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Department of Labor Proposes to Bring Back Form T-1

On May 30, the Office of Labor-Management Standards (OLMS) published a Notice of Proposed Rulemaking (NPRM) to establish the Form T-1 – Labor Organization Annual Financial Reports for Trusts in Which a Labor Organization is Interested.  This will require annual reporting on financial information pertinent to “trusts in which a labor organization is interested” (“section 3(l) trusts”).  The details are included at  www.govinfo.gov/content/pkg/FR-2019-05-30/pdf/2019-10971.pdf.  The OLMS proposes to require labor organizations with total annual receipts of $250,000 or more to file a Form T-1, under certain circumstances, for each section 3(l) trust, as defined by 29 U.S.C. § 402(l) of the LMRDA.

The Department of Labor first proposed the Form T-1 in 2002, as part of proposal to change the Form LM-2.  It was not until 2008 the final rule was issued on the Form T-1.  In 2010, the Department of Labor ruling was rescinded in its entirety.

Under the proposal, the Department requires all labor organizations with annual receipts of $250,000 or more to file the Form T-1, in certain circumstances.  The Form T-1 reporting requirements are triggered where the labor organization, during the reporting period, either alone or in combination with other labor organizations, (1) selects or appoints the majority of the members of the trust’s governing board or (2) contributes more than 50 percent of the trust’s receipts.  The proposed Form T-1 has the same basic template as the Form LM-2 and includes the following:

  • 14 questions that identify the Trust
  • Six yes/no questions on matters such as loss of funds or loans to officers or employees
  • Schedule on assets, liabilities, receipts, and disbursements
  • Schedule of receipts and disbursements greater than $10,000, both individually and in the aggregate by entity or individual (similar if format to current Form LM-2)
  • Schedule of disbursements greater than $10,000 paid to officers or employees (similar format to current Form LM-2 Schedules 11 and 12)

The proposal does have certain exemptions to reporting and such as the following:

  • Trusts organized as Political Action Committees (that are current with reporting obligations)
  • Trusts that meet the definition of “labor organization” and file Forms LM-2, 3 or 4
  • Trusts that are part of an employee benefit plan and file Form 5500 under ERISA
  • Partial exemption for a Trust where an audit is performed under a prescribed method (and is public info)
  • Trusts that are considered “subsidiary organizations” and reported on the Form LM-2

The OLMS is receiving comments due by July 29, 2019.  Electronic comments must be submitted through http://www.regulations.gov.