The Department of Labor (DOL) announced today that it wants to update rules to require private sector unions to be more transparent in their financial disclosure reports. Among other requirements, unions would have to reveal how much they spend on political activities; how much they offer leaders for travel, accommodations, and other expenses; and how many people pay dues to the union. It is just a proposed rule at this point, but the department is attempting to push it through the administrative process before the end of the year.
This effort will probably be written off by critics as an attack on unions, but the key beneficiary will most likely be the rank and file workers themselves. While unions supposedly represent worker interests, individual members often have little understanding of how their dues money is spent and for what purpose. Why not let those members know what their own leaders are doing? What better way to keep them honest?
Unions have fought this type of accountability for almost two decades. The George W. Bush administration, under then-Labor Secretary Elaine Chao, first pushed through reforms requiring unions to give more detailed disclosure of their finances. Those rules helped the Office of Labor Management Standards uncover fraud, resulting in 929 convictions, and recovering more than $93 million on behalf of union members. Hilda Solis, the Obama administration’s first labor secretary, rolled those rules back. She took the position that requiring less disclosure somehow helped union transparency. Now current labor secretary Eugene Scalia is attempting to restore accountability.
More transparency is needed. To cite just one example, former United Auto Workers (UAW) President Gary Jones pleaded guilty earlier this year to conspiracy to embezzle union funds and racketeering. The charges grew out of a federal investigation into a scheme going back to by UAW officials and Fiat-Chrysler executives. The scheme used a worker training center jointly managed by the union and company as a conduit for bribing union leaders for better terms during contract negotiations. The probe has resulted in other top former UAW officials either pleading guilty to fraud or are being investigated for embezzlement.
Would the DOL’s proposed changes have caught these shenanigans earlier? Maybe. In any event, more disclosure is always better. The current rules make it too easy for unions to obscure where the money goes. For example LM-2s have, a single category to report spending on “political activities and lobbying,” despite “lobbying” having a specific legal definition and “political activities” being a vaguely defined, catch-all term.
When a union lobbies a government, that generally affects workplace laws and regulations and thus can be said to represent worker interests. But political spending can be pretty much anything. The DOL proposal notes, “If a union spends $1,000,000 on lobbying and political activities, the $1,000,000 could be perceived or characterized by the union as monies well spent on representing members. The union might not be able to make that argument, however, if it spent $50,000 on lobbying and $950,000 on political activity.” Unions are not required to disclose how much is spent on travel, food, accommodations, and entrainment for officers, either.
The current forms don’t even require unions to clarify exactly how many paying members they have. Unions instead often report the number of workers it claims its collective bargaining contract obligates it to represent. However, not all of those may be dues-paying members, if, for example, the state has a right to work law that allows workers to opt out of membership or if the union simply inflates its estimation of who is covered by the contract.
All of this is common-sense stuff that ought to already be disclosed. If unions truly are organizations by and for their members, they should have no problem sharing this information with those workers.