Election reruns-intermediate Title IV 3 0.6

Election Reruns−international Title IV 3 0.2

Auxiliariesa Title IV (254)a 2.7

Subtotal 314 25.7

Reporting/disclosure

Delinquent reports−unions Title II 2,237 3.4

Deficient reports−unions Title II 84 0.3

Special reports−others Title II 114 1.0

Auxiliariesa Title II (10)a 0d

Subtotal 2,435 4.7

Other

Compliance assistance e e 1.9

Inquiries e e 3.8

Case targeting (planning future criminal work) e e 1.4

Subtotal 7.1

Total 3,583 99.6

Total auxiliariesa (375)a
Appendix I

Labor’s Organizational Structure and Use of

Fiscal Year 1999 Resources to Administer the

Act

Page 21 GAO/HEHS-00-116 Labor-Management Reporting

Note: Percentages do not total 100 because of rounding.

a

“Auxiliaries” is the term used to describe investigative work performed on the basis of leads generated

from original cases. Auxiliaries are not counted as additional investigations and are not included in the

subtotals.

b

These investigations may be performed jointly with other government agencies.

c

Basic investigations cover such areas as access to collective bargaining agreements, determinations

of existence of a union, and other Civil Service Reform Act requirements.

d

Amount of time was less than 0.1 percent.

e

Although staff time is spent on providing assistance to unions and others to help them comply with all

titles of LMRDA, as well as on responding to inquiries, these efforts are not related to a particular title,

nor are they tracked as “cases.”
Page 22 GAO/HEHS-00-116 Labor-Management Reporting

Appendix II

Title I: Bill of Rights of Union Members ApendxiI

Generally referred to as the “Bill of Rights” of union members, title I of

LMRDA provides basic rights for union members, including the right to

• nominate candidates for union office, vote in union elections, and

participate in union meetings;

• meet and assemble freely with other members and express their

opinions;

• use democratic procedures if subjected to assessments and raises in

member dues;

• be afforded a full and fair hearing of charges brought against them

before disciplinary actions are taken; and

• receive and inspect collective bargaining agreements (which also

applies to nonunion members).

Both union members and the Department of Labor play roles in ensuring

that these rights are protected. The Secretary of Labor (through OLMS) is

responsible only for ensuring that union members and others gain access to

collective bargaining agreements and may institute civil action in federal

district court to enforce this provision (often referred to by its section

number: 104). Union members may bring a private suit against the union in

a federal district court to enforce all title I rights, but the union may require

members to first exhaust internal union remedies, which the union has 4

months to provide.

Unlike LMRDA, OLMS investigates and enforces those sections of the Civil

Service Reform Act of 1978 (CSRA) and the other related legislation dealing

with the Bill of Rights for federal employee unions. OLMS enforces these

sections through its administrative process by referring cases for a hearing

before an administrative law judge and a final decision by the Assistant

Secretary of Employment Standards.

Scope and

Methodology

OLMS maintains case data on LMRDA and provisions of related legislation

in its Case Data System. We obtained the database and analyzed cases that

OLMS processed in fiscal years 1998 and 1999. The database did not track

cases according to titles of the act; however, for certain activities, including

collective bargaining agreements, 194 cases were grouped under a category

termed “basic investigations.” We queried the database to identify those

basic investigations that were initiated as a result of complaints about

collective bargaining agreements and reviewed case summary sheets,

which provided general data about the cases. Through this process, we

identified 21 cases in which union members complained about not having
Appendix II

Title I: Bill of Rights of Union Members

Page 23 GAO/HEHS-00-116 Labor-Management Reporting

access to or problems obtaining copies of collective bargaining

agreements. We also interviewed OLMS officials about the process for

addressing complaints regarding collective bargaining agreements.

Labor’s Efforts to

Administer Title I’s

Section 104

In response to oral or written complaints from union members or others,

OLMS contacts local unions and, if necessary, unions’ headquarters, about

giving access to collective bargaining agreements. If a union does not

comply with a request for copies of or access to a collective bargaining

agreement, OLMS’ district office investigates and forwards a report to

OLMS’ headquarters, which sends a “demand letter” to the union requiring

its compliance. If a union still does not comply, OLMS refers the case to

Labor’s Office of the Solicitor for litigation. OLMS officials said section 104

does not generate a significant workload for OLMS, and the Secretary of

Labor has rarely initiated litigation to enforce its provisions.

Case Resolution The 21 cases we identified as involving collective bargaining agreements

during fiscal years 1998 and 1999 were based on complaints that a union

member had not been able to obtain copies of collective bargaining

agreements. The 21 cases represented 12 unions whose membership

ranged from 35 to 34,177 members and whose total receipts ranged from

$3,100 to $19,913,660.

As shown in table 4, OLMS found violations in 15 of the 21 cases. In 13

cases (over 80 percent), OLMS was able to secure voluntary compliance by

contacting the unions and asking them to provide the collective bargaining

agreements. In one case, OLMS referred the case to Labor’s Solicitor for

legal action and closed the case. The final case was resolved before OLMS

took action.
Appendix II

Title I: Bill of Rights of Union Members

Page 24 GAO/HEHS-00-116 Labor-Management Reporting

Table 4: Resolution of Collective Bargaining Agreement Cases, Fiscal Years 1998

and 1999

a

Percentage exceeds 100 because of rounding.

Case status Number

Percentage

of all cases

Percentage of

cases with

violations

Cases investigated

No violation found 6 29

Violation found 15 71

Total 21 100

Resolution of cases with violations

Voluntary compliance 13 87

Referred to Solicitor for legal action 1 7

Resolved before OLMS took action 1 7

Total 15 101a
Page 25 GAO/HEHS-00-116 Labor-Management Reporting

Appendix III

Title II: Reporting Requirements and Public

Disclosure ApendxiI

Title II of LMRDA requires labor unions; their officers and employees;

employers; labor relations consultants, under certain circumstances; and

surety companies to file certain reports with OLMS’ headquarters in

Washington, D.C., and to retain the records necessary to verify the reports

for at least 5 years. Similar requirements under provisions of CSRA apply to

federal employees’ unions. These requirements are important because they

ensure that union members have all the necessary information to take

effective action to protect their rights.

Important requirements of title II include the following:

• Unions must file information reports that include the name and address

of the labor organization, address of the location where records required

by title II are maintained, and name and title of each officer, as well as

annual financial reports and copies of the constitution and bylaws.

• Officers and employees of labor unions must report financial interest in,

business dealings with, and loans and benefits received from employers

whose employees their unions represent and from businesses that deal

with their unions.

• Employers must report certain dealings with unions, such as payments

or loans to the union. Employers and others, such as labor relations

consultants, who engage in activities to persuade employees how to

exercise their union rights, must report certain information, such as

their expenditures.

• Surety companies that issue bonds required by LMRDA or the Employee

Retirement Income Security Act of 1974 must report data such as

premiums received, total claims paid, and amounts recovered.

Title II requires that these reports and documents be made available to the

public, which OLMS does at its offices around the nation. Unions must also

make these reports available to members and permit members to examine

records. These or similar provisions apply to federal unions under CSRA.

The Secretary of Labor can bring civil action to enforce the reporting

requirements under LMRDA. Labor relies on Justice to litigate civil actions

brought under title II of LMRDA. Under CSRA, the Secretary uses

administrative action that involves a hearing before an administrative law

judge and a final decision by the Assistant Secretary for Employment

Standards. Title II also provides for criminal penalties when unions

intentionally1 violate reporting requirements; criminal matters are within

1

The statute uses the terms “willfully” and “knowingly.”
Appendix III

Title II: Reporting Requirements and Public

Disclosure

Page 26 GAO/HEHS-00-116 Labor-Management Reporting

the responsibility of the Department of Justice. Tables 5, 6, and 7 show the

various reports required from unions, for unions under trusteeship, and

from other entities that do business with unions, respectively.

Table 5: Reports Required From Unions

Form number and name Required filer Reporting time frame

Form LM-1 (initial)

Labor organization information

report

Each union subject to LMRDA or CSRA The LM-1 is due to Labor within 90 days after the

union becomes subject to LMRDA or CSRA

requirements.

Form LM-1 (amended)

Labor organization report

Each reporting union (except federal employee

unions) that makes changes in its practices and

procedures that are not contained in the union’s

constitution and bylaws

The amended LM-1 form is due to Labor within 90

days after the end of the union’s fiscal year during

which the changes were made, along with the

appropriate annual form (that is, the LM-2, LM-3, or

LM-4).

Form LM-2

Labor organization annual report

Each reporting union with total annual receipts of

$200,000 or more and the parent union for

subordinate unions under trusteeship

The LM-2 is due to Labor within 90 days after the

end of the union’s fiscal year under normal

conditions. If the union loses its reporting identity

through dissolution, merger, consolidation, or other

means, the LM-2 is due to Labor within 30 days

after the date of the union’s loss of identity.

Form LM-3

Labor organization annual report

Each reporting union with total annual receipts of

less than $200,000 may use the less detailed

form LM-3 if not under trusteeship.

The LM-3 is due to Labor within 90 days after the

end of the union’s fiscal year under normal

conditions. If the union loses its reporting identity

through dissolution, merger, consolidation, or other

means, the LM-3 is due to Labor within 30 days

after the date of the union’s loss of identity.

Form LM-4

Labor organization annual report

Each reporting union with total annual receipts of

less than $10,000 may use the abbreviated form

LM-4 if not under trusteeship.

The LM-4 is due to Labor within 90 days after the

end of the union’s fiscal year under normal

conditions. If the union loses its reporting identity

through dissolution, merger, consolidation, or other

means, the LM-4 is due to Labor within 30 days

after the date of the union’s loss of identity.

Simplified annual report Parent body of a local union that has no assets,

liabilities, receipts, or disbursements and is not

under trusteeship may file simplified annual

reports on the local’s behalf.

Simplified annual reports are due to Labor within 90

days after the end of the union’s fiscal year. The

parent body must report annually certain basic

information about the local, including the names of

all officers, together with a certification signed by

the president and treasurer of the parent union.
Appendix III

Title II: Reporting Requirements and Public

Disclosure

Page 27 GAO/HEHS-00-116 Labor-Management Reporting

Table 6: Reports Required for Unions Under Trusteeship

Table 7: Reports Required From Other Entities

Form number and name Required filer Reporting time frame

Form LM-15 (initial)

Trusteeship report (including

statement of assets and liabilities)

Each parent union that imposes a

trusteeship over a subordinate union

The LM-15 is due to Labor within 30 days after

imposing the trusteeship.

Form LM-15 (semiannual)

Trusteeship report (excluding

statement of assets and liabilities)

Each parent union that continues a

trusteeship over a subordinate union for 6

months or more

The semiannual LM-15 is due to Labor within 30

days after the end of each 6-month period during the

trusteeship.

Form LM-15A

Report on selection of delegates and

officers

Each parent union that imposes a

trusteeship over a subordinate union if

during the trusteeship the parent union

held any convention or other policydetermining body to which the subordinate

union sent delegates or would have sent

delegates if not in trusteeship, or if the

parent union conducted an election of

officers

The LM-15A is due to Labor as required based on

the union’s requirements for holding elections for its

officers. The LM-15A is due along with the LM-15

within 30 days after the imposition of the trusteeship

or the end of each 6-month period, or with the Form

LM-16 within 90 days after the end of the trusteeship

or the subordinate union’s loss of reporting identity

through dissolution, merger, consolidation, or other

means.

Form LM-16

Terminal trusteeship report

Each parent union that ends a trusteeship

over a subordinate union or if the union in

trusteeship loses its reporting identity

The LM-16 is due to Labor within 90 days after the

end of the trusteeship or the subordinate union’s loss

of reporting identity through dissolution, merger,

consolidation, or other means.

Form number and name Required filer Reporting time frame

Form LM-10

Employer report

Each employer that engages in certain specified

financial dealings with its employees, unions, union

officers, or labor relations consultants or that makes

expenditures for certain purposes relating to employees’

or unions’ activities

The LM-10 is due to Labor within 90

days after the end of the employer’s

fiscal year.

Form LM-20

Agreement and activities report

Each person who enters into an agreement or

arrangement with an employer to inform employees

about exercising their rights to organize and bargain

collectively, or to obtain information about employee or

union activity in connection with a labor dispute involving

the employer

The LM-20 is due to Labor within 30

days after a person enters into such

agreement or arrangement.

Form LM-21

Receipts and disbursements report

Each person who enters into an agreement or

arrangement with an employer to inform employees

about exercising their rights to organize and bargain

collectively, or to obtain information about employee or

union activity in connection with a labor dispute involving

the employer

The LM-21 is due to Labor within 90

days after the end of the consultant’s

fiscal year.
Appendix III

Title II: Reporting Requirements and Public

Disclosure

Page 28 GAO/HEHS-00-116 Labor-Management Reporting

Scope and

Methodology

We obtained data that Labor generated from two different electronic

systems to determine how it administers title II. OLMS maintains data on

the daily case workload in its Case Data System, which includes OLMS

cases of delinquent and deficient reports as well as cases to determine

whether labor organizations are subject to LMRDA’s requirements. During

fiscal years 1998 and 1999, the Case Data System included

• 4,462 cases of delinquent union reports,

• 189 cases of delinquent or deficient reports from other entities that deal

with unions,

• 125 cases of deficient union reports, and

• 113 basic investigation cases that dealt with whether labor organizations

met the criteria that would make them subject to LMRDA requirements

or provisions of related legislation. (Of the total of 194 basic

investigation cases, we identified and excluded 21 that were related to

title I. This left 173 cases, from which we identified 113 that dealt with

whether groups had reported in compliance with the act.)

We obtained the OLMS computerized database for these cases, analyzed

the data, and reviewed summary sheets for some cases, which generally

were one- or two-page documents containing the name of the union,

estimated membership and receipts, rationale for the case, violation found,

and disposition of the violation.

We also reviewed hard copies of data from a second database that Labor

maintains that contains certain statistical data on labor organizations—the

Labor Organization Reporting System. This system contains data such as

Form LM-30

Labor organization officer and

employee report

Each union officer (including trustees of subordinate

unions under trusteeship) and employee (other than

employees performing exclusively clerical or custodial

services) who (or whose spouse or minor child) had

certain direct or indirect economic interests during the

past fiscal year

The LM-30 is due to Labor within 90

days after the end of the union officer’s

or employee’s fiscal year.

Form S-1

Surety company annual report

Each surety company with a bond in force insuring a

welfare or pension plan covered by the Employee

Retirement Income Security Act, or insuring any union

or trust in which a union is covered by LMRDA

The S-1 is due to Labor within 150

days after the end of the surety

company’s fiscal year.

(Continued From Previous Page)

Form number and name Required filer Reporting time frame
Appendix III

Title II: Reporting Requirements and Public

Disclosure

Page 29 GAO/HEHS-00-116 Labor-Management Reporting

the number of unions that file reports, the type of reports filed, the overall

memberships and receipts of all unions that file reports, and the number of

requests the public made for disclosure of reports filed. OLMS officials

describe the Labor Organization Reporting System as a dynamic system

that provides data at a particular point in time.

Labor’s Efforts to

Administer Title II

To administer title II’s requirements, OLMS focuses on three factors: (1)

whether unions and other entities required to report information do so in a

timely manner, (2) whether the information submitted is complete and

accurate, and (3) whether all organizations subject to the requirements of

LMRDA and provisions of related legislation acknowledge that they exist

by reporting required information to OLMS.

To carry out its responsibilities under this title, OLMS headquarters

monitors unions’ fiscal year-end dates, which determine the reports’ due

dates; generates a list of unions that are delinquent; and sends this list to

the district offices for action. OLMS uses the list to contact unions by

telephone about the reports and encourage them to send in the required

reports. OLMS uses administrative staff as well as investigators to perform

this work. OLMS also uses mailings to remind unions to file on time.

Justice officials confirmed that they are not likely to prosecute cases if

reporting violations are the only basis for the case. As a result, OLMS

focuses primarily on using voluntary compliance to address delinquent

reporting. In fiscal year 1996, OLMS implemented an initiative that focused

on reducing the delinquency rate of unions with receipts of $200,000 or

more by mailing them reminder letters and notices of delinquency. At the

same time, OLMS decided to wait up to 3 years before opening delinquent

report cases on smaller unions with receipts of less than $5,000 that were

late in filing. In 1999, OLMS substantially revised its program to address

delinquent reporting by developing, among other things, a comprehensive

manual with step-by-step instructions for obtaining delinquent reports. In

February 1999, OLMS focused on unions that filed on time in the prior year

to encourage continued timely filing. OLMS implemented another initiative

in 1999 through its compliance assistance program that focused on meeting

with national or international unions in an effort to get their delinquent

affiliates to file timely reports.

OLMS monitors other entities, such as labor consultants and surety

companies, on the basis of information the unions report, media and other

sources, and the entities’ fiscal year-end dates. OLMS officials said that
Appendix III

Title II: Reporting Requirements and Public

Disclosure

Page 30 GAO/HEHS-00-116 Labor-Management Reporting

reporting problems with other entities do not require similar levels of effort

as for unions because there are fewer other entities, and reporting is

required less frequently.

Regarding deficient reports, OLMS officials said that they perform a

cursory review applying minimal filing standards to assess completeness

and accuracy and follow up on any inadequate reports through telephone

calls and mailings. At the time of our review, OLMS had developed a draft

“Reports Electronic Audit Program” designed to identify reporting

deficiencies in annual financial reports (forms LM-2/3/4) through the

application of the following standard review criteria:

• filing standards that address the minimum information a report must

contain to be acceptable by OLMS;

• acceptability standards that address basic, key information that is

critical for adequate public disclosure; and

• reporting standards that address other types of reporting errors and

deficiencies.

According to OLMS officials, in fiscal year 2000, OLMS created a structured

program that involved developing a detailed deficient reports manual to

help staff obtain amended reports.

Finally, OLMS monitors several sources to determine whether

organizations are subject to LMRDA and provisions of related legislation

and have filed the appropriate reports. The sources include newspaper

articles; requests for public disclosure; individuals; and others, including

the National Labor Relations Board, which can report whether the labor

organization has been certified.

OLMS makes reports available to the public at its offices around the

country. It is working on a new system that would permit unions to file

LMRDA reports electronically, which would allow OLMS to create an

electronic database that would make report data accessible to the public

through the Internet. OLMS expects full implementation of this system by

the end of fiscal year 2001.2

2

See Labor-Management Reporting and Disclosure: Status of Labor’s Efforts to Develop

Electronic Reporting and a Publicly Accessible Database (GAO/HEHS-99-63R, Mar. 16,

1999).
Appendix III

Title II: Reporting Requirements and Public

Disclosure

Page 31 GAO/HEHS-00-116 Labor-Management Reporting

Case Resolution As of February 2000, OLMS reported that 31,411 unions with 13,577,606

members and total receipts of $15,304,997,046 were required to report

financial information annually on forms LM 2/3/4 or simplified forms. Table

8 shows the reports required of these unions, as of February 2000.

Table 8: Number of Unions and Type of Report Filed

Delinquent Reports Cases During fiscal years 1998 and 1999, OLMS opened delinquent report cases on

about 12 percent of all unions3 that were delinquent in filing the required

reports with OLMS. OLMS’ database identified 4,462 delinquent reports

cases (2,225 in fiscal year 1998 and 2,237 in fiscal year 1999) representing

3,974 discrete unions with memberships ranging from 0 to 195,383 and

receipts ranging from $0 to $225,470,553.4 OLMS reported a measure of

success in reducing delinquent reporting among unions with $200,000 or

more in receipts. According to OLMS officials, in fiscal year 1999, about 10

percent of these unions were delinquent filers compared with over 20

percent in fiscal year 1997. OLMS officials attributed this to its initiative of

contacting unions before the reports are due, which has been in place for

about 2 years. The initiative to not open delinquent report cases for unions

Number of unions required to file Unions’ total receipts Type of form

5,946 $200,000 plus LM-2

13,916 Less than $200,000 LM-3

9,112 Less than $10,000 LM-4

2,437 $0 Simplified annual report

3

Labor’s system for capturing statistical data, such as the number of labor organizations or

unions, their membership, and their total receipts, is dynamic, which means the data vary

depending on when information is requested. For example, as of May 11, 1999, the system

reported 32,065 unions compared with 31,411 as of February 25, 2000. According to OLMS

officials, OLMS does not immediately open a delinquent report case on every union that is

late in filing the required reports. As a result, OLMS reported that the actual delinquency

rate for all unions is approximately 25 percent.

4

Membership in labor unions can be zero if the union’s members are not dues-paying

members, or if the union is an intermediate body established for specific reasons under a

national or international union’s constitution or bylaws. Receipts in labor unions can be zero

if dues, fees, and other disbursements are made on a per capita basis through a national or

international union. Labor defines an intermediate body as a type of labor organization that

is subordinate to a national or international union but is not a local union. Examples include

district councils, joint councils, conferences, and certain types of boards.
Appendix III

Title II: Reporting Requirements and Public

Disclosure

Page 32 GAO/HEHS-00-116 Labor-Management Reporting

with receipts under $5,000 until they have been delinquent filers for 3

consecutive years, and the efforts to work with national and international

unions to get affiliates to report on time, had not been in place long enough

at the time of our review to develop or determine results.

Other entities, such as labor consultants, surety or bonding companies,

employers, union officers, and employees of unions, were also delinquent

in submitting required reports to OLMS. During fiscal years 1998 and 1999,

OLMS processed 189 cases of delinquent or deficient reports for 186

discrete entities. OLMS telephone and mail efforts in these cases resulted

in 98.5-percent voluntary compliance.

Deficient Reports Cases OLMS processed 125 deficient reports cases in fiscal years 1998 and 1999

representing 125 discrete unions with memberships ranging from 0 to

790,000 and receipts ranging from $0 to $140,000,000. OLMS found that 86

percent of these cases violated title II provisions for completeness and

accuracy.5 OLMS secured voluntary compliance in about 91 percent of the

cases in which violations were found, with unions submitting complete

reports in response to OLMS telephone and mail efforts. In the remaining

cases, events beyond OLMS’ control made action unnecessary, or OLMS

opened a follow-up case. According to OLMS officials, OLMS instituted

procedures in 2000 to more effectively address deficient reports and will

have improved data systems in 2001 for identifying deficient reports.

Existence of Unions Cases OLMS efforts to monitor union activity identified 113 cases in fiscal years

1998 and 1999 in which unions had not reported that they were subject to

LMRDA requirements or provisions of related legislation. These cases

represented 110 discrete unions with memberships ranging from 0 to 5,500

and receipts ranging from $0 to $1,419,596. OLMS secured voluntary

compliance in 96 percent of these cases, with unions submitting the

required reports in response to OLMS telephone and mail contacts. For the

remaining 4 percent, OLMS took no action, and the database did not

contain explanations for OLMS’ decisions.

5

According to OLMS officials, some unions may have corrected deficient reports and mailed

them in after OLMS opened a case, which is why not all cases identified as deficient resulted

in a violation.
Appendix III

Title II: Reporting Requirements and Public

Disclosure

Page 33 GAO/HEHS-00-116 Labor-Management Reporting

Public Disclosure OLMS makes the reports unions and others submit available to the public

at its headquarters office and in field offices. Currently, the public can

order reports through the Internet and in fiscal 2001 should be able to

access reports directly through the Internet. During fiscal years 1998 and

1999, OLMS processed 15,685 disclosure requests and reproduced copies of

53,799 reports.
Page 34 GAO/HEHS-00-116 Labor-Management Reporting

Appendix IV

Title III: Trusteeships ApendxiIV

Title III governs trusteeships: when a labor organization takes control of a

subordinate body by suspending the autonomy it otherwise has under its

constitution or bylaws, the subordinate body is said to be under a

trusteeship.1 Trusteeships can be imposed only for (1) ending corruption or

financial malpractice, (2) ensuring the appropriate implementation of

collective bargaining agreements or performance of other duties of a

bargaining representative, (3) restoring democratic procedures, or (4)

otherwise carrying out the legitimate objectives of a labor organization.

Under the act, a trusteeship that is established in conformity with the

constitution and bylaws of the union, which must include a fair hearing

process, is presumed valid for 18 months and may continue to exist during

that time, unless there is clear and convincing proof that it was not

established or maintained for a valid purpose. After 18 months, the

trusteeship is presumed invalid and must be discontinued unless the union

provides clear and convincing proof that it is still needed. Unions

establishing trusteeships over subordinate bodies must submit special

reports regarding trusteeships (see table 6).

When a union is under a trusteeship, the votes of that union’s delegates

cannot be counted in any convention or election of officers unless the

delegates have been elected by secret ballot. The act also prohibits the

transfer of funds from the subordinate body except for normal per capita

taxes and assessments charged to all other locals. The intentional violation

of either of these provisions is a crime. All members have the right to file a

civil lawsuit against the national or international union in federal district

court to remedy violations of this title (for example, to terminate invalid

trusteeships).

Labor is required to investigate written complaints from union members or

subordinate (local) unions that title III has been violated. If Labor finds

probable cause to believe that the trusteeship is illegal, Labor must file a

civil action in federal district court for appropriate relief, such as

terminating the trusteeship. OLMS takes the position that it cannot take

enforcement action to remove a trusteeship—even if it has exceeded the

18-month time frame of presumed validity—unless it receives a written

1

Congressional hearings in the 1950s that led up to the passage of LMRDA disclosed that

national or international unions or intermediate bodies sometimes established trusteeships

to drain local union treasuries or perpetuate power by undemocratically controlling a local

union’s votes.
Appendix IV

Title III: Trusteeships

Page 35 GAO/HEHS-00-116 Labor-Management Reporting

complaint. Without receiving a written complaint, Labor can initiate

investigations (under title VI of LMRDA) of potential violations of any

provisions of the act, other than part of title I. However, Labor has no

enforcement authority under title VI, which means that it would have to use

enforcement authority granted under another title of the act. According to

OLMS officials, this authority is not applicable to title III because the

enforcement authority granted here is available only if a written complaint

has been filed.

Scope and

Methodology

We obtained general information on the number of trusteeships

established, the number of trusteeships that OLMS considered active

trusteeships, the dates these trusteeships were first imposed, and the

length of time these trusteeships existed during the period fiscal years 1995

through 1999. OLMS’ automated records from its Case Data System were

limited to a 2-year period and included only 34 trusteeship complaints;

therefore, we obtained listings of trusteeship investigations processed

between fiscal years 1995 and 1997 to provide broader coverage of

trusteeship cases and Labor’s efforts to administer title III. We examined

the case files for 107 trusteeship complaints, and we discussed the process

for addressing trusteeships with OLMS officials.

Labor’s Efforts to

Administer Title III

When OLMS receives a written complaint from a union member or

subordinate body alleging that the organization imposing the trusteeship

has violated title III, OLMS field office staff investigate.2 In order to

conclude that a trusteeship was imposed unlawfully, the field investigator

must find proof that the union under trusteeship is a labor organization as

defined in the act and that the trusteeship was in violation of the act.

Specifically, there must be proof that the trusteeship

• involves withdrawing some or all of the autonomy over internal affairs

otherwise available to the union under trusteeship,

• was not established for a purpose listed in the act,

• was not established in accordance with the parent body’s constitution

and bylaws, or

2

An investigation may be deemed criminal if it involves improper voting or transferring

funds while the union or subordinate body is under trusteeship. Criminal trusteeship

investigations may be opened on the basis of a complaint, information from a compliance

audit, or other information.
Appendix IV

Title III: Trusteeships

Page 36 GAO/HEHS-00-116 Labor-Management Reporting

• was not established or ratified after a fair hearing.

The statute does not provide a time frame for investigating trusteeship

cases, but in the 1999 planning guidelines to field offices, the OLMS

Director instructed that field offices give priority to trusteeship cases and

complete field investigations in 45 days. After the field office submits the

report of investigation, OLMS’ Division of Enforcement and Labor’s Office

of the Solicitor review it. A telephone conference among the field

investigator, the Division of Enforcement, and the Solicitor is held to

discuss whether to initiate legal action or to close the case. According to

Labor officials, they attempt to obtain consensus on what should be done

to resolve the case during this discussion.

Case Resolution Over the 5-year period that we reviewed, national or international unions

imposed 353 trusteeships on local unions or intermediate bodies, averaging

about 70 new trusteeships a year. National or international unions

terminated 259 trusteeships over the 5-year period, averaging about 50 a

year (see table 9).

Table 9: Trusteeships Imposed and Ended, Fiscal Years 1995−99

As of September 30, 1999, Labor reported 313 active trusteeships, which

had been established by 47 national or international unions. A single

international union had established 74 of the active trusteeships. Over 90

percent of the organizations under trusteeship were local unions, and

about 6 percent were intermediate bodies. The active trusteeships included

228 that had been in effect for more than 18 months (the time frame under

the act that trusteeships are presumed valid), ranging from 18.4 months to

214.3 months. According to OLMS officials, some national and international

unions place local affiliates under trusteeship as an administrative act

when the locals’ employers have gone out of business or other actions

reduce locals to very few or no members.

Fiscal year

1995

Fiscal year

1996

Fiscal year

1997

Fiscal year

1998

Fiscal year

1999 Total

New trusteeships imposed 55 72 93 85 48 353

Trusteeships terminated 13 10 66 90 80 259

Net difference +42 +62 +27 -5 -32 +94
Appendix IV

Title III: Trusteeships

Page 37 GAO/HEHS-00-116 Labor-Management Reporting

Over the 5-year period reviewed, OLMS received and processed 107

trusteeship complaint cases and found that 33 percent of the cases violated

title III requirements. Labor’s efforts to resolve these cases ranged from

seeking voluntary compliance to taking legal action, as shown in table 10.

Table 10: Results in Trusteeship Complaint Cases, Fiscal Years 1995-99

a

Percentages may not total 100 because of rounding.

b

Percentages of total cases with violations.

c

In these cases, although complaints had been filed with OLMS, federal district courts were also

involved, so they had the authority to resolve potential trusteeship violations.

OLMS field offices initiated seven cases after the 45-day time frame was

established, five of which (71 percent) exceeded the 45-day time frame

established by the OLMS Director.

Field Recommendations

and Headquarters Decisions

Of the 107 cases for which the OLMS field offices conducted investigations,

35 trusteeships were determined to be unlawful. For seven of these cases,

the field offices recommended that action other than legal action be taken,

and OLMS headquarters concurred. In four of the seven cases, voluntary

compliance was achieved when the unions held elections and restored

autonomy to the subordinate bodies, and in the other three, the national or

international unions abolished the subordinate bodies.

For the remaining 28 of 35 cases, the OLMS field offices recommended that

OLMS headquarters take legal action to resolve the violations, but other

OLMS headquarters’ actions or other events made the use of legal action

Fiscal year

1995

Fiscal year

1996

Fiscal year

1997

Fiscal year

1998

Fiscal year

1999 Total

Percentage of

totala

Trusteeship complaint cases

investigated 26 22 25 20 14 107 100

Cases with no violations 18 15 16 12 11 72 67

Cases with violations (unlawful

trusteeships) 8 7 9 8 3 35 33

Resolution of violations

Voluntary compliance 1 2 4 5 0 12 34b

Other union actions 7 5 2 1 0 15 43b

Legal action 0 0 1 2 0 3 9b

Federal court actionc 00 2 0 0 2 6b

Enforcement review not completed

as of 10/21/99 0 0 0 0 3 3 9b
Appendix IV

Title III: Trusteeships

Page 38 GAO/HEHS-00-116 Labor-Management Reporting

unnecessary in most cases. As shown in table 11, OLMS headquarters did

not have to take any action in 46 percent of the cases because the locals

merged and the trusteeship no longer applied, the international union

terminated the local union, the local union changed its affiliation to another

parent union, and in one case a federal court was responsible for taking

action. In 29 percent of the cases, OLMS headquarters persuaded the

national or international unions to voluntarily comply by lifting the

trusteeship. In 14 percent of the cases, OLMS headquarters decided to

initiate legal action. For the final 11 percent, OLMS headquarters review

work and decisions were not completed within the period reviewed.

Table 11: Field Recommendations and Headquarters Decisions in Trusteeship Cases, Fiscal Years 1995-99

a

Percentages may not total 100 because of rounding.

b

Percentages of total cases in which field office recommended legal action.

A summary of the four cases in which OLMS decided to initiate legal action

follows.

• In one case, Labor filed a suit in federal court that was ongoing at the

time of our review.

• Two cases involved federal unions covered by CSRA rather than

LMRDA. These cases were referred by OLMS to Labor’s chief

administrative law judge. In both cases, settlement was reached before

the hearings.

• In the last case, at the time of our review, a civil suit had yet to be filed

because the union had agreed to elections at the regularly scheduled

election date. According to OLMS officials, the elections were held, so

litigation was not necessary.

Fiscal

year

1995

Fiscal

year

1996

Fiscal

year

1997

Fiscal

year

1998

Fiscal

year

1999 Total

Percentage of

totala

Unlawful trusteeships 8 7 9 8 3 35 100

Field office recommended no legal action and

headquarters decided to take no legal action 1 0 3 3 0 7 20

Field office recommended legal action 7 7 6 5 3 28 80

Headquarters decisions and other events

Other actions (reorganizations, mergers, other) 6 5 2 0 0 13 46b

Voluntary compliance 1 2 3 2 0 8 29b

Legal action 0 0 1 3 0 4 14b

Decision pending or review work incomplete 9/30/99 0 0 0 0 3 3 11b
Appendix IV

Title III: Trusteeships

Page 39 GAO/HEHS-00-116 Labor-Management Reporting

The trusteeship complaint cases involved subordinate bodies affiliated

with 28 national/international unions. The subordinate bodies under

trusteeship ranged in size from 0 to 21,163 members, and the amounts of

receipts ranged from $0 to $9,291,571.
Page 40 GAO/HEHS-00-116 Labor-Management Reporting

Appendix V

Title IV: Union Elections ApendxiV

Title IV provides guarantees for fair and democratic union elections to be

held periodically. It also provides other election-related rights to union

members and prescribes various procedures for conducting elections.

Specific requirements regarding elections under title IV include the

following.

• National or international unions must hold elections at least every 5

years, intermediate bodies every 4 years, and local unions every 3 years.1

• Local unions must elect their officers by secret ballot; international

unions and intermediate bodies must elect their officers by secret ballot

vote of the members or by delegates chosen by secret ballot. Unions

must mail a notice of election to every member at the member’s last

known home address at least 15 days prior to any election required to be

held by secret ballot. Election records must be maintained for 1 year.

• A member in good standing has the right to nominate candidates; to be a

candidate, subject to reasonable qualifications uniformly imposed; to

hold office; and to support and vote for the candidates of the member’s

choice.

• Unions must comply with a candidate’s request to distribute campaign

material to members at the candidate’s own expense and must also

refrain from discriminating against any candidate with respect to the

use of membership lists.

• Union and employer funds may not be used to promote the candidacy of

any candidate. Union funds may be utilized for expenses necessary for

the conduct of an election.

Union members may protest elections’ outcomes by seeking internal union

remedies. Once they have exhausted union remedies or the union has failed

to reach a final decision within 3 months, they can file a complaint with

Labor, which is required to investigate these complaints within 60 days. If

Labor finds probable cause that a violation affecting the outcome of an

election has occurred and it has not been remedied, Labor must bring a

civil action in federal district court, with Justice’s approval, to set aside the

invalid election and hold a new election.

LMRDA title IV election standards also apply to most federal unions, which

are subject to CSRA. Consequently, the administrative and investigative

1

An intermediate body is a type of labor organization that is subordinate to a national or

international union but is not a local union. Examples include district councils, joint

councils, conferences, and certain types of boards.
Appendix V

Title IV: Union Elections

Page 41 GAO/HEHS-00-116 Labor-Management Reporting

processes discussed below also apply to federal unions. However, the

remedies for resolving complaints involving federal unions are pursued

administratively, rather than through a federal district court. Also, the 60-

day time frame is not legislatively mandated for federal union cases, but

OLMS officials said their policy is to treat the cases the same for

investigative purposes.

Scope and

Methodology

Automated data that we obtained from OLMS’ Case Data System showed

that OLMS processed 321 election complaint cases in fiscal years 1998 and

1999. We identified limitations in OLMS’ database for union elections that

in some cases underestimate the number of cases with violations. However,

we do not believe this underestimation materially affects the results of our

analysis. We used cases for which the automated database indicated a

violation had occurred. The number of cases with violations was based

solely on the status reflected in the database as of September 30, 1999. We

examined the case files for all cases in which the database indicated

differences between field office recommendations and headquarters

decisions. We analyzed automated data for all supervised election cases

that OLMS processed in fiscal years 1998 and 1999. We also discussed the

process for addressing election complaints with OLMS officials in two

district offices and the headquarters office.

Labor’s Efforts to

Administer Title IV

Complaints form the basis for cases that OLMS investigates under this title.

Complaints must meet the following specific criteria in order for OLMS to

accept them:

• the complainant must be a member of the union;

• the election must be a regular, periodic election of officers or delegates

who will elect officers;

• the union must be covered by LMRDA or CSRA;

• the allegations, if true, must constitute violations of title IV; and

• the written complaint must have been filed within 1 calendar month

after the complainant either properly exhausted internal union remedies

or properly invoked internal union remedies for 3 calendar months

without obtaining a final decision.
Appendix V

Title IV: Union Elections

Page 42 GAO/HEHS-00-116 Labor-Management Reporting

LMRDA requires that union election investigations be completed and that

Labor decide whether filing a lawsuit in federal district court is necessary

within 60 days from the time a complaint is filed. OLMS allocates 30 days to

the field offices for investigating the complaint and the other 30 days to

headquarters for deciding on the appropriate enforcement action. OLMS

limits election investigations to those matters deemed to be within the

scope of the complainant’s internal union protest and those matters not

known to the complainant that are uncovered during the OLMS

investigation. The Supreme Court has held that the Secretary of Labor may

not challenge an election on the basis of a violation that was known to the

protesting member but was not raised in the member’s internal union

protest.2

Field Office Investigations Subsequent to opening an election case, OLMS field office investigators

visit the union’s national or international office and verify that the

complainant has properly exhausted union remedies and filed the

complaint with OLMS in a timely manner. Because the complainant and the

union’s national or international office may be in different locations, the

field office where the complainant is located is responsible for the

investigation, but it may use an OLMS investigator from the pertinent

OLMS field office (referred to as the auxiliary field office) to do this

verification. During this visit the investigator may also obtain the union’s

position on issues involved in the complaint, obtain copies of relevant

documentation, and clarify the union’s interpretation of constitutional

provisions.

The field investigator prepares a written investigative plan that lists all

allegations within the scope of the complaint and outlines all the steps

necessary to resolve each allegation. The investigator must resolve each

allegation independently and cannot rely on the results of any internal

union investigation. The investigator must gather background information

about the union and the nomination and election process, including the

number of union members; the union composition (active members,

retirees, and apprentices); geographic jurisdiction; principal employers;

dues structure and payment method; and frequency and location of

membership meetings. The investigator also obtains information on the

selection of the election committee; date, method, and content of the

nomination notice and election notice; date, time, and place of

2

Hodgson v. Local Union 6799, United Steelworkers of America, 403 U.S. 333 (1971).
Appendix V

Title IV: Union Elections

Page 43 GAO/HEHS-00-116 Labor-Management Reporting

nominations; date, time, location, and method of polling; election results;

and publication of results.

Investigators gather information by interviewing appropriate union

members and officials and reviewing relevant election records. If the union

refuses to produce records essential to the completion of an election

investigation or unreasonably delays doing so, OLMS can issue a subpoena

ordering the union to produce the designated records and to testify as to

their authenticity. If the subpoena is not honored, it can be enforced by

federal district court action. If during the course of the investigation the

investigator establishes that a violation has occurred that may have

affected the election outcome, the respective district director may try to

settle the case with union officials; but no settlement agreement can be

accepted without the concurrence of OLMS headquarters.

If field investigations or OLMS headquarters activities exceed the 60-day

time limit, district directors have the authority to request waivers from the

unions to extend the time. However, time waivers are only to be used when

absolutely necessary, such as when

• OLMS or the union needs additional time to consider settlement

proposals,

• OLMS requires additional investigative time because of unusual

circumstances, or

• in the judgment of the district director, a time waiver is in the best

interest of OLMS.

According to OLMS officials, unions generally grant these waivers.

Once the field investigator completes the investigation, he or she prepares

a Report of Investigation summarizing the findings. The district director

prepares a detailed Analysis and Recommendation Memorandum that

discusses all pertinent allegations and provides a recommendation for

resolving the case that is based on the investigative findings. The district

director also notifies the union of the preliminary investigative findings

through a Summary of Violations letter. This letter is intended to provide

the union an opportunity to present additional evidence, which may

prevent OLMS from initiating unwarranted litigation. This letter may also

encourage the union to reach a voluntary settlement agreement with

OLMS. A similar letter, the “15-day demand letter,” is sent in CSRA cases by

the chief of OLMS’ Division of Enforcement.
Appendix V

Title IV: Union Elections

Page 44 GAO/HEHS-00-116 Labor-Management Reporting

Headquarters Enforcement Within 10 days of receiving the Report of Investigation, the Analysis and

Recommendation Memorandum, and the Summary of Violations letter from

the district director, OLMS’ Division of Enforcement at headquarters

reviews the case and makes a recommendation to the chief of the Division

of Enforcement. OLMS officials said the investigator, Division of

Enforcement staff, and staff from Labor’s Solicitor’s Office hold a telephone

conference to attempt to reach consensus on how to resolve the case. If the

chief of the Division of Enforcement decides the case should be litigated,

the Solicitor’s Office prepares the documents necessary to file suit in

federal court. Depending on the location, once the U.S. Attorney has filed

suit, Labor’s Regional Solicitor may handle the litigation under the

supervision of an Assistant U.S. Attorney. For cases in which a suit is not

filed, the Solicitor’s Office drafts a Statement of Reasons memorandum for

the chief of the Division of Enforcement that lists the specific reasons why

Labor did not file suit. A letter is sent to the complainant and the presidents

of both the local union and the parent union with the Statement of Reasons

memorandum attached.

OLMS may conduct a supervised election as a result of either a successful

court suit or the voluntary settlement of an election complaint. OLMS must

then arrange, supervise, and control all phases of the election, including the

nominations, if appropriate. If the election is in response to a successful

suit, the chief of the Division of Enforcement certifies the results, and

either the U.S. Attorney or the Regional Solicitor of Labor provides the

certification to the court. Both court-ordered and voluntarily supervised

elections ideally should be completed within 90 days of the court’s order or

the voluntary compliance agreement.

Case Resolution Over 80 percent of election cases investigated involved local unions. The

remainder of the cases were about evenly divided between international

unions’ elections and elections for intermediate bodies. The size and

receipts of unions investigated vary considerably, as shown in table 12.
Appendix V

Title IV: Union Elections

Page 45 GAO/HEHS-00-116 Labor-Management Reporting

Table 12: Unions Represented in Election Cases Investigated, Fiscal Years 1998-99

Violations Found As shown in table 13, OLMS found violations in 162 of the 321 election

cases investigated in fiscal years 1998 and 1999. In 62 of the 162 cases, the

violation did not affect the outcome of the election or the union took

corrective action before Labor had to act, so no action was taken. Under

title IV of LMRDA, a court cannot remedy violations unless they may have

affected the outcome of an election. Accordingly, OLMS does not take

action in such cases through voluntary compliance or otherwise unless it

has probable cause to believe that a violation affected an election’s

outcome. In 47 cases, OLMS was able to secure voluntary compliance from

the union, which negated the need for legal action. In another 24 cases,

OLMS decided to take legal action: 18 were referred to the chief

administrative law judge for review and subsequent civil enforcement

action or to the U.S. Attorney for civil enforcement, and for the remaining

6, a decision to take legal action had been made but the action had not been

initiated as of September 30, 1999. The final 29 cases include those that

were pending or those that were not referred to Justice or the Solicitor.

Table 13: Resolution of Election Cases, Fiscal Years 1998-99

Cases

Unions

Number

Membership

range

Receipt amount

range

Local unions 266 237 0−100,000 $0−36,039,077

Intermediate bodies 28 25 0−191,484 2,295−78,503,617

International unions 27 11 956−664,883 148,608−860,988,260

Total 321 273

Local union

Intermediate

body

National or

international

union Total

Total election cases

investigated 266 28 27 321

No violation found 129 14 16 159

Violations found 137 14 11 162a
Appendix V

Title IV: Union Elections

Page 46 GAO/HEHS-00-116 Labor-Management Reporting

a

According to OLMS officials, this may be an underestimate of the number of cases in which violations

were found because of procedures for coding violations, changes made to cases subsequent to our

analysis, and database errors that OLMS staff found through case file reviews.

b

Includes one CSRA case.

Waivers Obtained OLMS obtained waivers to extend the time allowed in 151 cases, or about

half of all election cases, but OLMS obtained waivers in 85 percent of

international union elections cases. In about two-thirds of the international

union cases, OLMS obtained multiple waivers. The OLMS database did not

capture the length of time sought in the waivers. Table 14 shows the

number of waivers OLMS sought in fiscal years 1998 and 1999 for election

investigations.

Table 14: Waivers in Election Cases, Fiscal Years 1998-99

Resolution of cases

with violations

No action taken 54 5 3 62

Voluntary compliance 40 5 2 47

Case referred to chief

administrative law

judge or Justice 16b 2 0 18

Legal action pending 2 2 2 6

Case pending or other

actions 25 0 4 29

(Continued From Previous Page)

Local union

Intermediate

body

National or

international

union Total

Cases with

no waivers

Cases with

one waiver

Cases with

more than one

waiver Total cases

Local unions 146 59 61 266

Intermediate bodies 20 5 3 28

International unions 4 6 17 27

Total 170 70 81 321
Appendix V

Title IV: Union Elections

Page 47 GAO/HEHS-00-116 Labor-Management Reporting

Field Recommendations

and Headquarters Decisions

Of the 162 election cases in which OLMS found violations in fiscal years

1998 and 1999, we determined that the field office recommendation and the

headquarters decision were the same in 78 of these cases and differed in 70;

in 14 cases, OLMS headquarters had not yet made a decision as of

September 30, 1999. Figure 3 compares field office recommendations and

headquarters decisions.

Figure 3: Field Recommendations and Headquarters Decisions in 162 Cases, Fiscal Years 1998-99

a

In the database, seven cases were recorded in error. The database showed headquarters decisions

to be different from field recommendations, but further analysis showed that the decisions were the

same.

As shown in figure 3, in 44 cases the field offices recommended that legal

action be taken but headquarters decided to close the cases. In 27 of the 44

cases, headquarters officials, working with the Solicitor’s Office, decided

that there was insufficient evidence that the act had been violated to

litigate the cases. In another eight, although the act was violated, OLMS

officials did not think that there was evidence that the violation affected

the outcome of the election. For the remaining nine, OLMS did not pursue

litigation for various reasons, such as that the complainant did not properly

file the complaint or the union took action subsequent to the investigation,

which made the complaint moot. OLMS officials told us that there are a

number of reasons why field office recommendations and headquarters

9%

No Decision

(14 cases)

43%

Differ

(70 cases)

48%

Same

(78 casesa

)

27% Field Recommendation - Legal Action (44 cases)

Headquarters Decision - Close Case

14% Field Recommendation - Legal Action (23 cases)

Headquarters Decision - Voluntary Compliance

2% Field Recommendation -Other Action or Close Case (3 cases)

Headquarters Decision - Legal Action






Appendix V

Title IV: Union Elections

Page 48 GAO/HEHS-00-116 Labor-Management Reporting

decisions differ. For example, headquarters must bring consistency and

evenhanded treatment to cases handled by field offices that may not always

consistently apply program policies.

In the 23 cases in which the field recommended legal action, headquarters

secured voluntary compliance. OLMS officials said that voluntary

compliance is an alternative method of ensuring that a fair rerun election is

held, and voluntary compliance is often faster and less resource-intensive

than taking legal action. These officials said they do not consider this

situation to constitute a difference between the field office

recommendations and headquarters decisions.

In the final three cases, the field office recommended other action but

headquarters decided to take legal action. In the first case, the field office

had negotiated a voluntary compliance agreement with the union, but, at

the last minute, the union changed its mind and refused to sign the

agreement. As a result, OLMS headquarters filed a complaint with an

administrative law judge.3 In the second case, headquarters decided to take

legal action but after doing so, the union agreed to rerun the election,

making the complaint moot. In the last case, OLMS headquarters disagreed

with the recommendation to close the case and decided to file a lawsuit in

federal district court.

3

This case involved a federal union covered by CSRA.
Appendix V

Title IV: Union Elections

Page 49 GAO/HEHS-00-116 Labor-Management Reporting

Supervised Elections OLMS refers to supervised union elections as election reruns because

supervised elections represent a corrective measure to resolve violations

that affected the outcome of initial union elections. OLMS may conduct a

supervised election after first finding a violation and then filing a successful

suit in federal district court that demands the election be rerun or after

securing a voluntary compliance agreement from the union to rerun an

election. During fiscal years 1998 and 1999, OLMS conducted 75 rerun

elections, of which 61 were reruns of local union elections.4 Table 15 shows

these rerun elections and characteristics of the unions involved.

Table 15: Election Rerun Cases and Corresponding Union Characteristics, Fiscal

Years 1998-99

4

OLMS’ database does not identify the initial union election case that generated the

supervised election case, and we could not reasonably determine whether any of the rerun

cases resulted from the 162 election cases with violations.

Election

rerun cases

Unions

involved

Membership

range

Receipt amount

range

Local unions 61 61 63−17,176 $2,606−14,893,915

Intermediate

bodies 8 8 0−26,182 19,200−9,606,318

International

unions 6 6 1,000−666,704 0−674,236,422

Total 75 75
Page 50 GAO/HEHS-00-116 Labor-Management Reporting

Appendix VI

Title V: Safeguards for Labor Organizations ApendxiVI

Title V provides safeguards to protect unions’ funds and assets against

embezzlement and other criminal violations. The major provisions of title V

include the following:

• officers have a duty to manage the funds and property of the union

solely for the benefit of the union in accordance with its constitution

and bylaws;

• a union officer or employee who embezzles or otherwise

misappropriates union funds or other assets commits a federal crime;

• officials who handle union funds or property must be bonded to protect

against losses;

• a union may not have outstanding loans to any one officer or employee

that in total exceed $2,000;

• a union or employer may not pay the fine of any officer or employee

convicted of any willful violation of LMRDA; and

• persons convicted of certain crimes, such as embezzlement or murder,

may not hold union office or employment for up to 13 years after

conviction or after the end of imprisonment, whichever is later.

Union members may bring a civil action for appropriate relief against union

officers who violate any fiduciary duties under this title. The Department of

Labor has no authority to enforce fiduciary standards under this title.

Scope and

Methodology

We discussed the process for addressing violations of title V and the

implementation of a 1960 memorandum of understanding (MOU) between

Labor and Justice with officials in Labor’s OLMS and Solicitor’s Office and

with Justice Department attorneys in both headquarters and field or district

offices. We obtained and analyzed automated data from the OLMS Case

Data System for criminal cases OLMS processed in fiscal years 1998 and

1999, including 754 embezzlement cases; 217 bonding cases; and 3 cases

regarding prohibitions against certain persons holding office, which we

identified from 194 basic investigations cases. OLMS maintains the files for

its work on criminal cases in the respective field offices responsible for the

cases; therefore, our work addressing the results of OLMS’ enforcement

efforts was limited to our analysis of computerized data and discussions

with OLMS officials. We tracked the 754 criminal embezzlement cases

through key points associated with investigations conducted in accordance

with the MOU. These cases included those (1) for which Justice delegated

Labor investigation authority; (2) that Labor referred to Justice for

prosecution; (3) that Justice accepted from Labor; and (4) for which Justice

and Labor obtained indictments, convictions, or monetary restitution. We
Appendix VI

Title V: Safeguards for Labor Organizations

Page 51 GAO/HEHS-00-116 Labor-Management Reporting

also identified cases that involved state and local prosecution and the case

results. We identified limitations in OLMS’ database for embezzlement

cases that in some cases underestimate the number of cases with

violations. However, we do not believe this underestimation materially

affects the results of our analysis.

We discussed work done on criminal cases with Labor’s Office of Inspector

General and obtained its March 1999 audit report concerning Labor’s

enforcement of the title V provision prohibiting individuals with prior

criminal convictions from holding union office. We also discussed LMRDA

with the Inspector General’s Division of Labor Racketeering. While the

Division’s investigations may result in cases in which union leaders are

charged with violations of LMRDA, the focus of the Division’s work is

organized crime in labor unions, which is outside the scope of our work.

Labor’s Efforts to

Administer Title V

Under the 1960 MOU, Justice is to investigate and prosecute cases

involving criminal provisions of title V, such as embezzlement of union

funds, willful violations of the prohibitions against paying certain fines, and

violations of prohibitions against allowing certain persons to hold union

office. Labor also has the authority under the MOU to investigate certain

other criminal violations of the act, such as intentional reporting violations,

bonding, and certain loans by labor organizations to officers and

employees. However, to conduct embezzlement investigations, OLMS

usually seeks a redelegation of investigative authority from Justice.

According to OLMS officials, this redelegation is a formality, since Justice

generally grants Labor’s request. In either case, OLMS confirms the

delegation in writing to the appropriate individual in the Office of the U.S.

Attorney involved. When Labor investigates criminal cases, it must refer

these cases to Justice for litigation, which then decides whether to

prosecute. If Justice declines, then Labor decides whether it is appropriate

to contact state or local officials regarding the possibility of referral for

action under state criminal statutes or to close the case.

According to OLMS officials, criminal investigations and subsequent

referrals for prosecution are significant programs for protecting union

democracy and financial integrity for two reasons. First, officers and

employees convicted of embezzlement and certain other related crimes are

barred from union office and employment for a period beginning with

conviction or the end of imprisonment, whichever is later, and extending

up to 13 years. Second, restitution is frequently made to the union as a

result of the investigation.
Appendix VI

Title V: Safeguards for Labor Organizations

Page 52 GAO/HEHS-00-116 Labor-Management Reporting

OLMS may open criminal investigations on the basis of complaints or on its

own initiative in response to information obtained from individuals, union

reports, OLMS audits of unions, or other government agencies.

Investigators do preliminary work based on a detailed investigative plan to

determine whether OLMS should seek delegation authority from Justice to

investigate.

Embezzlement For criminal cases, such as embezzlement, in which Justice delegates

authority to investigate, the OLMS investigator determines the methods to

be used to obtain the necessary information.1 The OLMS investigator also

meets with the U.S. Attorney to discuss the findings and determine whether

the case will be prosecuted. The OLMS investigator then prepares a Report

of Investigation for the case that includes those requirements from the U.S.

Attorney who is likely to prosecute the case. If prosecution is likely, the

investigator prepares an Action Report of Investigation accompanied by

exhibits and a letter containing OLMS’ prosecution recommendation and

analysis. However, if the U.S. Attorney declines to prosecute, the OLMS

investigator prepares a Closed Report of Investigation, which includes

exhibits and documentation of investigative activities and findings and

correspondence from the U.S. Attorney. OLMS also sends a case

declination confirmation letter to the U.S. Attorney confirming the reason

the U.S. Attorney declined to prosecute the case. As noted above, OLMS

may refer cases that the U.S. Attorney declines to a state prosecutor.

CSRA does not contain criminal provisions for the embezzlement of funds

from unions representing federal employees. As a result, OLMS investigates

embezzlement cases by federal union officials under other federal statutes

or relies on state and local prosecutors to accept these cases, since

embezzlement or its equivalent is a felony in every state.

Bonding, Payment of Fines,

and Loans Prohibition

OLMS may investigate violations of bonding requirements under the

provisions of the act and the MOU with Justice. OLMS’ investigations of

whether officers and employees of unions are appropriately bonded are

1

OLMS policy requires that particular care be given to the way in which delinquent or

deficient union reporting and other LMRDA civil violations are addressed while a criminal

investigation is in progress. Generally, investigation and resolution of civil violations are to

be deferred until all criminal matters are resolved. In cases involving grand juries,

investigators must take certain steps to safeguard the information obtained.
Appendix VI

Title V: Safeguards for Labor Organizations

Page 53 GAO/HEHS-00-116 Labor-Management Reporting

triggered by complaints, audits, or information developed from union

reports. Violations include the failure to be bonded, inadequate bonding,

knowingly permitting unbonded people or groups to handle funds, failure

to address conflict-of-interest issues, and using an unacceptable surety

company. Bonding investigations focus on unions that are subject to

LMRDA requirements; those that have property and annual receipts of

more than $5,000 in the most recently completed fiscal year; and those that

have officers, agents, or employees handling union funds or property

against whom allegations have been made.

OLMS investigates certain violations under the payment of fines

prohibition that pertain to unions, while Justice investigates those

violations that pertain to employers under the MOU. Neither OLMS nor

Justice provided data on these cases. Under the MOU, Labor may also

investigate certain loans by labor organizations to officers and employees

of the labor organization, but we did not identify any such cases in fiscal

years 1998 and 1999, the period of our review.

Prohibition Against Certain

Persons Holding Office

Under its policy, OLMS generally does not initiate cases involving the

prohibition against certain persons holding office in unions except at the

request of a U.S. Attorney or other Justice official. However, OLMS told us

it sometimes contacts the U.S. Attorney or other Justice officials if OLMS

independently receives information regarding potential violations. If asked

to investigate, OLMS interviews the complainant, probation officers,

prosecutors, and other officials and obtains documentation of court

judgments, proof of employment, consultant status, and other information.

The investigator summarizes the findings in a Report of Investigation for

the U.S. Attorney. If no violations are established or the U.S. Attorney

decides to take no further action, the investigator prepares a Closed Report

of Investigation.

Case Resolution In fiscal years 1998 and 1999, OLMS processed 754 embezzlement cases

under the auspices of the MOU, and the results showed indictments in 167

cases (22 percent), convictions in 135 cases (18 percent), and monetary

restitution totaling over $3.7 million in 106 cases (14 percent). These cases

involved 624 discrete unions identified in the OLMS database with

memberships ranging from 0 to 1,414,000 and total receipts ranging from $0

to $208,260,892. OLMS found violations in 64 percent of the cases (484);

however, because the number of indictments, convictions, and restitution

cases was dispersed at various stages in the MOU process, as shown in
Appendix VI

Title V: Safeguards for Labor Organizations

Page 54 GAO/HEHS-00-116 Labor-Management Reporting

figure 4, we used the overall number of 754 cases to compute percentages

for these categories.

Embezzlement Cases According to the MOU, for criminal embezzlement cases, Labor must first

request that Justice redelegate it investigative authority. OLMS then

investigates and determines whether it will refer those cases to Justice for

prosecution, and Justice determines if it will accept cases for prosecution.

Figure 4 illustrates this process for the 754 embezzlement cases OLMS

processed for fiscal years 1998 and 1999.
Appendix VI

Title V: Safeguards for Labor Organizations

Page 55 GAO/HEHS-00-116 Labor-Management Reporting

Figure 4: Embezzlement Cases, Fiscal Years 1998−99

Justice delegated to Labor the authority to investigate 398 of the 754

embezzlement cases and did not delegate the remaining 356. OLMS’

database showed a range of reasons why 104 cases were not delegated (see

table 16).
Appendix VI

Title V: Safeguards for Labor Organizations

Page 56 GAO/HEHS-00-116 Labor-Management Reporting

Table 16: Reasons Cases Were Not Delegated, Fiscal Years 1998−99

For 136 cases, the database showed that delegation data were not

applicable, but OLMS officials told us that they did not seek delegation

authority in these cases. According to OLMS officials, OLMS does not seek

delegation when preliminary investigations indicate that violations are not

likely and there is no need for further investigation. The OLMS database did

not have available information to determine why the remaining 116 cases

were not delegated.

Indictments, Convictions,

and Restitution for 398

Delegated Cases

As shown in figure 4, Justice delegated to Labor the authority to investigate

398 cases. Of these 398 cases, Labor subsequently referred 279 to Justice

for prosecution under LMRDA, and Justice accepted 242 cases (87

percent). Justice obtained indictments in 140 cases (58 percent) and

convictions in 117 cases (48 percent). Justice won monetary restitution in

92 cases (38 percent) totaling $3,690,733. The amount of restitution ranged

from $300 to $761,609.

Justice did not accept 37 of the 279 cases (13 percent) for prosecution. The

most frequently cited reasons for declining cases for prosecution were

evidence problems, the small amount of money likely to be obtained, lack

Reason for not delegating Number of cases Percentage of cases

Amount of money involved too

small 43 12

Lacked prosecutorial merit 17 5

No violation 13 4

Lack of intent 9 3

Evidence problem 6 2

Restitution/recovery 6 2

Other 5 1

Out of office 1 0

Delegated to other agency 1 0

Frequency (data) missing 3 0

Subtotal 104 29

Information not available 116 33

Data not applicable

(Labor did not seek delegation) 136 38

Total 356 100
Appendix VI

Title V: Safeguards for Labor Organizations

Page 57 GAO/HEHS-00-116 Labor-Management Reporting

of prosecutorial merit, and unlikely restitution or recovery of funds. When

Justice declines to prosecute cases, Labor officials’ efforts to resolve cases

vary. One official told us that his office closes the cases without further

action if Justice declines prosecution. However, another official told us that

his office seeks local prosecution or some other disposition rather than

simply closing the case.

For the 356 cases that Justice did not delegate to Labor, Justice and local

prosecutors won indictments, convictions, and restitution using other

federal statutes or local statutes to prosecute the cases. Of the 356 cases, 27

(8 percent) resulted in indictments, 18 (5 percent) resulted in convictions,

and 14 (4 percent) resulted in monetary restitution, as shown in table 17.

Table 17: Prosecution Results of Embezzlement Cases, Fiscal Years 1998-99

Note: OLMS officials told us that they track indictments and convictions at the time they are obtained,

rather than in the year the cases are referred to Justice; thus, OLMS reported 259 indictments as well

as 259 convictions in fiscal years 1998 and 1999, which included some cases referred to Justice in

prior years.

We also found that, even though these investigations were begun under

LMRDA or related legislation such as CSRA, about 30 percent of the

indictments, convictions, and monetary restitution were actually achieved

under other federal or local statutes, as shown in table 18.

Table 18: Bases for Indictments, Convictions, and Monetary Restitution for

Embezzlement Cases, Fiscal Years 1998−99

Number

Delegated to Labor

initially

Not delegated to

Labor Total

Total cases 398 356 754

Indictments 140 27 167

Convictions 117 18 135

Restitution 92 14 106

Amount of restitution $3,690,733 $79,707 $3,770,440

Outcome LMRDA

Other federal or local

statutes Unknown

Indictments (167) 69% 30% 1%

Convictions (135) 71% 27% 2%

Restitution (106) 70% 28% 2%
Appendix VI

Title V: Safeguards for Labor Organizations

Page 58 GAO/HEHS-00-116 Labor-Management Reporting

Bonding Cases OLMS processed 217 bonding cases and found violations in 198 cases (91

percent)—195 cases involved violations of various aspects of the statutory

provisions pertaining to bonding. Virtually all of these cases (196) were

resolved through voluntary compliance; the other two cases led to criminal

investigations. These cases represented 214 discrete unions identified in

the OLMS database, with memberships ranging from 0 to 270,430 members

and receipt amounts ranging from $0 to $15,914,220.

Prohibition Against Certain

Persons Holding Office

OLMS investigated three cases under the provision prohibiting union

members with prior criminal convictions, such as embezzlement, from

holding office for a period beginning with conviction or the end of

imprisonment, whichever is later, and extending up to 13 years.2 In two

cases OLMS found no violations; in the other, OLMS obtained voluntary

compliance.

2

In March 1999, Labor’s Inspector General found 1.4 percent of indicted union officers,

employees, and agents that OLMS investigated had prior criminal histories and should have

been barred under title V provisions. The Inspector General suggested that OLMS consider a

more proactive approach to detecting such violations and ensuring compliance.
Page 59 GAO/HEHS-00-116 Labor-Management Reporting

Appendix VII

Title VI: Miscellaneous Provisions ApendxiVI

Title VI of the act contains miscellaneous provisions that, among other

things,

• grant Labor the authority to investigate possible violations of any title of

LMRDA (except for part of title I) and to enter premises, examine

records, and question persons in the course of investigations;

• prohibit a union or any of its officials from fining, suspending, expelling,

or otherwise disciplining members for exercising their rights under

LMRDA;

• prohibit unions from threatening or using violence that interferes with a

union member in the exercise of LMRDA rights; and

• prohibit union members from extortionate picketing—that is, picketing

for the purpose of getting the picketed employers to pay individuals to

stop picketing.

Union members may bring a civil action for an appropriate remedy if the

union has improperly disciplined them. Violations of the use of violence

provision or the extortionate picketing provision are crimes that are within

the responsibility of Justice.

Scope and

Methodology

We discussed title VI requirements with OLMS and Solicitor’s Office

officials as well as with officials from the Department of Justice. Labor’s

automated database did not include any cases specifically generated under

title VI, and Justice did not separately maintain statistical data for title VI

cases under LMRDA.

Labor’s Efforts to

Administer Title VI

Under title VI, Labor has authority to conduct investigations on its own

initiative—that is, without receiving a complaint from a third party. Labor is

authorized to conduct investigations, as it deems necessary, to determine

whether any part of the act, other than title I, has been or is about to be

violated. However, Labor interprets the act as not authorizing it to take

enforcement action under title III or IV without a written complaint.1

1

Labor’s interpretation is based on Supreme Court decisions indicating that the Secretary of

Labor may not bring an enforcement action without a written complaint. See Hodgson v.

Local 6799, United Steelworkers of America, 403 U.S. 333 (1971) and Wirtz v. Local 125,

Laborers, 389 U.S. 477, 483n.5 (1968).
Appendix VII

Title VI: Miscellaneous Provisions

Page 60 GAO/HEHS-00-116 Labor-Management Reporting

Labor delegated to Justice, under a 1960 MOU, the authority to investigate

and prosecute violations under several of the provisions outlined above—

namely, those that prohibit threatening or using force against union

members who exercise LMRDA rights and picketing with the goal of

extorting money from employers. Justice officials confirmed that Justice

and, occasionally, Labor’s Inspector General investigate these provisions of

the act.

Case Resolution Labor officials told us that they do not generate separate workload

statistics under title VI for any of its provisions. Justice officials told us that

it is difficult to prosecute certain violations, such as picketing to extort

money from employers, under LMRDA, so they prosecute violations found

in these cases under other statutes.
Page 61 GAO/HEHS-00-116 Labor-Management Reporting

Appendix VIII

International Compliance Audit Program ApendxiVI

OLMS completed its first compliance audit of an international union in

1982. Previously, OLMS had established its Compliance Audit Program in

1979 under its discretionary authority to ensure that unions at intermediate

and local levels comply with LMRDA’s provisions.1 Audits of union

operations at union headquarters (which can be at the international or

national level) are referred to as International Compliance Audit Program

(I-CAP) audits. Under this program, OLMS staff use specially designed

techniques and procedures to

• determine compliance by international unions with the criminal and

civil provisions of LMRDA and CSRA;

• to the extent possible, review compliance by affiliated unions with these

acts;

• provide assistance to international unions and their affiliates to help

them comply with the acts; and

• increase communication and cooperation between OLMS and

international unions.

Scope and

Methodology

We examined case files for the I-CAP audits OLMS conducted in fiscal years

1995 through 1999. We used this 5-year period because the automated

database did not include any cases processed during fiscal years 1998 and

1999. We identified nine I-CAP cases for this 5-year period. OLMS had three

other I-CAP cases under way and had begun preparatory work on another

at the time of our review. Table 19 shows the distribution of I-CAP cases

reviewed.

Table 19: I-CAP Cases Processed, Fiscal Years 1995−99

1

See app. IX for a discussion of the audit program for unions at the intermediate and local

levels.

Fiscal year Number of cases

1995 4

1996 1

1997 4

1998 0

1999 0
Appendix VIII

International Compliance Audit Program

Page 62 GAO/HEHS-00-116 Labor-Management Reporting

The nine unions that received an I-CAP audit varied in membership from

7,500 to 800,000, with annual receipts ranging from $2,110,675 to

$307,261,268.

Labor’s Efforts to Audit

International or

National Unions

As part of OLMS’ annual planning process, it selects international unions to

audit primarily on the basis of geographic location and amount of receipts.

OLMS’ policy is to audit all international unions at least once before any

union is revisited. Between February 1982 and September 1999, OLMS

completed I-CAP audits at 152 international unions.2 At the time of our

review, OLMS had identified about 150 national or international unions, and

although the number of these unions had declined from past years, OLMS

had not completed its goal of at least one I-CAP audit per union.3

Before OLMS begins the audit work for I-CAPs, its Division of Enforcement

sends standard letters to the Department of Justice, the Federal Bureau of

Investigation, Labor’s Office of Inspector General, and Labor’s Pension and

Welfare Benefits Administration notifying them of OLMS plans to conduct

the audit and requesting any information in their files pertinent to the

scheduled audit. These letters not only gather valuable information for the

I-CAP but also provide these agencies an opportunity to raise any potential

conflicts with their own investigations or enforcement activities. OLMS

requires that the audit team contact the pertinent U.S. Attorney in the

locations where international unions are headquartered. The Division of

Enforcement also sends standard memorandums to OLMS field offices and

headquarters components to obtain information about the international

union being audited.

The OLMS headquarters office oversees the I-CAPs, which are carried out

by a team led by OLMS field office staff located where the international

union is headquartered and, as necessary, OLMS staff from locations where

the international union has affiliates. The team reviews a standardized

Total 9

(Continued From Previous Page)

Fiscal year Number of cases

2

Fourteen international unions underwent second I-CAP audits between 1991 and 1994.

3

The number of national or international unions subject to OLMS compliance audits varies

over the years because of mergers and other changes that affect the total number of unions.
Appendix VIII

International Compliance Audit Program

Page 63 GAO/HEHS-00-116 Labor-Management Reporting

briefing book that includes items such as a list of current affiliated unions,

a list of any reports the union is delinquent in filing, and information

concerning embezzlement cases involving the international union and its

affiliates. The team completes a case-planning checklist designed to help it

prepare for the on-site audit and sends a standard notification letter to the

international union. The team then schedules and conducts an opening

interview with international union officials.

OLMS has designed an audit/investigative plan that consists of 25

mandatory investigative steps: 15 designed to detect and correct civil and

criminal violations and 10 designed to examine the international union’s

financial records. The team can select from an additional 35 optional audit

steps those that are most likely to uncover embezzlement violations. At the

conclusion of on-site activities, the team holds an exit meeting to discuss

results and to try to obtain voluntary compliance. Within 15 days after the

exit interview, the team prepares a Report of Investigation and closing

letter for review by the district director and submission to the chief of the

Division of Enforcement, except in cases involving criminal violations

requiring further enforcement action. Any investigative leads or case

referrals that have been accumulated are forwarded to the appropriate

OLMS district offices. Approximately 6 months after an I-CAP is completed,

the OLMS district director contacts the international union president by

mail and conducts a follow-up site visit to promote cooperation and

determine whether promises of future compliance made during the audit

have been kept and whether violations have been remedied.

Case Resolution The nine I-CAP cases that OLMS processed in fiscal years 1995 through

1999 identified violations ranging from delinquent and deficient reporting

to inadequate bonding (see table 20).

Table 20: Types of Violations Found in I-CAP Cases, Fiscal Years 1995−99

Type of violation

Number of cases with particular violation

International unions Affiliates Total

Delinquent reports 1 6 7

Deficient reports 7 0 7

Inadequate records 5 1 6

Bonding deficiencies 3 1 4

Other 2 1 3
Appendix VIII

International Compliance Audit Program

Page 64 GAO/HEHS-00-116 Labor-Management Reporting

OLMS resolved most of these violations using voluntary compliance.

However, the disposition of violations in three cases required follow-up

investigations, which led to four criminal investigations: three addressed

potential embezzlement violations, and the fourth concerned the use of

union funds to pay for the defense of an officer convicted of crimes.
Page 65 GAO/HEHS-00-116 Labor-Management Reporting

Appendix IX

Compliance Audit Program ApendxiIX

OLMS’ Compliance Audit Program (CAP) is an investigative program

established in 1979 under OLMS’ discretionary authority to detect criminal

and civil violations of LMRDA and provisions of related legislation. CAP

audits are conducted at the intermediate and local levels of unions. Over

31,000 of these unions are subject to compliance audits. The compliance

audits’ principal objectives are to

• uncover embezzlement and other criminal and civil violations,

• create a visible enforcement presence in the labor community, and

• provide effective grass-roots compliance assistance directly to union

officials.

Scope and

Methodology

We obtained and analyzed automated data from the OLMS Case Data

System for 591 CAP cases processed in fiscal years 1998 and 1999. OLMS

maintains case files in the field; therefore, our work on CAP cases was

limited to data obtained from the automated database and to discussions

with OLMS officials about the compliance audit process.

Labor’s Efforts to Audit

Intermediate and Local

Unions

Each OLMS district office sets an annual goal for the number of CAP cases

it will conduct after considering its workload in other areas. Because CAPs

are discretionary activities, OLMS may temporarily suspend CAPs to allow

staff to conduct other higher priority investigations, such as those

responding to an election complaint. In its fiscal year 1999 planning

guidelines, OLMS directed that field offices give higher priority to

eliminating criminal case backlogs than to compliance audit work.

According to OLMS officials, OLMS has been forced to do a declining

number of compliance audits as staff resources have diminished. The

officials noted that OLMS did 1,074 compliance audits in fiscal year 1990

but only 289 in fiscal year 1999. Also, when selecting unions to audit, field

offices were instructed to strongly consider unions that are chronically

delinquent report filers and in particular those with receipts of more than

$200,000 that were delinquent in the prior year.

The district office sends a notification letter to every union selected for a

compliance audit that provides an overview of the program and enables the

union to gather the required information. OLMS uses a streamlined audit

approach that employs a checklist addressing the union’s administrative

and financial operations and allows OLMS to complete its work in a

minimum amount of time. When OLMS completes a compliance audit, the
Appendix IX

Compliance Audit Program

Page 66 GAO/HEHS-00-116 Labor-Management Reporting

district office sends a closing letter to the union (unless the compliance

audit results in a follow-up criminal investigation case) that identifies all

violations found and those that have been remedied. The letter confirms

actions unions have agreed to take in the future to comply with

requirements. Each closing letter must indicate that the audit was limited

in scope and that all records and documents the union provided will be

handled in a confidential manner to the extent permissible by law. When

OLMS initiates a follow-up criminal investigation case, OLMS uses the

same process described for title V in appendix VI.

Case Resolution OLMS found violations in 469 (or 79 percent) of the 591 CAP cases

processed in fiscal years 1998 and 1999. In 84 percent of the cases with

violations, OLMS either secured voluntary compliance or it did not have to

take action, according to the database. In the remaining 16 percent of the

cases, OLMS initiated follow-up criminal investigation cases (see fig. 5).

Figure 5: Resolution of 591 Compliance Audit Cases, Fiscal Years 1998−99

a

These efforts resulted in 97 cases, 3 of which were referred to Justice for prosecution.

b

Twenty-five of these cases had both minor violations that were resolved by voluntary compliance or

did not require action as well as more serious violations that led to follow-up investigations.

An analysis of the particular violations in these cases found that the most

common violations OLMS detected were failure to maintain records,

deficient reporting, failure to file, and inadequate bonding for union

21%

No Violations

(122 cases) 79%

With Violations

(469 cases)

16% Criminal Follow-up

Investigation Openeda (73 cases)

84% Voluntary Compliance or

No Action Taken (396 casesb

)






Appendix IX

Compliance Audit Program

Page 67 GAO/HEHS-00-116 Labor-Management Reporting

officials. These also were violations that OLMS was most likely to resolve

by securing voluntary compliance from the union. Conversely, for

embezzlement violations, OLMS was most likely to open a follow-up

criminal case. Some cases involved technical violations, minor reporting

deficiencies, or nonactionable violations that, according to OLMS, did not

need to be resolved or corrected. Table 21 shows a summary of the

violations detected in the 469 compliance audit cases and the resolution of

particular violations.

Table 21: Resolution of Particular Violations Found in CAP Cases, Fiscal Years 1998−99

a

The three cases that were referred to Justice involved these violations.

CAP cases involved 590 discrete unions with memberships ranging from 0

to 30,564 and total receipts ranging from $0 to $36,288,658.

Resolution of particular violation

Violation

Number of

cases with each

violation

Voluntary

compliance No action taken

Follow-up

case opened

Failure to maintain recordsa 272 218 18 35

Deficient reportinga 261 225 17 18

Failure to file 130 109 8 13

Inadequate bonding 109 92 3 14

Embezzlement 71 0 1 70

Destroying or concealing recordsa 29 18 1 9

False records 21 3 1 17

False report 11 1 0 10

Improper loans 7 4 2 1

Improper election procedure 3 1 2 0

Failure to adopt a constitution 2 2 0 0

Other criminal violations 1 0 0 1

Other civil violations 1 0 0 1
Page 68 GAO/HEHS-00-116 Labor-Management Reporting

Appendix X

Justice’s Role in Enforcement ApendxiX

Section 607 of LMRDA authorizes the Secretary of Labor to make

agreements with any agency for cooperation or mutual assistance in

performing functions under the act. In 1960, the Departments of Labor and

Justice signed an MOU that outlined their respective responsibilities under

LMRDA—that is, investigating and litigating potential criminal and civil

violations of the act.

Criminal Enforcement Under the terms of the MOU, Labor delegated to Justice the responsibility

for investigating certain criminal violations under the act, such as those

involving embezzlement, cases in which employers paid fines for union

officials or employees, and the prohibition against certain persons holding

offices or positions related to unions under title V as well as deprivation of

union members’ rights, use or the threat of use of violence, and picketing to

extort money from employers under title VI. Labor is responsible for

investigating other criminal violations involving reporting; trusteeships;

and certain safeguards under title V, including bonding, loans to union

officers, and fines paid by unions on behalf of a union official or employee.

Also, Labor may request from Justice a “redelegation” of investigative

authority for particular criminal cases, such as embezzlement cases, on a

case-by-case basis. According to OLMS officials, the redelegation of

investigative authority is a formality, since Justice generally grants Labor’s

request.

Once Labor has obtained investigative authority from Justice, Labor

confers with Justice during the investigation before any decision is made to

close or refer a case for prosecution. Once Labor has completed a criminal

investigation, it decides whether to refer the case to Justice for

prosecution, since Justice is responsible for litigating all criminal violations

of the act. Justice determines whether it will accept cases that Labor refers

for criminal prosecution on a case-by-case basis. If Justice declines to

prosecute a case, Labor decides whether it will close the case or pursue

litigation through other means, such as using local prosecutors. Both Labor

and Justice officials said that criminal cases involving reporting violations

or inadequate bonding are not treated with the same priority as

embezzlements. Although the act provides penalties for reporting

violations, such as delinquent reporting that is intentional, Justice officials

do not consider these violations serious enough to warrant a court’s time.

Consequently, Labor is less likely to refer such cases to Justice unless they

also involve violations such as embezzlement.
Appendix X

Justice’s Role in Enforcement

Page 69 GAO/HEHS-00-116 Labor-Management Reporting

Civil Enforcement Under the MOU, Labor is responsible for investigating potential civil

violations of the act relating to union elections, trusteeships, or reporting.

If Labor concludes that litigation is warranted, it will refer the case to

Justice with a request that a civil suit be instituted on behalf of the

Secretary of Labor. In turn, Justice will, for example, file suit in federal

court to require unions to rerun an election or to terminate an unlawful

trusteeship. Unlike criminal enforcement, Justice will not institute civil

enforcement action except at Labor’s request, nor will Justice voluntarily

dismiss any action under way except with Labor’s concurrence. In civil

enforcement, Justice and Labor attorneys collaborate to prepare and

present the case. According to Labor officials, in some instances when

Justice’s resources are limited, Justice will delegate prosecution authority

to Labor—such as for elections—which requires Labor’s Solicitor to be the

attorney of record.

Working Relationship

Between Labor and

Justice

Justice officials told us that when the MOU was signed in 1960, Labor did

not have experience investigating criminal acts such as embezzlement;

therefore, the Federal Bureau of Investigation conducted these

investigations. However, over the years, as Labor gained experience, Labor

began to conduct more of the embezzlement cases and Justice began to

direct its investigative resources to other priorities. According to statistics

that Justice provided, work on Labor cases accounted for less than 1

percent of Justice’s work in fiscal years 1998 and 1999. Labor officials

described a good working relationship with Justice on the basis of a

customer satisfaction survey OLMS conducted of U.S. Attorneys. Justice

officials confirmed that a positive working relationship exists between the

two Departments.
Page 70 GAO/HEHS-00-116 Labor-Management Reporting

Appendix XI

Compliance Assistance ApendxiXI

OLMS’ compliance assistance program is designed to

• promote voluntary compliance with LMRDA by informing union officers

and others affected by the act of their responsibilities and

• encourage union members to exercise their rights under the act.

OLMS’ compliance assistance efforts also extend to the education and law

enforcement communities to foster a better understanding of the act and of

OLMS’ responsibilities to achieve greater cooperation among agencies, and

to improve enforcement efforts.

Scope and

Methodology

We discussed OLMS’ compliance assistance efforts with OLMS officials and

obtained documents describing these efforts for fiscal years 1998 and 1999.

Labor’s Efforts to

Provide Compliance

Assistance

OLMS headquarters and field offices conduct compliance assistance. The

headquarters office monitors and evaluates field office compliance

assistance activities and recommends successful programs to other OLMS

field offices for potential use. OLMS headquarters also identifies and

develops new and revised compliance assistance materials and conducts

liaison activities with union headquarters at the national and international

levels as well as with federal agencies. District directors determine what

compliance assistance activities the field offices will conduct on the basis

of perceived need. For example, unions identified as enforcement

problems, such as chronically delinquent report filers, are targeted for

compliance assistance.

Compliance Assistance

Activities

OLMS district offices carried out 614 compliance assistance activities and

liaison contacts reaching 4,395 union officers and members in fiscal year

1998. In particular, OLMS made 481 liaison contacts with U.S. Attorneys

and Assistant U.S. Attorneys, law enforcement and other agencies, union

representatives, and educational institutions. In April 1998, OLMS initiated

its member outreach program, which was designed to target union

members and inform them about their rights under the act. In April 1999,

OLMS drafted a new proposal for a “Labor Organization Orientation

Program,” which was designed to educate officers of newly formed labor

organizations and new officers in existing unions about their duties and

responsibilities under LMRDA. In fiscal year 1999, OLMS continued several
Appendix XI

Compliance Assistance

Page 71 GAO/HEHS-00-116 Labor-Management Reporting

previously implemented initiatives and developed new ones that focused

on reducing the number of unions delinquent in filing the reports required

under LMRDA (see app. III). OLMS officials told us they are working on a

major multiyear compliance assistance initiative designed to help trustees

in small unions conduct more effective audits of their organizations’

financial books and records. Officials expect to publish a detailed guide for

union officials in July 2000 and to conduct nationwide workshops on using

the guide in fiscal year 2001.
Page 72 GAO/HEHS-00-116 Labor-Management Reporting

Appendix XII

Comments From the Department of Labor ApendxiXI
Page 73 GAO/HEHS-00-116 Labor-Management Reporting

Appendix XIII

Comments From the Department of Justice ApendxXiI

Now on p. 51.
Appendix XIII

Comments From the Department of Justice

Page 74 GAO/HEHS-00-116 Labor-Management Reporting

Now on pp. 50 and 59.
Page 75 GAO/HEHS-00-116 Labor-Management Reporting

Appendix XIV

GAO Contacts and Staff Acknowledgments ApendxXiIV

GAO Contacts Lori Rectanus, (202) 512-9847

Jacqueline Harpp, (202) 512-8380

Staff

Acknowledgments

In addition to those named above, Robert Crystal, Lepora Flournory,

Dennis Gehley, Larry Horinko, Grant Mallie, Robert Sampson, John Smale,

Joan Vogel, and James Wright made key contributions to this report.

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