After nearly 50 years of lax enforcement of the financial disclosure provisions of the Labor Management Reporting and Disclosure Act, the Employment Standards Administration of the Labor Department has issued new and controversial interpretations of the disclosure rules that render reportable expenditures by employers, financial institutions, and professional service providers which have long been treated as excludable.

Under the new rules, every private sector business or organization within the United States that has one or more employees and that does business with a labor organization or a trust in which a labor organization has an interest, has a duty to keep a record of payments to union officials and operatives, including union appointed trustees.   Disclosing these expenditures in an LM-10 report is mandatory if expenditures per union recipient exceeds $250 in a fiscal year.

Here are a few examples of routine expenditures that are now reportable if the annual aggregate exceeds the per capita threshold:

  • Meals, travel and entertainment connected with trustee meetings and conferences paid for by investment advisers or financial institutions
  • Tickets to sporting events or golf outings paid for by professional service firms
  • Pro-rata expenditures associated with more than two gala events per year attended by union agents and representatives and hosted by media and entertainment employers

If your business is affected by these new rules and your fiscal year ended December 31, you have until May 15, 2006 to file your 2005 LM-10 report.  Your report must be signed by your President and the Treasurer, each of whom must declare under penalty of perjury that the they have examined the relevant books and records and that the information reported is true, correct and complete to the best of their knowledge and belief.  Records must be maintained for five years.  Failure to comply may result in fines and penalties and possible criminal prosecution for filing false statements.