Olms interpretative Manual

APPROVEDSURETY

535.001 LMRDA,SECTION502(a)

…Such surety company shall be a corporate surety which holds a grant of authority fromthe Secretary of the Treasury under the Act of July 30, 1947 (6 U.S.C. 6-13), as an acceptablesurety on Federal bonds: Provided, That when in the opinion of the Secretary a labor organizationhasmadeotherbondingarrangementswhichwould providetheprotectionrequiredbythis sectionat comparable cost or less, he may exempt such labor organization from placing a bond through asuretycompany holdingsuch grant ofauthority.

535.002SEE 29CFR453.20AND 453.26.

535.004

Criteriaforexemptionhavenotyetbeenpromulgated.Allinquiriesrelating toexemptionsshouldbe forwarded tothe NationalOffice.

535.005SURETIES—AUTHORIZEDBYTREASURYDEPARTMENT

SeeTreasuryDepartmentCircular570forlist ofcorporatesuretiesholdinggrantsofauthorityfromthe Secretary ofthe Treasury.

NOTE:
A copy of Treasury Department Circular 570, containing a list of companies holding certificatesof authority as acceptable sureties on Federal bonds is included in the “Regulations” section at theend of thisManual.

See Manual Entry 290.001 ffRe:SuretyCompanyReporting.

*535.010SELF-INSURANCEPROHIBITED

Aunion isprecluded fromeither depositingits ownfunds witha surety topay 1ossesorindemnifying a surety for losses sustained under a bond. Irrespective of the method used, self-insurance of union funds, either in whole or in part, fails to comply with the requirements ofsection 502of the LMRDA.

Section 502(a) requires that every officer, agent, shop steward, etc., of any labororganization “who handles funds or other property thereof shall be bonded...” (Emphasissupplied). Both this language and its legislative background make it clear that self-insurancearrangements are precluded, in whole or in part. This construction is directly supported by thestatementoftheHouseLabor Committeewithrespecttotheexemptionauthoritycontainedin the1965 amendments to the LMRDA wherein it was stated that it was not the intention of theCommittee, in giving discretionary authority to the Secretary, to sanction self-insurance on thepart of labor organizations. If the exemption authority does not extend to self-insurance, then afortiorithese arrangements are not available to unionsundersection 502.