In some recent audits and unofficial public statements EBSA (Employee benefits Security Administration officials have advanced a strict application of the ERISA Section 406(b)(3) provision prohibiting a fiduciary from receiving any consideration for his or her own personal account from any party dealing with a plan in connection with a transaction involving plan assets. Under this stricter application, any gift or entertainment by a current or prospective service provider for a multiemployer plan for which the recipient serves as a trustee, was deemed by EBSA to be prohibited. Apparently EBSA deemed the trustee to be receiving the gift or entertainment as a result of his or her position as a trustee to persuade the trustee regarding the affected service provider. It has been recognized for sometime that substantial amounts for entertainment or gifts to a plan fiduciary by a service provider could run afoul of the ERISA Section 406(b)(3) prohibition and in fact, there have been published cases to that effect. What appears to be developing now is a zero tolerance application of this prohibition by extending the prohibition to any item of value regardless of whether, based on the facts and circumstances, the amount is likely sufficient to persuade a fiduciary in a transaction involving plan assets. Items with a value less than the de minimis amount for LM-30 and LM-10 reporting would be prohibited under the zero tolerance application.
Many commentators on the subject of service provider entertainment have previously suggested that service providers for a plan can pay expenses for trustees which could be properly paid by the multiemployer plan such as a reasonable meal in conjunction with a Trustees' meeting. It is unclear whether the zero tolerance application extends to payments by service providers of expenses properly payable by the plan. It is also unclear what level of enforcement will be sanctioned by the EBSA for small gifts or entertainment amounts. What is clear is that some EBSA examiners have demanded that the trustees repay the amount of any meal or entertainment provided by a service provider involved plus 20% of that amount as a civil penalty. It is currently uncertain whether such a demand will be the subject of an enforcement action where the trustee refuses to reimburse the amount involved.
While the enforcement initiative appears to be focused on multiemployer plans, the rationale cited by the EBSA offices in applying the zero tolerance application would extend to any fiduciary of a plan covered by ERISA. Another thing that appears clear is that unlike the LM-30 and LM-10 reporting which is directed at Union Trustees, the zero tolerance application of ERISA section 406(b)(3) applies to all fiduciaries. Furthermore, a process that has assisted EBSA in identifying items of value provided to a trustee is the information furnished on the LM-30 and LM-10 forms.
Showing posts with label LM-30. Show all posts
Showing posts with label LM-30. Show all posts
Monday, August 20, 2007
Monday, July 16, 2007
DOL Finalizes LM-30 Rules
The U.S. Department of Labor has finalized the rules for disclosure form LM-30. This form requires officers and employees of labor organizations to report specified financial transactions and payments received to effect public disclosure of any possible conflicts between their personal financial interests and their duty to the labor union and its members. This rule clarifies the Form LM-30 and its instructions by explaining key terms and providing examples of the financial matters that must be reported, eliminates or modifies administrative exceptions in the old Form LM-30 that impeded the full disclosure of financial matters that constitute conflicts, or potential conflicts, of interest, and improves the usability of the reports by union members and the public.
The final regulations change the longstanding de minimis exception by adopting a quantitative standard of $250 as the amount above which a report is required and $20 as the amount above which payments or benefits must be counted when calculating whether the union official’s $250 reporting threshold has been met. The rule also includes a limited exclusion for widely attended gatherings, allowing union officials to attend two such gatherings without incurring a reporting obligation provided the employer or business paying for the gathering spent $125 or less per attendee per gathering. The rules are effective August 16, 2007.
The final regulations change the longstanding de minimis exception by adopting a quantitative standard of $250 as the amount above which a report is required and $20 as the amount above which payments or benefits must be counted when calculating whether the union official’s $250 reporting threshold has been met. The rule also includes a limited exclusion for widely attended gatherings, allowing union officials to attend two such gatherings without incurring a reporting obligation provided the employer or business paying for the gathering spent $125 or less per attendee per gathering. The rules are effective August 16, 2007.
Friday, March 10, 2006
New Grace Period for Filing LM-10s
> >
>
>
> The Labor Department's Office of Labor-Management Standards
>announced March 7 that many employers will have extra time to file LM-10
>forms disclosing payments and gifts made to unions and their officers and
>employees.
> OLMS said employers whose fiscal year ends Dec. 31 will have until May 15 to file fiscal 2005 LM-10s. Normally, LM-10s must be filed 90 days after the
>end of an employer's fiscal year; thus, organizations whose fiscal year
>ends Dec. 31 normally would have to file LM-10s by March 31.
>
> A separate March 7 advisory OLMS included an updated list of
>frequently asked questions regarding the LM-10, including who must file it
>and what must be disclosed.
>
> Under the Labor-Management Reporting and Disclosure Act, employers
>must report any payments and loans made to unions and union officials, as
>well as payments to employees designed to persuade them regarding their
>bargaining and representation rights, and payments to labor relations
>consultants.
>
> In announcing the grace period, OLMS said it received many inquiries
>following its last update of the frequently asked questions in November
>2005. The new guidance is
>designed to address some of the questions raised, but the Labor Department
>acknowledged that employers utilizing the new guidance would have only a
>short period of time to incorporate the answers prior to the normal March
>31 deadline. Thus, while the department does not have the authority to
>extend statutory deadlines, OLMS said it would use its discretion and not
>take any enforcement measures against employers with fiscal years ending
>Dec. 31 as long as they file by May 15.
>
> The November guidance from OLMS also said that as an incentive to
>get employers to file LM-10s for the first time, organizations filing their
>fiscal 2005 forms on time would not have to file delinquent forms for such
>years. Under the new extension, employers with fiscal years ending Dec. 31
>can file their LM-10s for the first time by May 15 and not have to file
>back LM-10s, the department said.
>
>
> Clarification of Who Is 'Employer.'
>
> The new list of frequently asked questions includes new guidance on
>when businesses are considered employers for LM-10 purposes. For example,
>it clarifies that any person acting directly or indirectly as an agent of
>an employer is covered. Thus, an individual hired by a financial services
>firm to generate new business and who provides a union official with season
>tickets to sporting events would have to file an LM-10, even if that
>individual does not employ anyone.
> In addition, the guidance now states that outside attorneys retained
>by unions "will in most, if not all, cases" have to file LM-10s. A law firm
>providing representation to an employer for collective bargaining purposes
>also would have to disclose the value of lunches provided to union
>officials during bargaining, subject to the $250 annual de minimis
>limitation. However, sole proprietors generally are not employers for LM-10
>purposes, according to the guidance.
>
> The guidance also specifies that certain payments from employers to
>unions and union officials are not reportable if the union reimburses the
>employer for those payments. Thus, a law firm that provides a meal during a
>meeting to prepare for collective bargaining would not have to report the
>value of that meal if the food costs are billed to the union, the
>department said. If one employer reimburses another for a reportable
>payment, the entity responsible for the final cost must file the LM-10, it
>added.
>
> The department added language to the guidance making it clear that
>employers must disclose otherwise reportable payments to union employees
>who earn $10,000 or less per year, even though such employees do not have
>to be mentioned by name on LM-2 financial disclosure reports for unions.
>The guidance also clarified that employers do not have to report payments
>to individuals who are officers or employees of unions composed entirely of
>state, county, or municipal employees and thus not covered by the LMRDA.
>
> OLMS also introduced new exemptions for reporting payments and gifts
>to union officials associated with widely attended gatherings, which the
>department defined as events that many people attend, including a
>substantial number with no union connection. Employers that sponsor such an
>event and spend $20 or less per attendee do not have to report such gifts,
>nor do they have to track such payments. In addition, an employer can
>sponsor up to two widely held events per year and spend up to $125 per
>participant without reporting or tracking such expenses.
>
> The $125 exemption also applies to union officials. They can attend
>up to two events not costing more than $125 each without reporting the
>benefit on LM-30s, which are the corresponding forms filed by union
>officers and employees. In addition, such payments would not count toward
>the de minimis threshold for LM-30 purposes; thus, if a union official
>attended two employer-sponsored events that cost $120 each and also
>received a reportable payment of $50, he or she would still not have to
>file an LM-30 because of de minimis rules.
>
> However, OLMS cautioned that if an employer does not know at the
>beginning of its fiscal year that it will hold no more than two such
>events, it should keep records of its expenses and attendee lists.
>
> OLMS added language to its LM-10 guidance specifying how such forms
>are different from LM-30s. For example, employers filing LM-10s must
>disclose payments to unions officers, agents, shop stewards, and other
>representatives, while union officers and employees must file LM-30s if
>they--or a spouse or minor child--receive a reportable payment. In
>addition, employers filing LM-10s must disclose any payment to any union
>employee. Meanwhile, a union employee who is a member of the clerical staff
>would not have to report the receipt of such a payment on an LM-30.
>
> As for past-due forms, the guidance said that in order to comply
>with the department's grace period offer, employers were required to file
>an LM-10 for fiscal 2005. Now, however, employers can take advantage of the
>grace period even if they did not make any reportable payments for fiscal
>2005. Rather than filing a blank form, employers should maintain records
>demonstrating that they identified no reportable interest after making a
>good-faith effort to track such payments, according to OLMS.
>
> The new guidance is available on the Web at
>http://www.dol.gov/esa/regs/compliance/olms/lm10_advisory.htm.
>
>
>
> >
>
>
>_____________________________________________________________________
>>
>
>
> The Labor Department's Office of Labor-Management Standards
>announced March 7 that many employers will have extra time to file LM-10
>forms disclosing payments and gifts made to unions and their officers and
>employees.
> OLMS said employers whose fiscal year ends Dec. 31 will have until May 15 to file fiscal 2005 LM-10s. Normally, LM-10s must be filed 90 days after the
>end of an employer's fiscal year; thus, organizations whose fiscal year
>ends Dec. 31 normally would have to file LM-10s by March 31.
>
> A separate March 7 advisory OLMS included an updated list of
>frequently asked questions regarding the LM-10, including who must file it
>and what must be disclosed.
>
> Under the Labor-Management Reporting and Disclosure Act, employers
>must report any payments and loans made to unions and union officials, as
>well as payments to employees designed to persuade them regarding their
>bargaining and representation rights, and payments to labor relations
>consultants.
>
> In announcing the grace period, OLMS said it received many inquiries
>following its last update of the frequently asked questions in November
>2005. The new guidance is
>designed to address some of the questions raised, but the Labor Department
>acknowledged that employers utilizing the new guidance would have only a
>short period of time to incorporate the answers prior to the normal March
>31 deadline. Thus, while the department does not have the authority to
>extend statutory deadlines, OLMS said it would use its discretion and not
>take any enforcement measures against employers with fiscal years ending
>Dec. 31 as long as they file by May 15.
>
> The November guidance from OLMS also said that as an incentive to
>get employers to file LM-10s for the first time, organizations filing their
>fiscal 2005 forms on time would not have to file delinquent forms for such
>years. Under the new extension, employers with fiscal years ending Dec. 31
>can file their LM-10s for the first time by May 15 and not have to file
>back LM-10s, the department said.
>
>
> Clarification of Who Is 'Employer.'
>
> The new list of frequently asked questions includes new guidance on
>when businesses are considered employers for LM-10 purposes. For example,
>it clarifies that any person acting directly or indirectly as an agent of
>an employer is covered. Thus, an individual hired by a financial services
>firm to generate new business and who provides a union official with season
>tickets to sporting events would have to file an LM-10, even if that
>individual does not employ anyone.
> In addition, the guidance now states that outside attorneys retained
>by unions "will in most, if not all, cases" have to file LM-10s. A law firm
>providing representation to an employer for collective bargaining purposes
>also would have to disclose the value of lunches provided to union
>officials during bargaining, subject to the $250 annual de minimis
>limitation. However, sole proprietors generally are not employers for LM-10
>purposes, according to the guidance.
>
> The guidance also specifies that certain payments from employers to
>unions and union officials are not reportable if the union reimburses the
>employer for those payments. Thus, a law firm that provides a meal during a
>meeting to prepare for collective bargaining would not have to report the
>value of that meal if the food costs are billed to the union, the
>department said. If one employer reimburses another for a reportable
>payment, the entity responsible for the final cost must file the LM-10, it
>added.
>
> The department added language to the guidance making it clear that
>employers must disclose otherwise reportable payments to union employees
>who earn $10,000 or less per year, even though such employees do not have
>to be mentioned by name on LM-2 financial disclosure reports for unions.
>The guidance also clarified that employers do not have to report payments
>to individuals who are officers or employees of unions composed entirely of
>state, county, or municipal employees and thus not covered by the LMRDA.
>
> OLMS also introduced new exemptions for reporting payments and gifts
>to union officials associated with widely attended gatherings, which the
>department defined as events that many people attend, including a
>substantial number with no union connection. Employers that sponsor such an
>event and spend $20 or less per attendee do not have to report such gifts,
>nor do they have to track such payments. In addition, an employer can
>sponsor up to two widely held events per year and spend up to $125 per
>participant without reporting or tracking such expenses.
>
> The $125 exemption also applies to union officials. They can attend
>up to two events not costing more than $125 each without reporting the
>benefit on LM-30s, which are the corresponding forms filed by union
>officers and employees. In addition, such payments would not count toward
>the de minimis threshold for LM-30 purposes; thus, if a union official
>attended two employer-sponsored events that cost $120 each and also
>received a reportable payment of $50, he or she would still not have to
>file an LM-30 because of de minimis rules.
>
> However, OLMS cautioned that if an employer does not know at the
>beginning of its fiscal year that it will hold no more than two such
>events, it should keep records of its expenses and attendee lists.
>
> OLMS added language to its LM-10 guidance specifying how such forms
>are different from LM-30s. For example, employers filing LM-10s must
>disclose payments to unions officers, agents, shop stewards, and other
>representatives, while union officers and employees must file LM-30s if
>they--or a spouse or minor child--receive a reportable payment. In
>addition, employers filing LM-10s must disclose any payment to any union
>employee. Meanwhile, a union employee who is a member of the clerical staff
>would not have to report the receipt of such a payment on an LM-30.
>
> As for past-due forms, the guidance said that in order to comply
>with the department's grace period offer, employers were required to file
>an LM-10 for fiscal 2005. Now, however, employers can take advantage of the
>grace period even if they did not make any reportable payments for fiscal
>2005. Rather than filing a blank form, employers should maintain records
>demonstrating that they identified no reportable interest after making a
>good-faith effort to track such payments, according to OLMS.
>
> The new guidance is available on the Web at
>http://www.dol.gov/esa/regs/compliance/olms/lm10_advisory.htm.
>
>
>
> >
>
>
>_____________________________________________________________________
>>
Wednesday, November 09, 2005
Revision to DeMinimus Standard for LM-30's
FORM LM-30 ADVISORY - DE MINIMIS EXEMPTION INCREASED
The Form LM-30 (Union Officer and Emolovee Report) informs filers that they “do not have to report any sporadic or occasional gifts, gratuities, or loans of insubstantial value, given under circumstances and terms unrelated to the [filer’s] status in a labor organization.” (Form LM-30 Instructions, General Instructions.) This test has been referred to as a “de minimis exemption.” If the test is satisfied, the filer need not report the gift or gratuity on Form LM-30. If the test is not satisfied, the gift or gratuity must be reported on Form LM-30.
Guidance previously issued by the Office of Labor-Management Standards (OLMS) on “de minimis” situations included examples of an employer picking up a lunch tab or an employer giving a union officer a Christmas gift of nominal value. A car was given as an example of a gift that would require a report. In March 2005, in order to provide more guidance on this issue, OLMS revised its LMRDA Interpretative Manual to quantify as “de minimis” an item with a value of $25 or less.
Between March and October 2005, because of a grace period, Form LM-30 reporting increased dramatically compared to historical practice. Based on a review of these reports, and considering comments from union officers and employees that the de minimis threshold was too low, OLMS has concluded that setting the reporting threshold at $25 places an unnecessary reporting burden on union officials without a corresponding benefit to union members or the public. As an interim measure, pending issuance of a final rule establishing revised Form LM-30 reporting obligations, OLMS has determined that gifts, gratuities or loans with a value of $250 or less received by a union officer or employee will be considered insubstantial for the purposes of Form LM-30 reporting. However, if the aggregate value of multiple gifts or loans from a single employer to a single union officer or employee exceeds $250 in a fiscal year, the transaction will no longer be treated as “de minimis,” and the aggregate value of the transactions will be reportable. Gifts or loans from multiple employees of one employer should be treated as originating from a single employer when calculating whether the $250 threshold has been exceeded.
Although offers of numerous small gratuities would appear to be outside the de minimis exemption because they are not provided on an “infrequent or sporadic” basis, the Department will not seek to enforce the reporting requirement, so long as the aggregate value of these gratuities does not exceed $250 per union officer or employee. For example, a union officer or employee who receives coffee, provided by an employer, at bi-weekly meetings over the course of a year would not be required to report this gratuity on a Form LM-30.
In a Notice of Proposed Rulemaking, published in the Federal Register on August 29, 2005, concerning the Form LM-30, the Department has sought comment on this standard and the dollar threshold. (70 Fed. Reg. 51166, 51175.) The comment period has been extended to January 26, 2006. (70 Fed. Reg. 61,400.) The Department encourages comments from all members of the public on all aspects of this rulemaking.
Last Updated: 11/07/05
The Form LM-30 (Union Officer and Emolovee Report) informs filers that they “do not have to report any sporadic or occasional gifts, gratuities, or loans of insubstantial value, given under circumstances and terms unrelated to the [filer’s] status in a labor organization.” (Form LM-30 Instructions, General Instructions.) This test has been referred to as a “de minimis exemption.” If the test is satisfied, the filer need not report the gift or gratuity on Form LM-30. If the test is not satisfied, the gift or gratuity must be reported on Form LM-30.
Guidance previously issued by the Office of Labor-Management Standards (OLMS) on “de minimis” situations included examples of an employer picking up a lunch tab or an employer giving a union officer a Christmas gift of nominal value. A car was given as an example of a gift that would require a report. In March 2005, in order to provide more guidance on this issue, OLMS revised its LMRDA Interpretative Manual to quantify as “de minimis” an item with a value of $25 or less.
Between March and October 2005, because of a grace period, Form LM-30 reporting increased dramatically compared to historical practice. Based on a review of these reports, and considering comments from union officers and employees that the de minimis threshold was too low, OLMS has concluded that setting the reporting threshold at $25 places an unnecessary reporting burden on union officials without a corresponding benefit to union members or the public. As an interim measure, pending issuance of a final rule establishing revised Form LM-30 reporting obligations, OLMS has determined that gifts, gratuities or loans with a value of $250 or less received by a union officer or employee will be considered insubstantial for the purposes of Form LM-30 reporting. However, if the aggregate value of multiple gifts or loans from a single employer to a single union officer or employee exceeds $250 in a fiscal year, the transaction will no longer be treated as “de minimis,” and the aggregate value of the transactions will be reportable. Gifts or loans from multiple employees of one employer should be treated as originating from a single employer when calculating whether the $250 threshold has been exceeded.
Although offers of numerous small gratuities would appear to be outside the de minimis exemption because they are not provided on an “infrequent or sporadic” basis, the Department will not seek to enforce the reporting requirement, so long as the aggregate value of these gratuities does not exceed $250 per union officer or employee. For example, a union officer or employee who receives coffee, provided by an employer, at bi-weekly meetings over the course of a year would not be required to report this gratuity on a Form LM-30.
In a Notice of Proposed Rulemaking, published in the Federal Register on August 29, 2005, concerning the Form LM-30, the Department has sought comment on this standard and the dollar threshold. (70 Fed. Reg. 51166, 51175.) The comment period has been extended to January 26, 2006. (70 Fed. Reg. 61,400.) The Department encourages comments from all members of the public on all aspects of this rulemaking.
Last Updated: 11/07/05
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