Filing Thresholds for Forms LM-2, LM-3, and LM-4 Labor Organization Annual Reports

DEPARTMENT OF LABOR <SUBAGY>Office of Labor-Management Standards</SUBAGY> <CFR>29 CFR Part 403</CFR> <DEPDOC>[Docket #]</DEPDOC> <RIN>RIN 1245-AA15</RIN> <SUBJECT>Filing Thresholds for Forms LM-2, LM-3, and LM-4 Labor Organization Annual Reports</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Office of Labor-Management Standards, Department of Labor. <HD SOURCE="HED">ACTION:</HD> Proposed rule; request for comments. <SUM> <HD SOURCE="HED">SUMMARY:</HD> This proposed rule revises the filing thresholds in 29 CFR 403.4(a) for the Forms LM-2, LM-3, and LM-4 Labor Organization Annual Reports. This summary can be found at <E T="03">www.regulations.gov</E> by searching by the RIN: 1245-AA15. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> Comments must be received on or before July 31, 2025. </EFFDATE> <HD SOURCE="HED">ADDRESSES:</HD> You may submit comments, identified by RIN #1245-AA15, by the following method: <E T="03">Internet:</E> Federal eRulemaking Portal. Electronic comments may be submitted through <E T="03">www.regulations.gov.</E> To locate the proposed rule, use RIN #1245-AA15. Follow the instructions for submitting comments. Only comments submitted through <E T="03">www.regulations.gov</E> will be accepted. Comments will be available for public inspection at <E T="03">www.regulations.gov.</E> The Department will post all comments received on <E T="03">www.regulations.gov</E> without making any change to the comments, including any personal information provided. The <E T="03">http://www.regulations.gov</E> website is the Federal e-rulemaking portal, and all comments posted there are available and accessible to the public. The Department cautions commenters not to include personal information such as Social Security numbers, personal addresses, telephone numbers, and email addresses in their comments as such submitted information will become viewable by the public via the <E T="03">www.regulations.gov</E> website. It is the responsibility of the commenter to safeguard this information. Comments submitted through <E T="03">www.regulations.gov</E> will not include the commenter's email address unless the commenter chooses to include that information as part of his or her comment. <E T="03">Docket:</E> Go to the Federal eRulemaking Portal at <E T="03">https://www.regulations.gov</E> for access to the rulemaking docket, including any background documents and the plain-language summary of the proposed rule of not more than 100 words in length required by the Providing Accountability Through Transparency Act of 2023. <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Andrew Davis, Director of the Office of Program Operations, Office of Labor-Management Standards, U.S. Department of Labor, 200 Constitution Avenue NW, Room N-5609, Washington, DC 20210, by telephone at (202) 693-0123 (this is not a toll-free number), 771 (TTY/TDD), or by email at <E T="03">olms-public@dol.gov.</E> </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">I. Background</HD> The Labor-Management Reporting and Disclosure Act of 1959 (LMRDA), 29 U.S.C. 401 <E T="03">et seq.,</E> mandates certain reporting and disclosure requirements for labor organizations, their officers and employees, employers, labor relations consultants, and surety companies. Under the LMRDA, every labor organization must file with the U.S. Department of Labor (Department), Office of Labor-Management Standards (OLMS) an annual financial report showing total annual receipts, disbursements, assets, and liabilities of the union. 29 U.S.C. 431. The Secretary of Labor has authority to prescribe the form of the financial disclosure reports required by the LMRDA. 29 U.S.C. 438. The Secretary has prescribed three forms for this purpose—Forms LM-2, LM-3, and LM-4—with the form required determined by total annual receipts. Under current regulations, labor organizations (not in a trusteeship) with $250,000 or more in annual receipts must file Form LM-2; those with less than $250,000 may choose to file Form LM-3; and those with less than $10,000 may choose to file Form LM-4. 29 CFR 403.4(a). Additionally, under certain circumstances, a local labor organization with no assets, liabilities, receipts, or disbursements that is not in a trusteeship can have a “simplified annual report” filed on their behalf by a parent union in lieu of an annual report. <E T="03">Id.</E> The Form LM-2 filing threshold was last revised in October 2003 when the Department raised it from $200,000 to $250,000. 68 FR 58374 (October 9, 2003). That 2003 adjustment was intended to approximate the effects of inflation on the earlier $200,000 level and reduce the recordkeeping and reporting burden for approximately 500 labor organizations. <E T="03">Id.</E> The Form LM-2 threshold level has only increased three other times prior to 2003. <E T="03">Id.</E> Shortly after the LMRDA was enacted in 1959, the threshold for filing the detailed Form LM-2 was set by the Secretary at $20,000. <E T="03">Id.</E> The threshold was raised by the Secretary in 1962 to $30,000, in 1981 to $100,000, and in 1992 to $200,000. <E T="03">Id.</E> Since 2003, the thresholds have remained unchanged for over twenty years, despite substantial inflation in the intervening period. <E T="03">Id.</E> As a result, many unions with relatively modest receipts still meet the threshold for filing the most detailed form, the Form LM-2. <E T="03">Id.</E> Similarly, the Form LM-4 was introduced in a 1992 final rule, which also established the Form LM-3 threshold and required Form LM-3 filing for unions with more than $10,000 in total receipts but less than the LM-2 threshold of $200,000 at that time. 57 FR 49356 (October 30, 1992). Since 1992, the $10,000 threshold for the Form LM-3 has never been raised, despite over 30 years of inflation. In this proposed rule, the Department proposes to increase each filing threshold to higher values: labor organizations with $450,000 or more in annual receipts must file Form LM-2; those with less than $450,000 may choose to file Form LM-3; and those with less than $25,000 may choose to file Form LM-4. These increases are necessary to reflect economic changes and reduce unnecessary reporting burdens on labor organizations whose total receipts, prior to adjusting for inflation, should not necessitate greater filing requirements. The Department proposes to revise accordingly each reference to the filing thresholds in 29 CFR 403.4(a) and on the Forms LM-2, LM-3, and LM-4, as well as their instructions. <HD SOURCE="HD1">II. Discussion</HD> OLMS' review of the current reporting thresholds confirms that inflation has eroded their real value. As evidenced in the 2003 rulemaking, raising the Form LM-2 threshold to $250,000 at that time was meant to “approximate[ ] an inflation adjustment” of the prior $200,000 standard from 1992. 68 FR at 58383. Since 2003, overall price levels have risen approximately 75%, meaning $250,000 in 2003 equates to over $430,000 today in real dollars. <SU>1</SU> <FTREF/> The LM-3 threshold erosion has been even steeper, as overall price levels have risen approximately 125% since 1992, and $10,000 in 1992 equates to over $22,500 today in real dollars. <SU>2</SU> <FTREF/> To realign the thresholds with current economic conditions, OLMS proposes raising the Form LM-2 and Form LM-3 thresholds to higher levels, with the Form LM-4 adjusting accordingly. These adjustments are consistent with the Department's practice of periodically assessing the appropriateness of the filing thresholds, and the Department proposes to round up to fairly account for future inflation. By increasing the thresholds, this proposed rule would relieve those unions that fall below the new threshold requirement from the burden to file the lengthy Form LM-2 report, without exempting any union from its duty to report all its receipts and disbursements. A majority of current LM-2 filers, including the largest and most complex unions, would continue to file Form LM-2 and provide detailed disclosures. As with the Form LM-2, the increased Form LM-3 filing threshold would excuse those unions that would fall under the new Form LM-3 threshold from the more burdensome filing requirements. <FTNT> <SU>1</SU>  OLMS utilized the Bureau of Labor Statistic's Consumer Price Index Calculator to estimate buying power from 2004 to 2025 <E T="03">https://www.bls.gov/data/i-nflation_calculator.htm.</E> </FTNT> <FTNT> <SU>2</SU>   <E T="03">Id.,</E> estimating buying power from 1992 to 2025. </FTNT> OLMS has estimated the effect of the proposed thresholds on FY2024 filers by looking at the number of labor organizations that filed LM Forms for FY2024 whose receipts fell between the current and proposed threshold amounts. Approximately 868 labor organizations that filed the Form LM-2 in FY2024 would fall below the revised Form LM-2 threshold and instead file the Form LM-3 in the next reporting cycle. Approximately 2,089 labor organizations that filed the Form LM-3 in FY2024 would fall below the revised Form LM-3 threshold and file the Form LM-4 in its next reporting cycle. It is important to view this estimated effect from increasing the Form LM thresholds in context. For example, the 2003 increase to the Form LM-2 threshold was estimated to affect approximately 500 Form LM-2 filers. 68 FR 58374. Similarly, OLMS estimates 868 FY2024 filers will no longer be required to file the Form LM-2. The estimated 868 filers make up less than 18% of all current LM-2 filers and represent the organizations with the lowest total annual receipts reported by all Form LM-2 filers. Thus, the Department estimates that a substantial number of the largest unions, as measured by total annual receipts, will continue filing the more detailed report, providing transpar ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 31k characters. 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