State Policy Network
The Department of Labor takes up a Network solution to bring more transparency to union finances

When April Gallart was a teacher in Cerritos, California, she was newly married and money was tight. She was a member of the teachers union, through the ABC Unified School District. Like thousands of other public employees, April wanted to know how her union spent her hard-earned dues money. But unions aren’t required to report detailed financial information, leaving union members like April in the dark.

SPN’s Federal Opportunity Working Group—a group of state think tanks who collaborate and share best practices to give workers a voice and a choice when it comes to union membership—recognized the need for more transparency in public sector unions. Workers like April deserve to know where their money is going. And while some unions are good stewards of their members’ dollars, not all are. In fact, each year there are widespread cases of fraud and abuse regarding union finances.

In the summer of 2020, the Federal Opportunity Working Group launched a campaign to bring more transparency to union finances. It caught the eye of the US Department of Labor. On October 13, 2020, the Department of Labor issued a Notice of Proposed Rulemaking (NPRM), that, if enacted, would require unions to provide more details on the financial information they already report publicly, predominantly through the LM-2 forms.

New rule from the DOL gives workers a better understanding of how their union spends dues money

An LM-2 form is an annual financial report that unions send to the DOL, which has oversight over these organizations. The NPRM updates the LM-2 form and requires unions to itemize their reporting, so they can no longer lump different expenditures together. For example, the “representation” line would require unions to list how much money they are spending on their current members for representation, collective bargaining, and contract negotiations, versus how much are they spending on organizing new members. The NPRM also separates the “politics” and “lobbying” lines—giving union members a better picture on what money their union spends on political activities.

“As a union member, I want to know as much as possible about how my union is spending my dues,” wrote Kelly Cunningham, a learning support/emotional support teacher in Pennsylvania. “It is important for me to stay informed with regards to what political actions my union is involved in, with regards to both their lobbying and electoral efforts. I appreciate that the proposed rule changes will make more information available to my colleagues and fellow union members.”

Public employees work hard for their communities and expect their union to work hard for them. The NPRM would empower workers like Kelly to hold their unions accountable when they don’t serve union members’ interests.

SPN’s Working Group, excited with the potential opportunity to help thousands of public employees, got to work. The Working Group realized they could make a direct impact through the public comment process.

The federal rulemaking process 101

If you’re not familiar with the public comment piece of the federal rulemaking process, here’s a quick refresher. When a government agency, such as the Department of Labor, releases a proposed regulation, there are procedures that agency must follow in order to establish a final, legally binding rule. First, an agency issues a NPRM in the Federal Register. Then, the agency must allow interested people to comment on the proposed rule (typically an agency will provide at least 30 days for public comment). After that, the agency will review the public comments and make changes to the proposed rule. Finally, the agency will issue a final rule in the Federal Register.

SPN mobilizes the Network to issue comments on the proposed rule

SPN put together a comment guide to help the Network and workers understand the 300-page NPRM, how it can be improved, and the impact it could have on workers. The comment guide also explained how state think tanks can craft meaningful comments for the Department to review.

SPN shared this comment guide in emails to state think tanks across the country and in a briefing call that featured experts from the Illinois Policy Institute, Yankee Institute, and Empire Center. These experts reiterated the benefits the NPRM would have on public employees.

SPN, along with submitting its own comment to the DOL, encouraged state think tanks to publish their own comments that underscore the importance of this rule and how it will benefit workers. SPN also helped state think tanks collect comments from affected union members who would benefit from more union transparency.

Seventy-five of the 91 unique comments submitted to the administrative record supported the proposed rule change. The vast majority of supportive comments came from the Network and coalitions of workers state think tanks have built. This is a direct result of SPN’s leadership on mobilizing these groups to make the case that American workers deserve more transparency from their unions. 

The Network makes the case for union transparency

Although the Department of Labor never finalized the rule, the Network spearheaded efforts to make the case for union transparency. Future administrations can consider the arguments in favor of transparency and use them as ready-made justifications for reforms in the future.

Additional Reading

Proposed rule from the Department of Labor would modernize and increase union transparency
State Policy Network

Categories: Policy Solutions
Policy Issues: Workplace Freedom
Organization: State Policy Network