Olms interpretative Manual

ELECTIONSWITHIN THETRUSTEEDLOCAL

323.005APPOINTMENTOF OFFICERS

If the autonomy of a local union is suspended in accordance with Title III and theconstitution and bylaws of the parent organization, it would not be a violation of the Act for thetrusteetoappoint theofficers ofthe localtoservewhile thelocal isundertrusteeship.However,an election of delegates by secret ballot of the local’s members in good standing is required bysection303,if thedelegates’ votesare tobecounted ina conventionor electionof officers.

323.200APPLICABILITYOF OTHERTITLES

Where a trusteeship is validly imposed for one of the statutory purposes, such as thecorrection of corruption or financial malpractice on the part of certain officers of a subordinate,compliance with the purposes of section 302 may best be secured by removing the officers inquestionandtemporarilyappointingothers, despite theprovisions of Title IV.

The Department has taken the general position that a validly imposed trusteeship thatresults in a complete suspension of autonomy would necessarily cut off the requirements of TitleIV of the Act, and make Titles II and V largely inapplicable to the members of the trusteed local.But a valid trusteeship runs a broad gamut from complete suspension to only limited suspension ofcertain aspects of a local’s affairs.In those cases where the parent does not completely suspendautonomy, even though it has the power to do so, the other provisions of the Act would apply tothe extent that autonomy is, in fact, retained.To the extent that the officers retain some of theirpowers, Title V may apply.When an election of officers of the subordinate is, in fact, held duringthetrusteeship, Title IVwould apply.

Union Trusteeships: A Report to Congress, page 39.Seealso Manual Entry 472.300

MANAGEMENTOFFUNDS

324.001LMRDA. SECTION303(a)(2)

.. .totransfer tosuchorganization anycurrent receiptsor otherfunds ofthe subordinatebodyexcept the normal per capita tax and assessments payable by subordinate bodies not intrusteeship...

324.005TRANSFERTO“HIGHERBODY”

The phrase “such organization” as used in 303(a)(2) obviously refers to “labororganization” in the first line of section 303.Under section 3(i), “labor organization” includesjoint councils and conferences, among others, which exist for certain purposes and are subordinateto a national or international labor organization.Reading the statute in this light, it would appearthatatransferoffundsfromatrusteedsubordinatelabororganizationtoanyhigherbodywouldbebarred,including atransferof thefunds ofatrusteedintermediatebodyto ahigherintermediatebody.

*324.007EFFECTOFINVALIDTRUSTEESHIP

If a trusteeship is determined to be invalid, anypayment by a trusteed local whose purposeoreffectis to maintainthe trusteeorthe trusteeshipmay wellbean illegaltransferof funds.

324.100LEGALFEES

When a court has taken action and has failed to find that a trusteeship was invalid, thepaymentof legalfees for thedefenseof thecase is alegitimate expense ofthe localorganizationandis nota transferof funds to the internationalprohibited by section 303(a)(2).

*324.200EXPENDITURESBY TRUSTEEDLOCAL

Under a valid trusteeship the international may require the local to meet reasonableexpensesincurredfor thebenefit ofthe trusteeship.Forexample, thelocal mayberequiredtopaythe salary and expenses of a trustee, provided that the payment is comparable to that incurred bylocalofficers in conducting the business of the local.

Criteria for determining the reasonableness of expenditures may be found in theconstitutionand bylawsof the trusteedorganization, andinits pastpractice whenit was notundertrusteeship.

324.300RETURN OFTRANSFERREDMONEY

The transfer of the funds of a trusteed local to a separate account under the name of theinternationalwasheld notto beaninvalidtransferof fundswithinthe meaningoftheActwhensubstantially greater funds were later retransferred to the local on the grounds that there was noevidenceofintent by theinternational todeprivethe local of its funds.

324.400REPAYMENTOFLOAN

The deduction of $1,000 per month by the international from a trusteed local’s share of itscheckoffdues isnotan invalidtransfer of fundssince the internationalhad loaned thelocal

$10,000priortotheimpositionofthetrusteeshipandusedthismethodtoget repayment.
324.410LOANTOINTERNATIONAL

A loan of $2,500 by a trusteed local to the international and the donation of $100 a week topart of the international’s strike fund were held not to be an invalid transfer of the funds of thetrusteedlocalwhereboththeloanandthedonationwerenotedandapprovedbythemembershipataregularmeetingand whereotherlocals,notin trusteeship,made similarloansanddonations.