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Federal Register / Vol. 86, No. 248 / Thursday, December 30, 2021 / Rules and Regulations labor unions, the Department has determined that the trust reporting required under the rule is overly inclusive and is not necessary to prevent the circumvention and evasion of the Title II reporting requirements.
DATES: This rule is effective on January 31, 2022.
FOR FURTHER INFORMATION CONTACT:
Karen Torre, Chief of the Division of Interpretations and Regulations, Office of Labor-Management Standards, U.S.
Department of Labor, 200 Constitution Avenue NW, Room N5609, Washington, DC 20210, 202 6930123
this is not a toll-free number, 800
8778339 TTY/TDD, OLMSPublic@dol.gov.
SUPPLEMENTARY INFORMATION:
I. Statutory Authority The Departments statutory authority is set forth in section 208 of the LMRDA, 29 U.S.C. 438. Section 208 of the LMRDA provides that the Secretary of Labor shall have authority to issue, amend, and rescind rules and regulations prescribing the form and publication of reports required to be filed under this title and such other reasonable rules and regulations including rules prescribing reports concerning trusts in which a labor organization is interested as he may find necessary to prevent the circumvention or evasion of such reporting requirements.
The Secretary has delegated his authority under the LMRDA to the Director of the Office of LaborManagement Standards OLMS and permitted re-delegation of such authority. See Secretarys Order 03
2012 Oct. 19, 2012, published at 77 FR
69375 Nov. 16, 2012.

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II. Background A. Introduction In enacting the LMRDA in 1959, Congress sought to protect the rights and interests of employees, labor organizations and the public generally as they relate to the activities of labor organizations, employers and their labor relations consultants, and the officers, employees, and representatives of these entities. The LMRDAs various reporting provisions for labor organizations, their officers, and their employees are designed to empower labor organization members by providing them the means to maintain democratic control over their labor organizations and ensure a proper accounting of labor organization funds. Labor organization members are better able to monitor their labor organizations financial affairs and to make informed choices about the
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leadership of their labor organization and its direction when labor organizations disclose financial information as required by the LMRDA.
By reviewing a labor organizations financial reports, a member may ascertain the labor organizations priorities and whether they are in accord with the members own priorities and those of fellow members. At the same time, this transparency promotes both the labor organizations own interests as a democratic institution and the interests of the public and the government. Furthermore, the LMRDAs reporting and disclosure provisions, together with the fiduciary duty provision, 29 U.S.C. 501, which directly regulates the primary conduct of labor organization officials, operate to safeguard a labor organizations funds from depletion by improper or illegal means. While the vast majority of union officers and employees do their work diligently and without incident, unfortunately civil and criminal violations sometimes occur and, when they do, the union is the victim. Timely and complete reporting helps detect instances of labor organization officers, employees, or others embezzling or otherwise making improper use of such funds and obtain relief for the benefit of the labor organization and its members when such improper use occurs.
B. The LMRDAs Reporting and Other Requirements The LMRDA was the direct outgrowth of a Congressional investigation conducted by the Select Committee on Improper Activities in the Labor or Management Field, commonly known as the McClellan Committee, chaired by Senator John McClellan of Arkansas. In 1957, the committee began a highly publicized investigation of labor organization racketeering and corruption; and its findings of financial abuse, mismanagement of labor organization funds, and unethical conduct provided much of the impetus for enactment of the LMRDAs remedial provisions. See generally Benjamin Aaron, The Labor-Management Reporting and Disclosure Act of 1959, 73 HARV. L. REV. 851, 85155 1960.
During the investigation, the committee uncovered a host of improper financial arrangements between officials of several international and local labor organizations and employers and labor consultants aligned with the employers whose employees were represented by the labor organizations in question or might be organized by them. Similar arrangements were also found to exist between labor organization officials and the companies that handled matters
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relating to the administration of labor organization benefit funds. See generally Interim Report of the Select Committee on Improper Activities in the Labor or Management Field, S. Report No. 851417 1957; see also William J.
Isaacson, Employee Welfare and Benefit Plans: Regulation and Protection of Employee Rights, 59 COLUM. L. REV.
96 1959.
Financial reporting and disclosure from labor organizations were conceived as partial remedies for these improper practices. As noted in a key Senate Report on the legislation, disclosure would discourage questionable practices The searchlight of publicity is a strong deterrent., aid labor organization governance labor organizations will be able to better regulate their own affairs because members may vote out of office any individual whose personal financial interests conflict with his duties to members, facilitate legal action by members against officers who violate their duty of loyalty to the members, and create a record the reports will furnish a sound factual basis for further action in the event that other legislation is required. S. Rep.
No. 187 1959 16 reprinted in 1 NLRB
LEGISLATIVE HISTORY OF THE
LABOR-MANAGEMENT REPORTING
AND DISCLOSURE ACT OF 1959, 412.
The Department has developed several forms for implementing the LMRDAs financial reporting requirements. The annual reports required by section 201b of the Act, 29
U.S.C. 431b Form LM2, Form LM3, and Form LM4, contain information about a labor organizations assets;
liabilities; receipts; disbursements;
loans to officers, employees, and business enterprises; payments to each officer; and payments to each employee of the labor organization paid more than $10,000 during the fiscal year. The reporting detail required of labor organizations, as the Secretary has established by rule, varies depending on the amount of the labor organizations annual receipts. 29 CFR 403.4.
The labor organizations president and treasurer or its corresponding officers are personally responsible for filing the reports and for any statement in the reports known by them to be false. 29 CFR 403.6. These officers are also responsible for maintaining records in sufficient detail to verify, explain, or clarify the accuracy and completeness of the reports for not less than five years after the filing of the forms. 29 CFR
403.7. A labor organization shall make available to all its members the information required to be contained in such reports and shall . . . permit such members for just cause to
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