The suggested language below builds on the requirements of the LMRDA and its implementing regulations, adding in details in areas where experience has shown that further disclosures are warranted. The itemization threshold has also been placed at $1,000 as this will capture more transactions and thus provide for a greater level of transparency.

The category of ”representational activities” as found on the Form LM-2 is divided into two categories in the suggested language below, one category for contract administration and one category for organizational activities. Similarly, the category “political activities and lobbying,” as found on the Form LM-2, is divided into two categories: one for political activity and one for lobbying.

Additionally, the identifying information for parties that conduct certain transactions with the union is enhanced, such as by requiring disclosure of people or entities that purchase assets from the union. This is done to ensure that transactions are done at arm’s length and that no unjust enrichment, such as a sweetheart deal, occurs.

The language below also incorporates the LMRDA’s requirement of an initial report, to be filed within 90 days of the union becoming subject to the new requirements. The union must file copies of documents, such as its constitution, bylaws, and other information.

The model legislation is below.

AN ACT

To provide for the reporting and disclosure of certain financial transactions and administrative practices of labor organizations, and for other purposes.

Declaration of Findings, Purposes, and Policy

The Legislature finds that employees represented by private sector labor organizations have been well-served by the disclosure requirements prescribed by the federal Labor-Management Reporting and Disclosure Act and its implementing regulations, and that enactment of legislation providing financial transparency for public employees of this state will bring that same benefit to such employees.

The Legislature further finds and declares that the enactment of this Act is necessary to eliminate or prevent improper practices on the part of labor organizations.

Definitions

Sec. 1. As used in this act:

(a) “Person” includes one or more individuals or labor organizations.

(b) “Public Employer” means any employer of public employees which are defined by
MCL § 423.201(1)(e).

(c) “Labor Organization” means a labor organization of any kind, any agency, or public employee representation committee, group, association, or plan so engaged in which public employees participate and which exists for the purpose, in whole or in part, of dealing with public employers concerning grievances, labor disputes, wages, rates of pay, hours, or other terms or conditions of employment, and includes any other type of labor organization which is exempt from taxation under Section 501(c)(5) of the Internal Revenue Code, excluding those labor organizations which are covered by the Labor-Management Reporting and Disclosure Act of 1959.

(d) “Officer” means any constitutional officer, any person authorized to perform the functions of president, vice president, secretary, treasurer, or other executive functions of a labor organization, and any member of its executive board or similar governing body.

(e) “Member” when used in reference to a labor organization, includes any person who has fulfilled the requirements for membership in such organization, and who neither has voluntarily withdrawn from membership nor has been expelled or suspended from membership after appropriate proceedings consistent with lawful provisions of the constitution and bylaws of such organization.

(f) “Commission” means the employment relations commission referred to in
MCL § 423.201(1)(b).

Initial Report

Sec. 2. (a) Every labor organization shall, within ninety days of becoming subject to this Act, adopt a constitution and bylaws and shall file a copy thereof with the Commission, together with a report, signed by its president and secretary or corresponding principal officers, containing the following information:

(1) the name of the labor organization, its mailing address, and any other address at which it maintains its principal office or at which it keeps the records referred to in this Act;

(2) the name and title of each of its officers;

(3) the initiation fee or fees required from a new or transferred member and fees for work permits required by the reporting labor organization;

(4) the regular dues or fees or other periodic payments required to remain a member of the reporting labor organization; and

(5) detailed statements, or references to specific provisions of documents filed under this subsection which contain such statements, showing the provisions made and procedures followed with respect to each of the following:

(i) qualifications for or restrictions on membership,

(ii) levying of assessments,

(iii) participation in insurance or other benefit plans,

(iv) authorization for disbursement of funds of the labor organization,

(v) audit of financial transactions of the labor organization,

(vi) the calling of regular and special meetings,

(vii) the selection of officers and stewards and of any representatives to other bodies composed of labor organizations' representatives, with a specific statement of the manner in which each officer was elected, appointed, or otherwise selected,

(viii) discipline or removal of officers or agents for breaches of their trust,

(ix) imposition of fines, suspensions, and expulsions of members, including the grounds for such action and any provision made for notice, hearing, judgment on the evidence, and appeal procedures,

(x) authorization for bargaining demands,

(xi) ratification of contract terms,

(xii) authorization for strikes, and

(xiv) issuance of work permits.

Any change in the information required by this subsection shall be reported to the Commission at the time the reporting labor organization files with the Commission the annual financial report required by Sec. 2(b).

Annual Report

(b) Every labor organization shall, within ninety days after the end of its fiscal year, file annually with the Commission a financial report signed by its president and treasurer or corresponding principal officers containing the following information in such detail as may be necessary accurately to disclose its financial condition and operations for its preceding fiscal year:

(1) assets at the beginning and end of the fiscal year, including a schedule disclosing on separate lines the totals for:

(i) cash;

(ii) accounts receivable, including a detailed schedule which discloses:

(A) the name of the entity or individual’s name;

(B) the total amount receivable from that entity or individual;

(C) any amounts that are 90-180 days past due;

(D) any amounts that are over 180 days past due; and

(E) any amounts that have been liquidated;

(iii) loans receivable, including a detailed schedule which discloses:

(A) the name of the person or entity receiving the loan;

(B) the purpose for the loan;

(C) the security received for the loan:

(D) the terms of repayment;

(E) the amount of loans outstanding from the person or entity at the start of the period;

(F) the amount of loans made to the person or entity during the period;

(G) the amount of cash repayments made during the period;

(H) the amounts of repayments made by means other than cash; and

(I) the amount of loans outstanding for each person or entity at the end of the reporting period;

(iv) U.S. Treasury securities,

(v) investments, including a detailed schedule which discloses:

(A) the name and amount of each marketable security which has a book value of $5,000 or more and which exceeds 5% of the total of all marketable securities;

(B) the name and amount of each other investment which has a book value of $5,000 or more and which exceeds 5% of the total of all other investments;

(vi) fixed assets, including a detailed schedule which discloses:

(A) location, cost, book value, and value of land;

(B) location, cost, total depreciation or amount expensed, book value and value of buildings;

(C) cost, total depreciation or amount expensed, book value and value of automobiles and other vehicles;

(D) cost, total depreciation or amount expensed, book value and value of office furniture and equipment;

(E) cost, total depreciation or amount expensed, book value and value of other fixed assets;

(vii) other assets; including a detailed schedule which discloses the description and value of the asset;

(2) liabilities at the beginning and end of the fiscal year, including a schedule disclosing on separate lines the totals for:

(i) accounts payable, including a detailed schedule which discloses the name of the entity or individual, the total amount payable, amounts that are 90-180 days past due, amounts that are more than 180 days past due, and liquidated amounts;

(ii) loans payable, including a detailed schedule which discloses on separate lines for each loan,

(A) the source of loans payable at any time during the reporting period;

(B) amount owed at the beginning of the reporting period;

(C) loans obtained during the reporting period;

(D) cash repayments made during the reporting period;

(E) repayments made by other than cash during the reporting period;

(F) total owed at the end of the reporting period;

(iii) mortgages payable, including a detailed schedule which discloses on separate lines for each mortgage,

(A) the source of mortgages payable at any time during the reporting period;

(B) amount owed at the beginning of the reporting period;

(C) mortgages obtained during the reporting period;

(D) cash repayments made during the reporting period;

(E) repayments made by other than cash during the reporting period;

(F) total owed at the end of the reporting period; and

(iv) other liabilities, and additionally a separate detailed schedule which discloses on separate lines a description of each individual liability and the amount owed at the end of the reporting period;

(3) receipts of any kind and the sources thereof, including a schedule disclosing on separate lines the totals for:

(i) dues and agency fees, and additionally a separate, detailed schedule which discloses on separate lines any amounts received from employers through a checkoff arrangement, and dues transmitted to the organization by a parent body or other affiliate;

(ii) per capita tax, and additionally a separate, detailed schedule which discloses on separate lines capita tax portion of dues received directly by the reporting labor organization from members of affiliates, per capita tax received from subordinates, either directly or through intermediaries, and the per capita tax portion of dues received through a checkoff arrangement whereby local dues are remitted directly to an intermediate or parent body by employers;

(iii) fees, fines, assessments, and work permits,

(iv) sale of supplies,

(v) interest,

(vi) dividends,

(vii) rents,

(viii) sale of investments and fixed assets, including a detailed schedule which discloses,

(A) a description of the investment, including the address if the investment is land or buildings,

(B) cost of the investment,

(C) book value of the investment,

(D) gross sales price, and

(E) amount obtained;

(ix) loans obtained,

(x) repayments of loans made,

(xi) receipts on behalf of affiliates for transmittal to them, and

(xii) receipts on behalf of members for disbursement on their behalf,

(4) salary, allowances, and other direct or indirect disbursements (including reimbursed expenses), benefits, and an estimation of the amount of time spent in the functional expense categories of contract administration, organizing activities, political activities, lobbying, contributions, gifts and grants, general overhead, and union administration for each officer and also to each employee who, during such fiscal year, received more than $10,000 in the aggregate from such labor organization and any other labor organization affiliated with it or with which it is affiliated, or which is affiliated with the same national or international labor organization;

(5) direct and indirect loans made to any officer, public employee, or member, which aggregated more than $250 during the fiscal year, together with a statement of the purpose, security, if any, and arrangements for repayment;

(6) direct and indirect loans to any business enterprise, together with a statement of the purpose, security, if any, and arrangements for repayment;

(7) for purchases of investments and fixed assets a detailed schedule which discloses,

(i) a description of the investment, including the address if the investment is land or buildings,

(ii) cost of the investment,

(iii) book value of the investment,

(iv) gross sales price, and

(v) amount paid;

(8) for the categories that follow, an itemization schedule that discloses the name and address, purpose, date, amount, and type or classification for each payer or payee for whom there is (1) an individual receipt or disbursement of $1,000 or more, or (2) total receipts or disbursements that aggregate to $1,000 or more during the reporting period;

(i) other receipts;

(ii) contract administration;

(iii) organizing activities

(iv) political activities;

(v) lobbying;

(vi) contributions, gifts, and grants;

(vii) general overhead;

(viii) union administration;

(ix) benefits; and

(9) other disbursements made by it including the purposes thereof, all in such categories as the Commission may prescribe.

Additional Information Available to Labor Organization Members

Sec. 3. Every labor organization required to submit a report under this Act shall make available the information required to be contained in such report to all of its members, and every such labor organization and its officers shall be under a duty enforceable at the suit of any member of such organization in any court of competent jurisdiction, to permit such member for just cause to examine any books, records, and accounts necessary to verify such report. The court in such action may, in its discretion, in addition to any judgment awarded to the plaintiff or plaintiffs, allow a reasonable attorney's fee to be paid by the defendant, and costs of the action.

Reports Made Public Information

Sec. 4. The contents of the reports and documents filed with the Commission pursuant to this Act shall be public information and shall be posted on the Commission’s public website. The Commission shall develop a system for electronically filing all reports required to be filed by this Act. Labor organizations shall use this system for filing all reports required under this Act, unless granted a temporary hardship exemption by the Commission. The Commission shall compile and make available on its website the raw data from all reports that are filed under this Act, and shall make that data searchable on the Commission’s website. The Commission may publish any information and data which it obtains pursuant to the provisions of this Act. The Commission may use the information and data for statistical and research purposes, and compile and publish such studies, analyses, reports, and surveys based thereon as it may deem appropriate.

Retention of Records

Sec. 5. Every labor organization required to file any report under this Act shall maintain records on the matters required to be reported which will provide in sufficient detail the necessary basic information and data from which the documents filed with the Commission may be verified, explained or clarified, and checked for accuracy and completeness, and shall include vouchers, worksheets, receipts, and applicable resolutions, and shall keep such records available for examination for a period of not less than five years after the filing of the documents based on the information which they contain.

Effective Date

Sec. 6. This Act shall become effective sixty days after enactment.

Rules and Regulations

Sec. 7. The Commission shall have authority to issue, amend, and rescind rules and regulations prescribing the form and publication of reports required to be filed under this Act and such other reasonable rules and regulations (including rules prescribing reports concerning trusts in which a labor organization is interested) as it may find necessary to prevent the circumvention or evasion of such reporting requirements. In exercising it power under this section, the Commission shall prescribe by general rule simplified reports for labor organizations with receipts of less than $250,000 in the fiscal year, but the Commission may revoke such provision for simplified forms of any labor organization if it determines, after such investigation as it deems proper and due notice and opportunity for a hearing, that the purposes of this section would be served thereby.

Criminal Provisions

Sec. 8. (a) Any person who willfully violates this Act shall be fined not more than $10,000 or imprisoned for not more than one year, or both.

(b) Any person who makes a false statement or representation of a material fact, knowing it to be false, or who knowingly fails to disclose a material fact, in any document, report, or other information required under the provisions of this Act shall be fined not more than $10,000 or imprisoned for not more than one year, or both.

(c) Any person who willfully makes a false entry in or willfully conceals, withholds, or destroys any books, records, reports, or statements required to be kept by any provision of this Act shall be fined not more than $10,000 or imprisoned for not more than one year, or both.

(d) Each individual required to sign reports under this Act shall be personally responsible for the filing of such reports and for any statement contained therein which he knows to be false.

Civil Monetary Penalty for Failure to File Reports

Sec. 9. Any labor organization required to file a report under this Act that fails to file the report within 90 days after the end of its fiscal year shall be fined $100 per day for such failure to file. A civil fine recovered under this section shall be submitted to the state treasurer for deposit in the general fund of this state.

Civil Enforcement

Sec. 10. Whenever it shall appear that any person has violated or is about to violate any of the provisions of this Act, the Commission may bring, in any court of competent jurisdiction, a civil action for such relief (including injunctions) as may be appropriate.

Investigations

Sec. 11. The Commission shall have power when it believes it necessary in order to determine whether any person has violated or is about to violate any provision of this Act to make an investigation and in connection therewith it may enter such places and inspect such records and accounts and question such persons as it may deem necessary to determine the facts relative thereto. The Commission may report to interested persons or officials concerning the facts required to be shown in any report required by this Act and concerning the reasons for failure or refusal to file such a report or any other matter which it deems to be appropriate as a result of such an investigation.

Severability Provision

Sec. 12. If any provision of this Act, or the application of such provision to any person or circumstances, shall be held invalid, the remainder of this Act or the application of such provision to persons or circumstances other than those as to which it is held invalid, shall not be affected thereby.