2007 POLICY HIGHLIGHTER

November 23, 2007

Model Legislation: Worker Right-To-Know Act
Volume 17, Number 26

By Scott Dilley

Background
In Washington, public-sector labor unions are not obligated to disclose financial information to their members. This lack of transparency impedes the flow of information necessary for union members, elected officials, and the public to make sound decisions. The absence of this information is uncharacteristic of the importance Washington traditionally places on disclosure.

Washington residents have a cherished tradition of involvement in and knowledge of public affairs. Meetings are open to the public, government documents are available upon request, residents have increased legislative awareness through various traditional and electronic media, and voters can access campaign finance reports online. Now is an opportune time for Washington to extend transparency to public-sector union finances, thereby allowing public-sector workers the right to know how their union dues and fees are being spent.

Existing union disclosure requirements
The public disclosure of labor union finances has existed in some form for nearly a half-century. The passage of the federal Labor-Management Reporting and Disclosure Act in 1959 required private-sector unions to disclose financial information to their membership and to the federal government annually. These unions must report expenditures of $5,000 or more. LMRDA also guarantees equal rights for members to participate in union business, protects the right to free speech and assembly, and requires unions to provide members with copies of the collective bargaining agreement.

With the rise of unionization of government workers, several states began requiring the public-sector unions to follow reporting procedures similar to the federal requirement’s on private-sector unions. Since public-sector negotiations involve public funds, supervision, and work, the general public should have the right to know how their tax dollars are being spent. So far, thirteen states—with a blend of traditionally conservative, moderate, and liberal ideologies—have passed laws providing for some form of disclosure.

Workers’ right to know in Washington
Washington’s workforce is more educated, empowered, and familiar with financial data and transactions than at any time in the state’s history. The innovation and technology that have led to more than a half-century of regional economic growth can now help ensure public-sector workers have the information they need to make wise decisions about themselves, their careers, and their families.

EFF recently conducted a scientific poll of 400 public school teachers in Washington. When asked, “Do you favor or oppose requiring the Washington Education Association and other public-employee unions to disclose financial information to the workers they represent?” 75 percent strongly favored such actions, and an additional 20 percent somewhat favored those requirements. In total, 95 percent of teachers surveyed support their right to know what their union is doing on their behalf.

Recommendations
Workers and the general public should know what is being done with their money on their behalf. Existing federal and state laws already require transparency in other areas of public interest. The model legislation below extends similar provisions to public-sector labor unions. These organizations act within the public sector and should therefore file reports with the Public Employment Relations Commission. These reports would disclose union assets, liabilities, salaries, expenditures of $1,500 or more, dues amounts, direct or indirect political spending, and any possible conflicts of interest for union officers or staff.

If lawmakers are serious about protecting individual liberties and allowing public-sector employees to have information for financial and employment decisions, they should consider the following model legislation.

Model Legislation
AN ACT Relating to protecting public sector workers’ rights and providing for public disclosure of public sector unions’ finances.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
NEW SECTION. Sec. 1. A new section is added to chapters 28B.52, 41.56, 41.59, 41.76, 41.80, 47.64 RCW to read as follows:

The legislature finds the power of workers to make sound decisions concerning their careers, workplace choices, workplace representation, and other areas of importance hinges on a worker’s access to useful and relevant information. The legislature finds it is important to ensure public sector workers are provided with useful information concerning their membership in a labor union through thorough and complete public disclosure of union finances and by protecting a worker’s freedom of speech, assembly, and other rights.

The legislature finds today’s workforce is more educated, empowered, and familiar with financial data and transactions than at any time in the state’s history. Workers are presented with more choices concerning their careers than in the past, in areas such as compensation packages, benefits, and other matters related to their careers. Whether and how to exercise a worker’s self-governance rights is among the choices a worker faces.

The legislature finds transparency in organizational finances central to sound decision-making. The legislature recognizes the federal Labor Management Reporting and Disclosure Act provides for the reporting of financial data for private sector labor organizations. The legislature intends for all public sector labor organizations in Washington to provide similar, relevant financial data to their members.

Residents of Washington state have a cherished populist tradition of involvement in and knowledge of public affairs. The people have already called for open public meetings, government documents upon request, increased legislative awareness through various traditional and electronic media, and transparency of candidate and campaign committee finances. These methods serve as a powerful deterrent against corruption and for people to make decisions about their individual and collective futures.

The legislature intends for increased transparency and financial disclosure to provide public sector workers with the knowledge they need to make wise decisions about themselves, their careers, and their families. Sound decision-making depends on sound information, and workers cannot be expected to make decisions in their own best interest without access to unbiased and candid information. The legislature intends to ensure members of labor organizations are provided with more complete, timely, and comprehensible information about their union’s financial practices, investments, solvency, and expenditures would empower them to protect their personal financial interests and exercise their democratic rights of self-governance.

NEW SECTION. Sec. 2. A new section is added to read as follows:
(1) An employee organization must annually, not more than sixty days after the end of its fiscal year, provide financial disclosure information to all employees in the bargaining unit and to the general public by filing with the commission a report containing the following information, detailed by functional spending categories, that accurately discloses its financial condition and operations for the preceding fiscal year:
(a) Assets and liabilities at the beginning and end of the fiscal year;
(b) Salary, the cost of fringe benefits, allowances, and other direct or indirect disbursements to each officer of the local, the employee organization, and the support staff, as well as all contributions to state or national affiliates and any official or employee thereof;
(c) All income received or the value of services furnished to an employee organization by an affiliated labor organization or any other labor organization on behalf of the employee organization;
(d) A report of the total amount spent by the employee organization, and an itemization of expenditures of more than one thousand five hundred dollars for:
(i) Contract negotiation and administration;
(ii) Organizing activities;
(iii) Strike activities;
(iv) Litigation, specifying the matters and cases involved;
(v) Public relations activities;
(vi) Political activities, including contributions to candidates, ballot measures, member communications, and get out the vote efforts;
(vii) Activities attempting to influence the passage or defeat of federal, state, or local legislation or the content or enforcement of federal, state, or local regulations or policies;
(viii) Voter education and issue advocacy activities;
(ix) Training activities for each officer of the employee organization or employee organization support staff; and
(x) Conference, convention, and travel activities engaged in by the employee organization;
(e) The percentage of the employee organization's total expenditures that were spent for each of the activities described in (d)(i) through (x) of this subsection;
(f) The names, addresses, and activities of any of the law firms, public relations firms, or lobbyists whose services are used by the employee organization for any activity described in (d)(iv) through (x) of this subsection;
(g) A list of political candidates, political organizations, charitable organizations, nonprofit organizations, and community organizations to which the employee organization contributed financial or in-kind assistance and the dollar amount of such assistance; and
(h) The name and address of any political action committees with which the employee organization is affiliated or to whom it provides contributions, the total amount of contributions to such committees, the candidates or causes to which such committees provided any financial assistance, and the amount provided to each such candidate or cause.
(2) The report required in subsection (1) of this section must be prepared by an auditing organization, independent of the employee organization, using generally accepted auditing standards and generally accepted accounting principles, that ensures the accuracy and veracity of the information provided by the employee organization. All expenditures must be reported as either germane to collective bargaining, contract administration, or grievance processing, or not so related.
(3) The employee organization must disclose information to all employees in the bargaining unit and to the general public by filing with the commission a report signed by its president and secretary or corresponding principal officers, and containing the following information:
(a) The name of the employee organization, its mailing address, and any other address at which it maintains its principal office or at which it keeps records;
(b) The name and title of each of its officers;
(c) The initiation fee or fees required from a new or transferred member;
(d) The regular dues or fees or other periodic payments required to remain a member of the reporting employee organization; and
(e) Detailed statements regarding the provisions made and procedures followed with respect to each of the following:
(i) Qualifications for, or restrictions on, membership;
(ii) Levying of assessments;
(iii) Participating in insurance or other benefit plans;
(iv) Authorization for disbursement of funds of the employee organization;
(v) Audit of financial transaction of the employee organization;
(vi) The calling of regular and special meetings;
(vii) The selection of officers and stewards;
(viii) Discipline or removal of officers or agents;
(ix) Imposition of fines, suspensions, and expulsions of members, including the grounds for such action and any provision made for notice, hearing, judgment, and appeal;
(x) Authorization for bargaining demands; and
(xi) Ratification of contract terms.
(4) Any change in the information required by subsection (3) of this section must be reported to the commission at the time the employee organization files with the commission the annual financial report required in subsection (1) of this section.
(5) Every officer of an employee organization and every employee of an employee organization, other than an employee performing exclusively clerical or custodial services, shall file with the commission within sixty days of the end of its fiscal year a signed report listing and describing for his preceding fiscal year:
(a) Any stock, bond, security, loan given or received, or other interest, legal or equitable, which he or his spouse or minor child directly or indirectly held in, and any income or any other benefit with monetary value (including reimbursed expenses) which he or his spouse or minor child directly or indirectly derived from, any business any part of which consists of buying from, selling or leasing to, or otherwise dealing with, the employer;
(b) Any stock, bond, security, loan given or received, or other interest, legal or equitable, which he or his spouse or minor child directly or indirectly held in, and any income or any other benefit with monetary value (including reimbursed expenses) which he or his spouse or minor child directly or indirectly derived from, a business any part of which consists of buying from, or selling or leasing directly or indirectly to, or otherwise dealing with the employee organization;
(c) Any direct or indirect business transaction or arrangement between him or his spouse or minor child and the employer or any subsidiary thereof whose employees his organization represents or is actively seeking to represent, except work performed and payments and benefits received as a bona fide employee of the employer; and
(d) Any payment of money or other thing of value (including reimbursed expenses) which he or his spouse or minor child received directly or indirectly from any person who acts as a labor relations consultant to the employer.
(6) The provisions of paragraphs (a), (b), (c), and (d) of subsection (5) of this section shall not be construed to require any such officer or employee to report his bona fide investments in securities traded on a securities exchange registered as a national securities exchange under the Securities Exchange Act of 1934, in shares in an investment company registered under the investment Company Act or in securities of a public utility holding company registered under the Public Utility Holding Company Act of 1935, or to report any income derived there from.
(7) Every person required to file any report under subsections (1), (3), and (5) of this section shall maintain records on the matters required to be reported which will provide in sufficient detail the necessary basic information and data from which the documents filed with the commission may be verified, explained or clarified, and checked for accuracy and completeness, and shall include vouchers, worksheets, receipts, and applicable resolutions, and shall keep such records available for examination for a period of not less than six years after the filing of the documents based on the information which they contain. The commission shall preserve such statements or reports for not less than ten years. The contents of the reports and documents filed with the commission pursuant to subsections (1), (3), and (5) of this section shall be public information and shall be made available to the public in the following manners:
(a) The commission shall by regulation make reasonable provision for the inspection and examination, on the request of any person, of the information and data contained in any report or other document filed with him pursuant to subsections (1), (3), and (5).
(b) The commission shall furnish copies of reports or other documents filed with the commission pursuant to subsections (1), (3), and (5) at a charge based on the cost of the service.
(c) By ninety days after the enactment of this law, the commission shall operate a web site or contract for the operation of a web site that allows public access to reports, copies of reports, or copies of data and information submitted in reports, filed with the commission under subsections (1), (3), and (5) of this section.
(d) The employee organization must make copies of reports or other documents filed pursuant to subsections (1), (3), and (5) of this section available to every employee in the bargaining unit, and must annually notify every employee in the bargaining unit that said reports are available on the commission’s web site.
(8) The commission may determine whether an actual violation of this section has occurred, and following such determination issue and enforce an appropriate order subject to the following terms:
(a) If the commission finds that an employee organization has violated this subsection by failing or refusing to prepare the reports as required in subsections (1), (3), and (5) of this section or by preparing an incomplete or inaccurate report, the commission shall issue an order compelling compliance and assess a fine of fifty dollars for each day each report was overdue.
(b) On finding a second violation by the employee organization, the commission shall:
(i) Issue an order compelling compliance; and,
(ii) Assess a fine of fifty dollars for each day each report was overdue or order the refund of all membership dues or agency shop fees to employees in the bargaining unit for the period covered by the report, whichever amount is greater.
(c) On finding a third violation by the employee organization, the commission shall:
(i) Issue an order compelling compliance;
(ii) Assess a fine of fifty dollars for each day each report was overdue or order the refund of all membership dues or agency shop fees to employees in the bargaining unit for the period covered by the report, whichever amount is greater; and,
(iii) Order an employee election in the affected bargaining unit to determine whether the employee organization will continue to be the exclusive bargaining representative of the bargaining unit. The election shall be conducted upon the expiration of the existing collective bargaining agreement covering the affected bargaining unit.
(d) The commission may make determinations and issue and enforce orders at its own discretion or as a response to a petition filed by the employer, any employee in the bargaining unit before expiration of the applicable collective bargaining agreement, or any member of the general public. The commission may, at its discretion, refer matters of compliance to the state attorney general or other enforcement agency.
(9) Civil enforcement provisions:
(a) Any person who willfully violates this title shall be fined not more than $10,000.
(b) Any person who makes a false statement or representation of a material fact, knowing it to be false, or who knowingly fails to disclose a material fact, in any document, report, or other information required under the provisions of this title shall be fined not more than $10,000.
(c) Any person who willfully makes a false entry in or willfully conceals, withholds, or destroys any books, records, reports, or statements required to be kept by any provision of this title shall be fined not more than $10,000.
(d) Each individual required to sign reports under subsections (1), (3), and (5) shall be personally responsible for the filing of such reports and for any statement contained therein which he knows to be false.

NEW SECTION. Sec. 3. This act takes effect July 1, 2008.

Scott Dilley is a policy analyst for the Labor Policy Center. Scott came to EFF from Washington Farm Bureau, where he worked in the government relations department. Scott holds a Bachelor of Arts degree in government from Center College in Danville, Kentucky, and a Master of Arts degree in theological studies from the Assemblies of God Theological Seminary in Springfield, Missouri.

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