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News September 12, 2005 Issue

DOL Expected to Act on Form LM-10 This Month

Whatís going on with Form LM-10, the form that requires all "employers" to report gifts to union officials?

Weíll find out later this month whether efforts by the Investment Adviser Association, Securities Industry Association, and others have paid off. DOLís Office of Labor-Management Standards is expected to issue guidance on LM-10 in two weeks or so (yes, thatís pushed back a bit from the original two to three weeks we first heard back in July).

Meanwhile, industry groups continued their effort to encourage DOL to rethink its approach to LM-10. On August 29, the IAA, SIA, Investment Company Association, American Bankers Institute, American Council of Life Insurers and other trade groups sent a joint letter to Victoria Lipnic, DOLís assistant secretary for employment standards. The groups noted that they collectively represented "thousands of employers" potentially affected by DOLís position on LM-10.

The letter emphasized four key points:

First, the groups asked that any new reporting requirements be applied only on a going-forward basis (not retroactively, as the DOLís June 22 FAQ had suggested). "It would be exceedingly difficult, costly, and burdensome for businesses to attempt to gather information for prior time periods in order to file the form," said the groups. "The last minute scramble required to produce the necessary historical data would provide little useful or comprehensive information to the Department, while posing potential liability risks for the filers and their signatories."

Second, the groups asked DOL to engage in formal rulemaking, in order to provide a notice and comment period on LM-10.

Third, the groups expressed public policy-based concerns about DOLís extending the LM-10 reporting requirement to virtually all employers. "This new interpretation would require virtually any entity that provides anything at all to a union member to file Form LM-10," they said. "Whether Congress intended such a result should be a matter discussed in a public forum through notice and comment."

Fourth, the groups asked DOL to clarify the circumstances in which ERISA prohibits payments to pension plan trustees and union officials. To date, said the groups, those circumstances "have not been adequately clarified or explained." Before requiring employers to make potentially self-incriminating reports, they said, "DOL should provide guidance as to the parameters of permissible expenditures and enforce this guidance prospectively only."

The letter followed on the heels of a lengthy DOL proposal on LM-30, the form used by union officials to report gifts received. That proposal, however, did not appear to shed light on how DOL will interpret LM-10.