Olms interpretative Manual

BENEFIT FROM BUSINESSWHICHDEALSWITHUNION

246.001LMRDA,SECTION202(a)(4)

. . . any stock, bond, security, or other interest, legal or equitable, which he or his spouse orminor child directly or indirectly held in, and any income or any other benefit with monetaryvalue (including reimbursed expenses) which he or his spouse or minor child directly orindirectly derived from, a business any part of which consists of buying from, or selling orleasingdirectlyorindirectlyto,or otherwisedealingwith suchlabor organization;...

246.005MEMBEROFPARTNERSHIPDEALINGWITHUNION

Aand Bare employees of an international union in a professional capacity and also haveinterests in a partnership which is under contract to render the same type of professional servicesto the union.The union has reported the persons concerned as employees who perform servicesother than those which are exclusively clerical or custodial in nature.If each of the personsreferred to is in fact an employee of the labor organization, section 202(a) (4) would beapplicable, since by virtue of his connection with a partnership which performs professionalservices pursuant to a contract with the labor organization, there is an “interest, legal orequitable,whichhe...directlyorindirectlyheldin ...a businessany partofwhichconsists of
…dealingwithsuchlabororganization.”Inaddition,suchpersonsnodoubtalsoderived
income and benefits with monetary value from the partnership which deals with their unionemployer.Insuch instance, theemployee isrequiredtofileareportwiththeOffice.

246.100DISPENSINGMACHINES

Where a business agent for a union makes a deal with the union and employer wherebydispensing machines are installed in the plant and the profits are split among the agent, the unionand the employer, the agent is required to report any profits which he derives from thetransactionundersection202(a)(4)and202(a)(5).

246.200INTERESTMAYBEASCREDITOR

Union Officer Aof a local union had a one-third ownership interest (worth $8,000) in aninsurance agency, a legal entity which is independent of the local and not a “subsidiaryorganization” thereof.Union Officer B, of the same local, was a creditor of the insurance agencybyvirtueofaloanof$10,000,secured bya5%interest bearing note, made to theagency in1959.During the years 1960 to 1962, while the note was still outstanding and interest paymentswere received by Officer Bin the amount of $500 per annum, the agency “wrote” the automobileinsurancepolicies for thelocal.

Section 202(a) (4) requires a report from a union officer who has an interest in an entitywhichdoesanybusinesswiththeunionofwhichheisanofficer.
Therefore, reports are required from both union officers.The language of section 202(a) (4)isbroad enoughto rendera distinctionbetweenacreditor orownerinterest“academic.”

246.250INCOMEFROMBUSINESSDEALINGWITHTRUST

A union officer or employee is required to report income he receives from a business any partof whose buying and selling activities are with a trust in which his labor organization isinterested.While this type of situation is not specifically covered in LMRDA, by 29 CFR 404.2,we are requiring union officers and employees to file reports as to their income or interest in abusiness, any of the activities of which are with the trust in which their labor organization isinterested.

246.300OFFICERSASWHOLESALER

When a local union establishes a gasoline station for the purpose of providing discounts forits members, and the president of the local union purchases wholesale gasoline with his ownmoney,whichhethensellstotheunionataprofittohimself, heis requiredundersection 202(a)

(4)of the LMRDAto file reportsonthesetransactionswiththeunion.

246.400GRATUITIESFROMHOTELWHERECONVENTIONHELD

Union officers who receive complimentary hotel rooms and other gratuities of substantialvalue from the hotel at which the union holds its convention are required to report pursuant tosection202(a)(4).

While the furnishing of complimentary rooms by hotels to officials of organizations whichhold conventions at their establishments is a common practice, reports under section 202(a)(4)nevertheless are required from the union officers so that the union members may be aware ofsubstantial gratuities received by their representatives by virtue of their position in the labororganization, and to disclose any possible conflict of interest situation between such officials andtheemployers which sellto or otherwisedealwiththeunion.
246.500“SUBSIDIARYORGANIZATION”ASBUSINESS

Where a labor organization has a “subsidiary organization” as defined in Article X of theInstructions for the Preparation of LM-2, and where the officers of the labor organizations arealso officers of the “subsidiary organization,” and where, further, there is full and completedisclosure of the activities of the “subsidiary organization” by the labor organization inaccordance with the special instructions for subsidiary organizations” in Article X, it will not benecessary for the officers of the labor organization to file union officer reports pursuant tosection 202(a) of the Act for the income, etc., received from the “subsidiary” since examinationof the LM-2 filed by the labor organization will disclose to the members and the public the fullincome, expense, and allowances received by the union officer from the labor organization itselfandits“subsidiaryorganization.”

(TechnicalRevisions:Dec.2016)

246.600INCOMESASEMPLOYEEOFINSURANCECOMPANY

A union officer, who is an employee of an insurance company from which the union welfarefund procures insurance, is required to report that money which he receives as an employee ofthe insurance company, inasmuch as he derives income from a business which sells to orotherwisedealswithalabororganization ofwhichheis anofficer.

246.605EMPLOYEEOFUNIONATTORNEY

A union president who works part-time for the union’s attorney, keeping the union’s booksand filing necessary reports, and who receives half of the attorney’s retainer from him ascompensation, is required to file a report under section 202(a) (4) since the attorney operates abusiness (practice of law) which deals with the union and the union president receives incomefrom that business.It is immaterial that motions passed by the executive board of the union andthemembershipindicatethatthisarrangementwasknown.

246.700“DEMINIMIS”STOCKHOLDING,INTERESTORINCOME

An employee of a labor organization purchased, in an “Over-the-Counter” transaction in1963, $400 worth of a common stock of a business which supplies his labor organization withmore than one million dollars annually in goods and services.This employee occupies a positionwhich requires him to make policy recommendations to officers of the labor organizationregardingthe purchase of suchgoods andservices.

No report would ordinarily be required of the union employee under these circumstances(even though Over-the-Counter securities do not come within the exception from union officerand employee reporting in section 202(b)) if (1) his total holdings, including the $400 purchase,hadaprevailingmarketpriceof $1,000orless,(2)theholdingswereunrelatedtotheemployee’sstatus in the labor organization, and (3) he received income of $100 or less from the stock during1963.ThistypeoftransactioncomeswithinthetermsofexclusioninItem(ii)oftheInstructionsrelatingto PartAoftheLM-30.

(Revised:Dec.2016)

246.800EMPLOYEEOFCREDITUNION

If a credit union grants loans to a labor union, a report would be required from an officer ofthatlaborunionwhoisalsoanemployeeof thecreditunion.However,noreportwouldbe

requiredmerely becausethe credit uniongrants loans tomembersof thelabor union.
There is nothing in the nature of the purposes or policies of a credit union which wouldappear to be adverse to the interests of a related labor union.However, it is conceivable thatbecause of peculiar circumstances an employee of the credit union might find that his duty to thecredit union conflicts with the duty he owes to his labor organization as its elected officer oremployee.It might also be possible that a person could abuse his position with the credit unioninsuchawayasto violatehisdutyoftrustinrelationtothelabororganization.