Union Records Free of Labor Dept. Scrutiny

Some union watchdogs are complaining that labor is getting a free pass on its accounting rules after a federal judge delayed the implementation of new regulations that would demand tougher scrutiny of unions' financial records.

"This (ruling), in effect, has given the AFL-CIO and all these unions the green light to conduct their 2004 political campaigns without having to disclose any of it," said Stefan Gleason, executive director of the National Right to Work Foundation (search), a non-profit legal organization opposed to compulsory union membership.

The new rules, imposed by the Department of Labor late last year, aim to update accounting regulations for unions that make political expenditures not covered by the Federal Election Commission.

U.S. District Judge Gladys Kessler (search) ruled on Dec. 31 that the unions needed more time to put into place the new regulations. Kessler granted a one-year injunction requested by the AFL-CIO (search), one of the largest labor unions in the country, to give the union time to comply with the new "extensive and sophisticated" regulations, spurred by the Bush administration and given final approval in November.

Kessler is currently deliberating the merits of a larger lawsuit by the AFL-CIO to halt the changes altogether.

Gleason called the judge's ruling an opportunity for the unions to remain free from real financial scrutiny during an election year. But union officials allege the rules, which required that unions with an annual income of more than $250,000 follow stricter reporting requirements to make their expenditures more publicly transparent, were deliberately imposed to begin on Jan. 1, 2004, in order to burden labor with expensive new accounting systems and take money and focus away from union organizing, collective bargaining and the elections.

"The Bush administration's rules are craftily designed to weaken unions — the strongest advocates for American workers — as our nation prepares for the 2004 elections," said AFL-CIO President John Sweeney (search) in an October statement denouncing the proposed regulations, which would affect nearly 5,500 local, national and international unions.

"The secretary of labor has no idea what the cost to the unions can be," said AFL-CIO spokeswoman Deborah Greenfield. "We are not challenging her authority to require some amount of disclosure ... but the level of minutia is one of the things we are objecting to. What it leads to is volumes and volumes of paperwork, not true transparency."

Greenfield said accountants hired by the union found that the new rules could cost unions anywhere from $300,000 to $1.3 billion to get up and running, depending on the size of the organization.

Gleason said the new rules would have required electronic filing, and greater detail in the accounting of expenditures of more than $5,000. Aside from collective bargaining and organizing costs, filings include the millions of dollars unions spend each year on political activities, lobbying, issue advocacy and administrative overhead.

According to the Center for Responsive Politics (search), labor political action committees have so far given $15 million to candidates in the 2004 election cycle — 83 percent to Democrats, 17 percent to Republicans. That doesn't count soft money raised and spent for political organizing and issue advocacy.

Rep. John Boehner, R-Ohio, chairman of the House Education and Workforce Committee and a supporter of the new regulations, said he was disappointed the judge had postponed implementation.

"Obviously, this is an election year and an important year and another year without rank and file union members having this information," he said through spokesman Kevin Smith on Jan. 7.

But not all Republicans have chosen to support the administration's new rules. Rep. Phil English, R-Pa., who has long enjoyed the support of the steel unions, called the new regulations "draconian."

"I've always opposed extreme reporting requirements for business, so it only makes sense to stand against this new proposal aimed at unions," he said.

Aside from their annual filing obligations with the Office of Labor-Management, unions are also required to file detailed tax forms with the Internal Revenue Service and any political contributions with the Federal Election Commission.

The Department of Labor, which has argued that the new requirements are meant to help members track spending of their union dues, said the filing process has remain unchanged in 40 years, while unions have become bigger and their financial structures more complex so that they now "resemble modern corporations in their structure, scope and complexity."

The Labor Department cited recent examples of union corruption to argue for the new, "functional" reporting that requires extensive detail of big expenditures. It noted that the new requirements followed a lengthy process in which it received 35,000 public comments and made several compromises before the rule changes were made.

"We will continue to work to provide greater financial transparency for the rank-and-file union members of this country," said U.S. Assistant Secretary of Labor for Employment Standards Victoria Lipnic, shortly after Kessler's ruling.

Gleason said his group will continue to fight to ensure that the new requirements stay in place.  Kessler is expected to decide within the next few months on their merits.

"The problem is not that big labor plays politics, it's that big labor plays politics with other people's money," said Gleason. "People deserve to know where their money is actually going."