Department of Labor Eliminates Form T-1 for Labor Organizations

As of January 31, 2022, labor organizations will no longer be required to submit the recently-created Form T-1 Trust Annual Report.

On December 30, 2021, the Department of Labor announced it is rescinding the 2020 rule requiring labor organizations to submit Form T-1.  This move follows the DOL’s March 29, 2021 announcement of a policy of non-enforcement of the September 28, 2021 initial filing deadline identified in the 2020 rule.

In 2020, the DOL’s Office of Labor-Management Standards (OLMS) issued a final rule requiring unions that file an LM-2 to also file Form T-1. The form sought “financial information pertinent to trusts in which a labor organization is interested.”  A labor organization was considered “interested” in a trust if (1) a majority of trustees are selected by unions or (2) the trust receives contributions pursuant to a collective bargaining agreement (CBA). Labor organizations were obligated to report the finances of certain trusts, including apprenticeship and training plans, labor-management cooperation committees, strike funds, and building corporations.

Although the stated purpose of Form T-1 was to detect wrongdoing and enforce reporting requirements, in reality, the form imposed a substantial burden on unions with little, if any, enforcement benefit to the government. The information required to be reported on Form T-1 was duplicative of pre-existing filing requirements, since relevant trust financial information is already reported to the Internal Revenue Service.  OLMS cited this redundancy as one reason for rescinding the 2020 rule, explaining that Form T-1 would not provide additional information necessary to track labor organization fraud.

OLMS also took the position that “the vast majority of union officers and employees do their work diligently and without incident,” and in the event of civil and criminal violations, OLMS is already well-equipped to handle such situations and has “an established record of bringing such wrongdoers to justice.”

As a result of the 2021 non-enforcement policy and subsequent rescission of Form T-1, labor organizations are no longer required to file the form, and there are no penalties for failure to file a Form T-1 in 2021.