New Labor Rule Would Improve Union Financial Accountability

Labor policy experts from the Mackinac Center for Public Policy last week filed public comments with the U.S. Department of Labor in support of its new proposed rule to provide better disclosure of union financial information to rank-and-file union members and the general public. The draft labor department rule contains many recommendations previously reported in a December 2001 Mackinac Center study entitled, “The Michigan Union Accountability Act: A Step Toward Accountability and Democracy in Labor Organizations,” available at

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While labor union financial disclosure has been a legal requirement since 1959, the information requested by law has been insufficient as far as what is necessary to adequately inform union members as to how their dues are being spent by labor leaders. Unions often report expenditures in the aggregate, which obscures the details union members need in order to determine whether their dues have been spent wrongfully. The financial information currently required by law provides little insight into the various functional areas where union money is spent, such as collective bargaining, politics, lobbying or employee grievances.

The revised labor department rule would remedy these problems by requiring the largest unions to itemize all disbursements over $200,000 and to categorize all expenses by function so union members can easily see where their money is spent. Additionally, unions would be required to report all receipts and disbursements by certain trust funds or other organizations in which they have a reportable interest. Finally, unions would have to file their disclosure forms electronically, posting them on the Department of Labor web site, to enhance the forms’ availability to union workers.

Labor experts at the Mackinac Center support most of the new rules, and in addition recommend: 1) that union disclosures be subject to independent audits to ensure the accuracy of the information provided; 2) that the definition of union “political activities” be clarified and that potential loopholes be closed; and 3) that unions be required to post their financial disclosures on bulletin boards in union halls, on employee bulletin boards at individual workplaces, and on individual union websites.

The Mackinac Center recommendations are aimed at supporting democratic principles and functions, and ensuring fiscal integrity and financial transparency for all union dues payers.

Robert P. Hunter, the Mackinac Center’s director of labor policy, said the new labor department rules “… are long overdue. These worker-friendly provisions will go a long way toward answering the number-one complaint heard from Michigan union members about their unions: that their leaders stonewall them about how their dues money is spent. The rules also expedite the exercise of employee Beck rights, which allow union members to withhold that portion of their dues that pay for non-collective-bargaining- related union expenses. By enabling workers to acquire accurate financial information in a non-threatening way, these changes would help workers make an informed choice about paying only those dues which fund direct workplace representation services.”

The full Mackinac Center’s Comments to the U.S. Department of Labor can be found at