back to Federal Labor Law Topical Outline: Internal union regulation

Accountability of Union Officers and Agents, Titles III, II and V


  1. 29 USC Sec. 461-66.
  2. 29 CFR Sec. 402(h).
  3. Union Democracy, pp. 127-38.
  4. 29 USC Sec. 462
  5. See Industrial Workers, AIW v. Local 589, 693 F.2d 666, 111 LRRM 3106 (7th Cir. 1982).
  6. See Higgins v. Harden, 644 F.2d 1348, 107 LRRM 2438 (9th Cir. 1981).
  7. E.g., Local 48, Carpernters v. Carpenters, 920 F.2d 1047 (1st Cir. 1990).
  8. Carpenters v. Brown, 343 F.2d 872, 59 LRRM 2140 (10th Cir. 1965).
  9. See, e.g., Vestal v. Hoffa, 452 F.2d 706, 78 LRRM 2996 (6th Cir. 1971).
  10. Donatello v. McKenzie, 826 F.Supp. ___ (S.D. N.Y. 1993), but also see Painters, Local 1983 v. Painters, 598 F.Supp. 1056 (D.N.J. 1984) where the court determined this section was not intended for internationals to use for collecting dues.
  11. Letter Carriers v. Sombrotto, 449 F.2d 915, 78 LRRM 2550 (2nd Cir. 1971).
  12. See Benda v. Machinists, 584 F.2d 308, 79 LRRM 2935 (9th Cir. 1971).
  13. Hodgson v. Machinists, Local 50, 79 LRRM 2687 (S.D. Cal. 1971).
  14. Sawyers v. Machinists, 279 F.Supp. 747, 67 LRRM 2375 (E.D. Mo. 1967).
  15. Teamsters, Local 406 v. Crane, 848 F.2d 709, 128 LRRM 2544 (6th Cir. 1988).
  16. Compare Carpenters v. Brown, supra note 8, with Gordon v. Laborers, 490 F.2d 133, 84 LRRM 2952 (10th Cir. 1973).
  17. Individual Rights, p. 188.
  18. The forms, due dates and other requirements are contained in the DOL regulations. See 29 CFR Sec 408.2-12.
  19. 29 USC Sec. 461(c) and (e).
  20. See Moody v. Longshoremen, ILA, 112 LRRM 2338 (N.D. Ohio ____), aff'g mem. 708 F.2d 726, 112 LRRM 2369 (_ Cir. ____).
  21. 29 USC Sec. 464(c).
  22. See Baily v. Dixon, 314 F.Supp. 452, 74 LRRM 2712 (E.D. La. 1970).
  23. See, e.g., Hotel & Restaurant Employees v. Rollison, 615 F.2d 788, 104 LRRM 3038 (9th Cir. 1980).
  24. See, Jolly v. Gorman, 428 F.2d 960, 74 LRRM 2706 (5th Cir. 1970).
  25. The hearing's validity will be determined by the trusteeship's purpose. Compare Jolly v. Gorman, supra note 24, where the trusteeship was imposed to end an illegal strike to Mine Workers, Local 13410 v. Mine Workers, 475 F.2d 906, 82 LRRM 2206(D.C. Cir. 1973) where a trusteeship was imposed to halt disaffiliation.
  26. See, e.g., Service Employees, Local 554 v. Service Employees, 441 F.2d 1115, 77 LRRM 2458 (5th Cir. 1971).
  27. Dol regulations covering union informational reporting are found in 29 CFR Sec. 402.1—13, annual reports are covered in Sec 403.1—11.
  28. Union Democracy, p. 161.
  29. 29 USC Sec. 431(a) "adoption and filing of constitution and bylaws; contents of report," which states:
    (1) the name of the labor organization, its mailing address, and any other addresses at which it maintains its principal office or at which it keeps the reocrds referred to in this subchapter;
    (2) the name and title of each of its officers;
    (3) the initiation fee or fees required from a new or transfered member and fees for work permits required by the reporting lanor organization;
    (4) the regular dues or fees or other periodic paymnets required to remian 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 provision made and procedures followed with respect to each of the following:
    (A) qualifications for or restrictions on membership,
    (B)levying of assessments,
    (C) participation in insurance or other benefit plans,
    (D) authorization for disbursement of funds of the labor organization,
    (E) audit of financial transactions of the labor organization,
    (F) the calling of regular and special meetings,
    (G) the selection of officers and stewards and of any representatives to other bodies composed of labor organizations'representives, with a specific statement of the manner in which each officer was elected, appointed, or otherwise selected,
    (H) discipline or removal of officers or agents for breaches of their trust,
    (I) imposition of infes, suspensions, and expulsions of members, including the grounds for such actions and any provisions made for notice, hearing, judgement on the evidence, and appeal procedures,
    (J) authorization for bargaining demands,
    (K) ratification of contract terms,
    (L) authorization for strikes, and
    (M) issuance of work permits.
    29 USC Sec 431(B), "Annual financial report; filing; contents", states in pertinent part:
    Every labor organziation shall file ... a report signed by its president and treasurer ... to disclose its financial condition and operations for its preceding fiscal year —
    (1) assets and liabilities at the beginning and end of the fiscal year;
    (2) receipts of nay kind and the sources thereof;
    (3) salary, allowances, and other direct or indirect disbursements (including reimbursed expenses) to each officer ... who ... received more than $10,000 in the aggregate from such lanor organization ...
    (4) direct or indirect loans made to any officer, employee, or member, which aggregated more than $250 ...
    (5) direct or indirect loans to any business enterprise ...
  30. 29 USC Sec. 431(c) states what must be made available to the member and the courses of action to be taken when denied such information.
  31. See 29 CFR Sec. 403.4(b) for stipulations required for waiving the financial report.
  32. 29 CFR Sec. 403.5
  33. E.g., Teamsters, Fruit & Vegetable Packers, Local 760 v. Morely, 378 F.2d 738, 65 LRRM 2424 (9th Cir. 1967).
  34. E.g., Antal v. Mine Workers, District 5, 451 F.2d 1187, 78 LRRM 2837 (3rd Cir. 1971).
  35. See 29 CFR Sec. 405.1—11 for DOL regulations.
  36. 29 USC Sec. 433(e).
  37. At one time a split income theory was in practice, whereby portions of a supervisor's pay were reportable if they acted to interfere, coerce or restrain unionization activities. This practice ended in 1982.
  38. 29 USC Sec. 433(a)(4).
  39. 29 USC Sec. 433(b).
  40. 29 USC Sec. 433(c).
  41. 29 USC Sec. 501(a).
  42. See the 2nd Circuit's opinion in Gurton v. Aarons, 339 F.2d 371, 58 LRRM 2080 (2nd Cir. 1964).
  43. THe 3rd, 8th and 9th Circuits follow the broad interpretation of Sec. 501. The D.C. Circuit has vacillated between the two views, while four other courts have refused to adopt one view or the other.
  44. See e.g., Monzillo v. Biller, 735 F.2d 1456, 116 LRRM 2587 (D.C. Cir. 1984).
  45. See Teas v. Teamsters, Local 413, 504 F.Supp. 12 (S.D. Ohio 1978).
  46. Quoting Morrissey v. Curran, 650 F.2d at 1274, 107 LRRM at 2238 (@nd Cir. 1981).
  47. 29 USC Sec. 501(a).
  48. See Filippini v. Austin, 106 FRD 425 (C.D. Cal. 1985).
  49. 29 USC Sec. 501(c).
  50. See United States v. Sullivan, 498 F.2d 146, 86 LRRM 2869 (1st Cir. 1974).
  51. See 29 CFR Sec. 453.8.
  52. 29 CFR Sec. 453.12.
  53. 29 USC Sec. 503.
  54. The Supreme Court decision in United Staes v. Brown, 381 U.S. 437, 59 LRRM 2353 (1964) overturned the ruling that made membership in the Communist Party a crime.
  55. See 29 USC Sec. 504(a) for the list. Crimes of a similar nature will also serve to disqualify an individaul from holding office, see e.g., Postma v. Teamsters, Local 294, 337 F.2d 609, 57 LRRM 2298 (2nd Cir. 1964).

Title III — Trusteeships1

A trusteeship, as defined in Sec. 402(h), states:
"'Trusteeship' means any receivership, trusteeship, or other method of supervision or control whereby a labor organization suspends the autonomy otherwise available to a subordinate body under its constitution or bylaws." 2

Although not universal, certain national and international unions' misuse of trusteeships was a contributing factor in the formulation of Title III. Areas of abuse included imposing trusteeships for no legitimate reason, keeping the trusteeship in place for an inordinate time, imposing the trusteeship against the rank and file's wishes, being used as a means of appropriating local's treasuries and as a means of manipulating votes cast in convention elections.3

When drafted, Title III was designed to also recognize the need and legitimacy of trusteeships to correct instances of corruption or mismanagement. The title covers the legitimate reasons for imposing trusteeships. It also includes the administrative requirements for when trusteeships are instituted. Title III includes actions that will result in violations, the enforcement/recourse mechanisms that are available and the presumption of validity once a trusteeship has been put into place. This final statement allows for a parent body to self-police itself while imposing limits on the length of time it has to accomplish its goals.

  • Purposes for establishing trusteeships
    Parent bodies are required by Sec 462 to have the ability to impose trusteeships as part of their constitution and bylaws. This section further imposes restrictions on trusteeships by limiting the permissible purposes for such action. Parent bodies may impose trusteeships "for the purposes of correcting corruption or financial malpractice, assuring the performance of collective bargaining agreements or other duties of a bargaining representative, restoring democratic procedures, or otherwise carrying out the legitimate objects of such labor organization." 4
    • Constitution/bylaw stipulation
      Although a parent body may institute action under a name other than "trusteeship, " those actions can be construed nonetheless as a trusteeship under Title III. The determining factors are how much autonomy the local maintains and whether it was an attempt by the parent to avoid Title III.
      • When the parent body appoints the local's officers, this action is considered a trusteeship.5
      • When officers' authority to take part in the collective bargaining process is rescinded, this is considered as imposing a trusteeship.6
      • The use of mergers, revocations and reorganizations are scrutinized for motive to determine if Title III evasion was intended.7
    • The courts have held that unless the parent body constitution or bylaws expressly authorizes trusteeships, then the action is not permitted.8 However, unions are given deference in the interpretation of their constitution and bylaws.9
    • Corruption/financial malpractice
      When theft or embezzlement of union funds occurs, trusteeships can be imposed in order to stabilize the local's governance and insure that appropriate measures are taken. Concerning financial malpractice, trusteeships are most often imposed when locals fail to pay capita taxes.10
    • Collective bargaining performance
      Trusteeships can be ordered to ensure collective bargaining agreements are complied with. This can result in a trusteeship being imposed to halt a wildcat strike.11 It may also be used when a local refuses to adhere to a bargaining structure, e.g., when the international is the bargaining agent and the local attempts to negotiate its own agreement.12
    • Democratic procedures
      Situations that will lawfully result in a trusteeship to restore democratic procedures often cover election violations (Title IV),13 but can also cover irregularities in conducting local meetings14 to the inability of the local to operate because of political infighting.15
    • "Other"
      To carry out the legitimate objectives of a labor organization has been interpreted to include imposing a trusteeship because the local was unable to function autonomously, mismanagement by the local officers and when dealing with dissension. The last issue, dissension, has resulted in contradictory findings by some courts.16
      The end result between allowing for the democratic wishes of the locals and the parent bodies' desire to quell dissension is that if the local breaks the contract formed when they affiliate with the parent body, the parent body can impose a trusteeship. If however, the local's actions are in accordance with the applicable constitution and bylaws, disaffiliation is allowed.17
  • Administrative requirements
    When a parent body imposes a trusteeship over a subordinate body, there is paperwork to fill out.18 The main report is the documenting of the trusteeship, informing the DOL of its existence and providing the beginning of the eighteen month timeline. To be included in this report is the subordinate body's financial status. With notification of the trusteeship's existence and financial status, two abuses can be avoided — the use of trusteeship votes to manipulate convention elections and the raiding of treasuries
    The penalty for violating this section is a $10,000 fine and/or one year in prison with the added responsibility of liability for those individuals signing the above required forms/reports.19
  • Enforcement/recourse
    Sec 464(a) allows for tow avenues of enforcement for violations of Title III. The members may utilize the DOL, which will investigate first before filing suit in the district court where the parent body is located or where the trusteeship is being carried out. The drawbacks to this are the time involved and the damage that could be done, while the benefit is that the DOL services are free and the complaint is kept anonymous. The member may also bring private suit, which can speed up the process by seeking injunctive relief. Title III complainants are not required to exhaust internal mechanisms before a member can initiate suit against the parent body.
    For conflict involving areas covered by both the NLRA and the LMRDA, the courts have found that Title III issues can be dealt with separately from NLRA issues.20
  • Presumption of validity
    A trusteeship:

    "... shall be presumed valid for a period of eighteen months from the date of its establishment and shall not be subject to attack ... except upon clear and convincing proof that the trusteeship was not established or maintained in good faith ... " 21 This allows unions to make good faith efforts at achieving the trusteeship's objectives without being subject to judicial review.22
  • Fair hearing
    Sec 464(c) does not expressly require that a fair hearing before an executive board be held to authorize or ratify a trusteeship, but the courts have interpreted overwhelmingly that such a hearing is necessary.23
    • The definition of fair hearing equates to basic due process.24
    • A hearing can occur after a trusteeship has been imposed.25
    • Many courts have found that for a trusteeship to be instituted without a hearing, an emergency must exist, with a hearing to be held within a reasonable amount of time.26

Title II — Reporting Requirements of Labor Organizations, its Officers and Employees, and Employers and their Agents

  • Union reports27
    The majority of Title II covers the financial reporting of labor organizations, its officers and employees and employers and their agents. The intent was that the reporting requirement would provide the DOL with much of the information it might need to audit a labor organization. Audits could be used to ensure above board practices by the union. Although the impact has been questioned as to its effectiveness, the end result has been better maintenance28 of financial records overall. Title II also has an informational component that requires unions to adopt a constitution and bylaws. These documents are then filed with the DOL and must contain certain information.29 The information and the detail required by the statute were intended to be for the union member's benefit. By having access to information and financial data, the member can be informed and make intelligent decisions concerning the affairs of the union.30
    • If a local has no assets, liabilities, receipts or disbursements, it will not be required to file a financial report.31
    • If a local ceases to exist through merger, consolidation or otherwise, it must file a report.32
    • When a member requests information, the union is obligated to provide it. The request can be oral,33 the member does not have to state a reason and the member can have professional assistance in inspecting records.34
  • Union Officers and Employees Reports. The purpose of this section is to augment Sec 302 of the Taft-Hartley Act. Sec 302 prohibits payment by an employer or their agent to a union or union official, which is or seeks to represent the employer's employee outside certain areas — principally, bona fide compensation for doing their normal job duties. Sec 432 of the LMRDA expands the areas where reporting must occur. Reporting must include non money payments (from stocks and bonds to "things of value ") from employers to themselves, their spouses or children.
  • Employers and their agents35
    Employers are also required by Title II to file various reports. Whether an employer is required to report depends on whether the activity is "reportable. " The activities that can trigger a reportable incident are broken down into the following areas; payments and expenditures, persuader activities, information gathering and consultant's reports. Exempted from the category of reportable activity is advice, which differs from persuasion.
    • If payments are made to employees or their committees designed to persuade others from expressing their organizing rights, these payments require reporting.
    • If however, it is disclosed what the reason for the payments was, then reporting may not be required.
    • If the object of the payment is to interfere, restrain or coerce unionization efforts or collect information concerning a labor dispute, those payments need to be reported.
    • Employers are not required to report payment to "any regular officer, supervisor, or employee of an employer as compensation for service " 36 in their regular duties.37
    • Persuader activities are those direct and indirect actions whose goal is to persuade employees not to exercise their organizing rights.38
    • Supplying information concerning a labor dispute is reportable,39 doing so for a judicial, administrative or arbitration proceeding are not.40
    • Consultants are responsible for filing a report each time they agree to provide information or persuader services. They must also file an annual financial report.
    • When only advice is given to employers or their representatives by consultants or attorneys, this activity does not require reporting.

Title V — Fiduciary responsibility of union officers

  • Title V regulates those union officers in positions of trust. The title also covers exculpatory or "get out of jail free " provisions that may be included in an organization's constitution or being contemplated by a governing board or meeting. As with the benefits that arise from responsibilities, there are also penalties for failure to uphold ones duties and for blatant disregard for the position, including embezzlement. Title V covers the bonding requirement for union officers dealing with fiduciary matters. It also limits the amount of money that can be loaned to a union officer or employee and what fines can be paid by the union on behalf of an officer or employee. Title V concludes with a restriction on who olds positions with fiduciary responsibilities.
  • Officers' duties
    Section 501(a) begins by stating that union "officers, agents, shop stewards, and other representatives" 41 occupy positions of trust and thus carry the burden of responsibility to carry certain fiduciary duties. The question of whether fiduciary duties include pensions and welfare trusts is preempted by the Employee Retirement Income Security Act. The specific duties of union officers are to
      1. Hold the union's money and property solely for the union's benefit;
      2. To manage, invest and expend union funds and holdings in accordance with the union's constitution and bylaws;
      3. To refrain from acting against or for another party acting against the union;
      4. To avoid holding or acquiring interests that conflict with the union's interests; and
      5. To account for any personal profit the individual may have acquired performing their union duties.
    • The courts are divided whether the above duties are inclusive of this section's scope. The minority view42 holds that Sec. 501 is limited to the fiduciary duties. The majority view43 is that this section encompasses all official duties of those covered by Sec. 501(a).
    • The duty to comply with the union's constitution and bylaws has been found to be true regardless of whether the individual benefits from the non adherence. How transgressions are determined often rely on how the constitution is interpreted. Unions are generally given deference in how they interpret their constitution as long as it is reasonable and does not conflict with the LMRDA.44
    • The duty to refrain from acting against the union covers actions such as embezzlement,45 transferring funds to a rival union or aiding a parent organization's illegal activities.
    • The duty to avoid conflicts of interest is dealt with under the banner of standard of care. The general rule of thumb is that if the expenditures made by an officer do not personally benefit him/her, they require only that authorization deemed necessary by the constitution or bylaws. If however, there is a personal benefit to the expenditure, it must be determined if this benefit falls outside "a range of reasonableness." 46
    • Exculpatory or "get out of jail free" clauses have been found to be against public policy and thus illegal.47
  • Breach of fiduciary duties
    To bring civil suit as permitted by Sec. 501(b), the member must first make a demand on the union "to sue to recover damages or secure an accounting or other appropriate relief. " If the union fails to do so in a reasonable period of time, it has been determined that the member has done what she/he can through the union mechanisms and thus can pursue their individual action. If the union sues concerning a breach of fiduciary duty, a member cannot also sue48). To sue for breach of fiduciary duties, the person bringing suit must be a member of the union and have leave of the court. Leave of the court is permission of the court to bring suit. Having exhausted internal efforts and having good cause can satisfy this requirement. The remedies for a fiduciary breach are monetary, injunctive and recovery of attorney fees.
  • Embezzlement of assets
    Embezzlement of union funds or properties was made a federal crime underthe LMRDA.49 A charge of "conversion" will also be found against someone who is the recipient of said property.50 In order for a charge of embezzlement to hold, intent must be shown. Defenses of authorization or benefit to the union are generally not permitted in a conversion case. The penalties for ignoring this section are a fine no greater than $10,000 and/or imprisonment of up to five years.
  • Bonding of officers
    The union officers, agents, shop stewards and other representatives listed in Sec. 501(a) who handle union funds or property51 must be bonded. The bond required for those individuals is an honesty bond, one that would cover acts of fraud or dishonesty.52 The amount of bonding necessary to fulfill this section's mission is ten percent of total funds handled by the individual and his predecessor (when applicable) in the previous fiscal year, not to exceed $500,000. The bonding company must be recognized by the DOL as capable of carrying out the duties of a surety.
  • Financial Transactions between Unions and Officers/Employees53
    • Loans
      Direct or indirect loans from the union to either a union officer or employee can total no more than $2,000. This amount is not applicable to loans made from a pension or similar trust.
    • Payment of fines
      It is also illegal for the union to pay any fines that an officer may be levied for violating the LMRDA.
    • The penalties for violation of either of the two above are a maximum fine of $5,000 and/or a maximum of one years imprisonment.
  • Prohibition concerning union office holding
    Sec. 504 states that members of the Communist Party54 and individuals convicted of various crimes55 are disqualified from holding union office. The period of disqualification lasts for thirteen years from the date of conviction if they do not serve sentence or from the date of release if they do serve time. If an individual has been paroled, they must wait out a five year period. The penalties for ignoring this section are a fine no greater than $10,000 and/or imprisonment of up to five years.