PENALITIES regarding LM 30 $10,000 fine and imprisonment of up to a year, or both for: Failing to file Filing false report knowing it to be false Filing report with intentional material omissions Destroying records needed to substantiate filing Person signing the report is personally liable to maintain the records for 5 years.
Deadlines for LM 30 and LM Days after end of fiscal year If you file calendar year tax return, March 31 of the following year LAST YEAR’S AMNESTY: LM 30 AUGUST 15, 2005
WHAT DID AMNESTY MEAN? 1. “filers will not have to submit reports for prior years, even if such reports should have been filed.” 2. “OLMS will not require a new filer to submit reports covering the same financial interest for any prior years absent extraordinary circumstances.”
WHO FILES THE LM 30? union officers union employees, such as business agents, organizers, supervisors of union staff NOT clerical or janitorial employees
YOU FILE FOR MORE THAN JUST YOURSELF You also file your LM 30 for transactions involving: Spouse Minor children
BUT YOU ONLY FILE IF… You had “reportable transactions”
There are 3 types of reportable transactions. PART A Covers employers with employees your union represents or seeks to represent
There are 3 types of reportable transactions. PART B Covers companies you may or may not own which do substantial business with a PART A employer – or- Covers companies that do any business with your union or an affiliated fund
There are 3 types of reportable transactions. PART C Covers all other employers and labor relations consultants.
TRANSACTIONS WITH THE UNION’S BENEFIT FUNDS Normally reportable on PART B of the LM 30, but If your funds’ employees are members of your union, then list transactions under PART A
Complete PART A if you … (1) held an interest in, (2) engaged in transactions (including loans) with, or (3) derived income or other economic benefit from an employer whose employees your union represents or is actively seeking to represent.
Separate PART A’s Complete a separate Part A for each employer and for each interest, transaction, or item of income or other economic benefit connected with that employer.
Exclude from PART A … Holdings of, transactions in, or income from, publicly traded securities (Not NASDAQ - check with SEC) Holdings of, transactions in, or income from privately traded securities if value is no more than $1,000 or income is no more than $100 from any one security
Also exclude From PART A … Transactions involving purchases of goods at prices generally available to the public.
Also exclude from PART A … Payments and benefits received as a bona fide employee of the employer for past or present services; or
Also exclude from PART A … Payments to employees while not working but are: (a) required by a bona fide collective bargaining agreement, or (b) made pursuant to a custom or practice under such a collective bargaining agreement, or (c) made pursuant to a policy, custom, or practice which the employer has adopted without regard to status as union officer
Examples of Employee Exclusion: Wages Any entitlements under CBA, e.g. employee discount Paid time off for doing union business Lunches paid for by employer while engaging in collective bargaining Free thanksgiving turkey if given to all employees
Union Officials Also exclude from PART A … Whether you are or are not an employee of the employer LAST YEAR “any sporadic or occasional gifts, gratuities, or loans of insubstantial value, [probably no more than $25] given under circumstances or terms unrelated to the recipient’s status in a labor organization”
NEW 2005 DE MINIMIS TEST Need not be sporadic or infrequent $250 or less Must add up receipts during the year By individual By same Employer
3 part test for the de minimis rule 1 no more than $25 value received 2 sporadic or occasional 3 given for reason unrelated to your status as a labor union official Last year must satisfy all three parts to not report! This year: $250 and regular is OK!
Examples of de minimus test in action Last year: if an employer frequently provides a catered lunch during long meetings with various groups, you would not have to report the receipt of such a lunch if it has a value of $25 or less. This year: if less than $250 Do Not Report!
What if you don’t know how much the lunch cost? OK to make a reasonable, good faith, estimate of the value you received from the lunch Special Cocktail Party Rule – it is not the employer's cost but rather the value of how much you ate and drank Special Funeral Rule – no value received – no need to report no matter how much the flowers cost.
Why worry? Title 29 USC § 186 It is unlawful for any employer to directly or indirectly pay, lend, or deliver … any money or other thing of value to any representative of any of his employees and it is unlawful for that representative to receive it e.g., meals, trips, anything No de minimis exemption in the law, but on the form, unless a bribe
Title 29 USC § 186 Willful violation, under $1,000, 1 year imprisonment, $10,000 fine, or both. Willful violation, over $1,000, 5 years imprisonment, $15,000 fine, or both. Strict liability – ignorance no excuse
Title 29 USC § 186 No recognized 5 th amendment right to file false LM 30 If this is your issue, you should consult competent criminal defense attorney (should also know labor law) before filing LM 30.
SPECIAL UNION CONSTITUTION ISSUES Must examine your national and local constitutions to determine if track § 186 or have other restrictions
Complete PART B if you … held an interest in or derived income or other economic benefit, including reimbursed expenses, from a business (1) a substantial part of which consists of buying from, selling or leasing to, or otherwise dealing with the business of an employer whose employees your union represents or is actively seeking to represent, or
Complete PART B if you … held an interest in or derived income or other economic benefit, including reimbursed expenses, from a business 2) any part of which consists of buying from or selling or leasing directly or indirectly to, or otherwise dealing with your union or with a trust in which your union is interested.
Exclude from PART B … Holdings of, transactions in, or income from, publicly traded securities Holdings of, transactions in, or income from privately traded securities if value is no more than $1,000 or income is no more than $100 from any one security
2004: Exclude from PART B … 1 no more than $25 value received 2 sporadic or occasional 3 given for reason unrelated to your status as a labor union official Must satisfy all three parts to not report! 2005: New $250 Rule
Examples of PART B … You are a trustee of an affiliated benefit fund, and received reimbursed expenses from that fund to go to an educational conference. Your local union owns a building. A business which is a tenant, buys you dinner.
Examples of PART B … Your wife works at a law firm. The firm earns substantial fees from an employer your local union has under contract. You are a local officer not employed by the national union, but it reimburses you for certain travel and hotel expenses incurred by you in connection with attending a national union sponsored event. (National Union need not file LM-10 for this, under new LM- 10 rules)
Another example of PART B … You and your spouse attend a dinner paid for by one of the money managers doing business with the benefit funds sponsored by your local union.
Complete PART C if you … received from any employer (other than an employer covered under PARTS A and B), or from any labor relations consultant to an employer, any payment of money or other thing of value
PART C is ambiguous DOL published guidance says to make a PART C report “if the payments are a conflict of interest or a potential conflict of interest.” Examples include, dinner paid for by a company that wants to do business with the union’s benefit fund.
Clearly exclude from PART C … Payments made because you, your spouse or minor child is an employee of that employer Bona fide loans, interest or dividends from national or state banks, credit unions, savings or loan associations, insurance companies, or other bona fide credit institutions.
Clearly exclude from PART C … Interest on bonds or dividends on stock, provided they were acquired, under circumstances unrelated to the recipient’s status as a union officer and the company is not in competition with the employer whose employees your union represents or seeks to represent.
Clearly exclude from PART C … any amounts meeting the new de minimis test
Required to include payments in PART C constituting a § 186 crime Must include payments received : (1) not to organize employees; (2) to influence employees in any way with respect to their rights to organize;
Required to include payments in PART C constituting a § 186 crime Must include payments received : (3) to take any action with respect to the status of employees or others as members of the union; and (4) to take any action with respect to bargaining or dealing with employers whose employees your union represents or seeks to represent
If you have a § 186 issue in PART C No recognized 5 th amendment right to file false LM 30 Seek advice from a competent criminal defense attorney before filing
Why should you want to file an LM 30 by March 31? It’s the law Penalty for failing to timely file $10,000 fine imprisonment of up to a year or both
STAY TUNED FOR 2006 DOL published in Federal Register request for comments on revising LM-30. Comment period ended January 26, 2006 New rules and new form likely to be announced this year.
To Contact Us … CARY KANE LLP Representing workers, trade unions and benefit plans 1350 Broadway, Suite 815 New York, NY (212) Larry Cary