1. FINANCIAL RESPONSIBILITIES OF LOCAL PRESIDENTS 2009 NPC Conference

2. Webinars Fiduciary Responsibilities of Union Officers New Officers Training & Responsibilities LM Reporting Local Elections (Officers, committee members DOL & IRS Requirements and Audits Travel & Expenses

3. Webinar cont. Recording Secretary Duties COPA Funds Trustee Training Renting vs Owning Budgeting

4. What You Signed On For Labor Management Reporting and Disclosure Act Five Authorities to Spend New Officers Checklist Your local LM Report Handling Local Financials Bonding Local Constitutions Record Keeping Budgeting Local Policies Article 16 Compliance DOL/IRS Audits Members Rights to Examine Financial Records

5. LMRDA Labor Management Reporting and Disclosure Act, 1959 as amended This is the law. It is commonly referred to as the Act.

6. How did the LMRDA come about? It was the direct outgrowth of a Congressional investigation conducted by the Select Committee on Improper Activities in the Labor or Management Field in 1957

7. Why was the LMRDA created? The committee began a highly publicized investigation of labor organization racketeering and corruption; and its findings of financial abuse, mismanagement of labor organization funds, and unethical conduct provided much of the impetus for enactment of the LMRDA's remedial provisions

8. LMRDA: Sec. 501(a) Fiduciary Responsibility All officers, shop stewards and representatives of the union hold a position of trust to the union and its members It is the duty of each person above to hold its money and property solely for the benefit of the union and its members All officers must manage, invest and expend that money in accordance with the unions constitution and bylaws and any resolutions of the governing bodies adopted there under…

9. LMRDA Section 501(a) – Fiduciary Responsibility of Officers A good recordkeeping system can help union officers meet their LMRDA fiduciary responsibilities and it provides a foundation for other internal financial controls.

10. LMRDA: Sec. 501(b) Fiduciary Responsibility All officers, shop stewards and representatives are obligated to recover damages to the union If you refuse or fail to do so within a reasonable time after being requested to do so by any union member, such member may sue such officer, shop steward or representative in any district or state court to recover damages.

11. LMRDA: Sec. 501(c) Fiduciary Responsibility If you embezzle or steal any monies, securities, properties or other assets of the union you may be fined up to $10,000 and/or imprisoned for up to five (5) years.

12. LMRDA: Sec. 101-Bill of Rights Equal Rights – Every member of a labor organization, subject to reasonable rules and regulations in the constitution & bylaws, shall have equal rights and privileges to: Nominate candidates Vote in elections or referendums Attend membership meetings

13. LMRDA: Sec. 101-Bill of Rights Freedom of Speech and Assembly – Every member shall have the right to: Meet and assemble freely with other members Express any views, arguments, or opinions Express his/her views upon any business properly before a meeting, subject to the unions established and reasonable rules (i.e. Roberts Rules of Order)

14. LMRDA: Sec. 101-Bill of Rights Dues and Assessments may only be done by a local: By majority vote by secret ballot of the members in good standing voting at a general or special membership meeting

15. LMRDA: Sec. 104 Right to Copies of CBA It is the duty of the secretary or corresponding principal officer to forward a copy to any employee who requests a copy. This pertains to non-members as well. Must maintain copies of the agreement at the principal office.

16. LMRDA: Report of Labor Organizations Sec. 201(b): Every labor organization shall file an annual financial report: LM-2: Over $250,000 gross receipts LM-3: $250,000-$10,000 gross receipts LM-4: Under $10,000 gross receipts

17. LMRDA: Sec. 210 Civil Enforcement This gives the Secretary of Labor the authority to take civil action to stop someone from violating the Act or who has violated the Act.

18. LMRDA: Sec. 207 Effective Date (i.e. deadlines) All reports must be filed within ninety (90) days after the end of the fiscal year.

19. LMRDA: Sec. 209 Criminal Provisions Penalties of up to $10,000 or imprisonment of up to one (1) year or both may result from the following: a) Willful violations of the Act b) False statements c) Willfully concealing, withholding, or destroying books, records, reports or statements required to be kept by this Act d) The signers of the LM-1, LM-2, LM-3, LM-4 or LM-10 are personally responsible for the filing of the reports and for any statement contained therein known to be false.

20. Donts and Dos Do get a professional that really knows this form. The time (and grief) savings more than offset the expenses. Do get your electronic signatures in order, well ahead of time. If you are already late, DO IT! Do take a look at the DOLs Compliance audit letters on their website.

21. Donts and dos Dont be Late Dont be careless Dont assume They will never look at mine Dont think youre too small to be audited Dont think these reports go into a black hole, people (your members, managers, the media, candidates for office WILL look at these forms (DOL has a policy, if you dont file or are late filing for three (3) years in a row, you will be AUDITED )

22. When the DOL inspects local finances and spending, they want to examine your records. Failure to have the union records is not a defense and could result in criminal and civil penalties.

23. LMRDA: Sec. 206 Retention of Records All records that include information that is require to file any of the reports mentioned in this act, must be retained for five (5) years. For example: these records must be kept current year 2009 going back five (5) years: 2008, 2007, 2006, 2005, 2004.

24. Recordkeeping Requirements The financial recordkeeping requirements of the LMRDA are found in Section 206, Retention of Records. Unions must maintain records that will provide in sufficient detail the basic information from which reports filed with DOL such as Form LM- 2, LM-3, and LM-4 may be verified and checked for accuracy and completeness.

25. Responsibility of the President and Treasurer Personal responsibility of the president and treasurer. The unions president and treasurer, or corresponding principal officers, are responsible for ensuring that the union retains these records and complies with the provisions of Title II.

26. Responsibility of the President and Treasurer Any person willfully failing to maintain required records, making false entries in records, and concealing or withholding or destroying these records can be criminally prosecuted. These penalties can include fines up to $100,000 and/or one (1) year in prison. These penalties not only apply to the unions officers who are responsible for the unions finances and records, but also to anyone (member, employee, accountant, lawyer) who causes a false record to be created.

27. What records must be maintained? General Rule: All types of records used in the normal course of conducting union business.

28. Is there a prescribed recordkeeping system? There is no prescribed recordkeeping system. No specific format required by DOL Vast array of recordkeeping systems

29. What does failed to maintain records mean ? The required record was either never created or was not obtained from another party. Records once existed and were in the unions possession, but were not preserved.

30. LMRDA: Report of Labor Organizations Sec. 201(a): Every labor organization shall adopt a constitution and bylaws and shall file a copy with the DOL together with a LM-1 report. The National Constitution of the APWU requires that all local must submit a copy of their local constitution to the national office.

31. Constitution & Bylaws Your local/state constitution needs to be to be in compliance with the law and with the National Constitution and Bylaws. Amendments may also need to be made to come up to date with your current needs.

32. 5 Sources of Authority to Spend $ 1. The Law 2. The Membership, in form of a motion 3. The Constitution and Bylaws 4. The Budget, adopted by the membership 5. The Executive Board, as permitted in the Constitution or by the membership

33. Handling Finances You are responsible for the members money. To many of the members, a measure of your ability to lead will be how you handle their money. Budgeting for the present and future Salaries and benefits, Travel and Expenses, Managing your union office(s)

34. Basic Financial Matters We recommend having at least 2 names on all accounts, preferably 3 We recommend having 2 signatures on checks for accountability Must have one of the 5 sources of authority to spend money and should annotate that authority on your financial records

35. Credit Card/Debit Card We recommend that you only use credit cards for you local-with no authority for cash advances. Avoid reimbursements, use your local credit card or local checks. Try to eliminate any petty cash fund. Limit access to union funds and control credit cards.

36. LMRDA: Sec. 503 Making of Loans The union may not make directly or indirectly any loan in excess of $2,000 to an officer or employee. Violating this section may result in a fine up to $5,000 and/or one year in prison. Advances for travel expenses can become loans (60-30 rule)

37. DOL & IRS Audits Donts Go beyond what was requested - answer as accurately as possible but avoid lengthy discussion Discuss or respond to impromptu questions or issues raised by the agents – identify the issues in writing for an orderly response Good foundation for future administrative appeal or litigation of issues that cannot be resolved at the audit level

38. DOL & IRS Audits If there were criminal ramifications Dont discuss these items with your accountant – There is no client privilege with accountants! Call or have the accountant refer you to a tax lawyer

39. Why Budget? Guide to where youre going financially Control your money instead of money controlling you Creates extra money to spend on things that matter Focus on common goals

40. Who Should Set or Formulate a Budget? Presidents and Treasurers assume responsibility for insuring that organization has written budget Executive Board

41. Who Should Approve the Budget ? The entire membership should review, and vote on your local budget.

42. When Should a Budget Be Set? Near the End or at the Beginning of Your Fiscal Year. Newly elected officers should review the budget, or formulate one if the local does not have a budget.

43. LMRDA: Report of Labor Organizations Sec. 201(c): Right to examine records: the union shall make available the information required to be contained in these reports to any member for just cause to examine any books, records, and accounts necessary to verify such report.

44. Members right to review books/ records books/ records Section 201(c) of the LMRDA gives members the right to examine any of the unions books and records that are necessary to verify a report filed with DOL. This is enforceable by the filing of a civil suit in federal district court by a member showing just cause for examination.

45. Owning vs. Renting Many local struggle with the decision about whether to buy a building or lease commercial space for their union hall. Maybe the union owns space, has too much, and does not use it frequently enough to justify ownership or the local has no place and the members want a space.

46. Ownership Advantages Cont. The right to select tenants for space the union does not use Income from tenants Avoidance of rent escalation

47. Ownership Disadvantages Upfront costs: down payment, closing costs, legal fees, etc. Responsibility of building management, including inspections, permits Time consuming and who makes decisions Less flexibility when moving to another space Depreciation (local economic conditions may negatively impact value)

48. Leasing Advantages Initial lower costs. Less risk Less commitment and responsibility as a renter vs. being an owner/landlord Flexibility to move

49. Leasing Disadvantages Little input regarding the appearance and maintenance of the building Leasing can require a long-term commitment No control over rent escalation

50. What are your needs? How many fulltime officers do you have? How many part-time officers do you have? Could officers share an office/work space? Do you need to hold union meetings at the union hall?

51. LMRDA: Sec. 502 Bonding The union is required to have fidelity insurance for a minimum of 10% of the funds handled by an individual, not to exceed $500,000. National automatically pays for coverage of $2,500 for each local. Recommend a bond to cover all liquid assets (banking accounts, credit limits) (unless you have the proper constitutional amendment)

52. Article 16 Compliance The Secretary-Treasurer shall notify in writing each local that does not have a Constitution & Bylaws, has not filed reports and returns required by federal and/or has not conducted elections in accordance with the Department of Labor regulations, that its charter will be revoked.

53. Article 16 Compliance Contd Locals must provide: – A copy of their local unions constitution – A copy of your local unions signed 2008 LM-2, LM-3, or LM-4 report that was filed with the Department of Labor – Written verification that your local union filed a 990 or 990- N electronic postcard with the IRS in 2008; and – A listing of your local officers, and verification that the local union has held elections according to the local unions constitution within the last three years

54. New Officer Check List Transfer of all union records and property, including: Keys to file cabinet(s), office(s) and/or building(s) Union computer(s) Financial records, both hard files and electronic files Union credit card(s) Union checkbook History of LM reports and IRS forms Copy of local/state constitution

55. List Continued Copy of LMOU Copy of bond certificate Grievance records Any other union records or property Changed names on bank account(s) and credit card account(s) Professional audit of financial records

56. Policies & Procedures Types of Policies? Grievance Handling Travel & Expenses Computer and Web Usage Editorial Policies File and record keeping Meeting attendance Member complaints Steward conduct

57. Be very careful of the they owe me mentality. You volunteered for this job, thats a responsibility you took. The dues paying members of your local are not making you hold an office, so dont use your commitment as an excuse to steal from your members. Work excessive hours for your local? Give up your family time for your local? Always bring union work home? Wont take time off for personal vacation? Think it wont get done without you?