THE LM 30

CARY KANE LLP

LARRY CARY, ESQ.

LMRDA REQUIRES REPORTS FROM . . . Unions

Union Officers

Employers

Labor Consultants

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 10

90 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 5th 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 5th 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 fineimprisonment of up to a yearor 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 LLPRepresenting workers, trade unions and benefit plans

1350 Broadway, Suite 815

New York, NY 10018

(212) 868-6300

Larry Cary

lcary@carykanelaw.com