The Labor Management Reporting and Disclosure Act and Managing Local Funds!

The Labor Management Reporting and Disclosure Act’s (LMRDA’s) regulations are designed to protect the members and union funds. The financial reports provide transparency regarding the finances of the union; the Internal Revenue Service’s (IRS) reports maintain the union’s nonprofit status; elections maintain democracy; and the constitution facilitates the administration of the union and its funds. The LMRDA grants the Department of Labor discretion to interpret the law and apply its principles. A requirement of 501(c)(5) organizations is to maintain compliance with the (LMRDA). Sec. 502(a) of the LMRDA states:

“The officers, shop stewards and representatives of the union hold a position of trust to the union and its members. It is the duty of each such person to hold its money and property solely for the benefit of the union and its members, in accordance with the union’s constitution and bylaws.”

The Secretary-Treasurer’s Department provides virtual fiduciary training for local officers who are unable to attend fiduciary training at the Secretary-Treasurer workshops each year.

Bond coverage is required by (1) the Constitution, and (2) the LMRDA. Under the Labor Management Reporting and Disclosure Act (LMRDA), locals are required to have a bond limit of liability no less than 10 percent of the local’s liquid assets. It is strongly advised that locals obtain bond coverage at 100 percent of their liquid assets for any officer responsible for handling union funds. Again, to maintain compliance with the LMRDA Sec. 502(a) of the LMRDA states:

“Every officer, agent, shop steward, or other representative or employee of any labor organization (other than a labor organization whose property and annual financial receipts do not exceed $5,000 in value), or of trust in which a labor organization is interested, who handles funds or property thereof shall be bonded to provide protection against loss by reason of acts of fraud or dishonesty on his part directly or through connivance with others.”

Labor Organization Bond and Crime Policy Coverage

National APWU provides local affiliates with $5,000 of coverage for each local at no cost to the local. The Labor Organization Bond (LOB) covers the loss of money, securities, and other property which the insured shall sustain, to an amount not exceeding in the aggregate the amount stated in the bond, resulting directly from one or more fraudulent or dishonest acts committed by an employee acting alone or in collusion with others and protection for failure to faithfully discharge duties. The amount of bond coverage can be increased or decreased by requesting a bond change form from the Secretary- Treasurer’s Department.

The LOB was specifically written for unions to satisfy the requirements of the LMRDA, whereas the Crime Policy can be used for several types of entities. A bond is a guarantee to protect unions from financial loss arising from fraudulent or dishonest acts in the handling of funds or other property by officers and/or employees. Violations of the LMRDA bonding requirement may be punishable by fines up to $10,000 and imprisonment up to one year, or both.

As cyber technology becomes more sophisticated, and at an alarming rate, it is important to be proactive in protecting local assets from these types of losses. Implementing Commercial Crime Policy coverage would provide forgery or alteration and computer and funds transfer fraud coverages for the international and the locals/affiliates listed on the LOB.

Please contact the Secretary-Treasurer's Department if you need assistance with determining the amount of bond coverage.