Olms interpretative Manual

TYPEOFBOND:HONESTY

533.01LMRDA, SECTION502(a)

. . . to provide protection against loss by reason of acts of fraud or dishonesty on his part directlyorthrough connivance with others. . .

533.002SEE 29CFR453.10AND 453.12

FORMOFBOND:INDIVIDUALORSCHEDULEDESIGNATIONOFINSURED

534.001LMRDA, SECTION502(a)

... Suchbonds shallbeindividualor scheduleinform, andshall havea corporatesurety companyas surety thereon . . .

534.002SEE 29 CFR453.18, 453.19.

The statute does not require individual bonds, although such bonds are, of course,permissible under its provisions.The statute also permits position schedule bonds.This lattertype of bond normally does not raise problems concerning the coverage of successors to bondedpersonnel.

(Revised:Dec. 2016)

534.005IN GENERAL

The statute does not require individual bonds, although such bonds are, of course,permissibleunderitsprovisions.Thestatutealsopermitspositionschedule bonds.Thislattertypeof bond normally does not raise problems concerning the coverage of successors to bondedpersonnel.

534.010CONGRESSIONALINTENT

The statute requires that the bonds be “individual or schedule in form.”Leadingrepresentativesofthebondingindustry informedtheDepartmentthatthere aretwokindsof bondsincurrent usagewhich are “schedulein form”– name schedulebonds andpositionschedule

bonds.Congressprobablyknewthisbeforeitagreedonlanguagefortheprovisionanditdidnotqualify or restrict the word “schedule” in any way.It seems reasonable and proper that anyschedulebond which meetsthe currently acceptedusage of thistermshould be acceptable.
Consequently,an individualbond, apositionschedule bond,ora nameschedule bond would meetthestatutoryrequirement, “individual or schedulein form.”

*534.020AGGREGATEORMULTIPLEPENALTYBLANKETBONDS AREPERMISSIBLE

The bonding provisions (section 502) of the LMRDA were amended in certain respects in1965.The legislative record made in amending the provisions to authorize honesty bonds forlabor organizations indicates that Congress was concerned not only with the additional costs forunion bonds associated with “faithful discharge of duty” coverage, but also with the higherpremiums on multiple penalty as opposed to aggregate penalty bonds.The House Report on thebill to amend section 502 (H.R. Rep. No. 182, 89^thCong. 1^stSess. 3) reflects Congress’ desire toremoveanydistinctionbetweenbondingrequiredbytheLMRDAand bythe WPPDA(Welfare&Pension Plans Disclosure Act, repealed in 1974 when ERISA enacted) with regard to these costfactors. In the light of this expression of Congressional intent, it is the opinion of the Solicitor ofLaborthat section 502shouldno longer be interpretedas requiring multiple penaltybonds.

Accordingly,a bondwritten tocover allpersons requiredbytheLMRDA tobe bondedisacceptableif it operateson eitheranaggregate or multiple penaltybasis.

(TechnicalRevisions:Dec. 2016)