DOL-OLMS Requesting Comments on Proposed Reinstated Form T-1 Filing for Certain Union Trusts

Julie Stich, CEBSJuly 18, 2019July 17, 2019

On May 30, 2019, the Department of Labor’s Office of Labor-Management Standards (DOL-OLMS) issued a proposed rule that would reinstate an annual filing of Form T-1, the Trust Annual Report. DOL-OLMS says the form is designed to “capture financial information pertinent to ‘trusts in which a labor organization is interested.’”

The proposed rule, if finalized, would apply to unions that are involved with trust funds set up to provide benefits to members. The proposal includes an exemption for trusts that file Form 5500; accordingly, pension and benefit trust funds would not need a Form T-1. Forms would be needed for other types of trusts, such as apprenticeship and training funds and labor-management cooperation committees.

Comments are due to DOL-OLMS on or before July 29, 2019.

Form T-1 History

The Form T-1 reporting requirement was first instituted by DOL-OLMS during the George W. Bush administration. Beginning in 2002, there have been several incarnations of the form and instructions; the rule’s history is detailed in the new proposed rule’s preamble and, in part, here. A final rule was released in October 2008. The rule was rescinded, however, in 2010.

Summary of 2019 Proposed Rule’s Provisions

Who needs to file?

With this new proposal, the Form T-1 filing requirement applies to labor organizations (unions) with total annual receipts of $250,000 or more.

These labor organizations will need to file a Form T–1 for certain trusts.

What is meant by trusts?

Trusts are defined as “a trust or other fund or organization: (1) which was created or established by a labor organization, or one or more of the trustees or one or more members of the governing body of which is selected or appointed by a labor organization; and (2) a primary purpose of which is to provide benefits for the members of such labor organization or their beneficiaries.”

What triggers the reporting requirement?

The reporting requirement is triggered if, during the year, the labor organization either alone or in combination with other labor organizations, (1) selects or appoints the majority of the members of the trust’s governing board (this is called management control), or (2) contributes more than 50 percent of the trust’s receipts (this is called financial dominance).

Does this requirement involve multiemployer trust funds?

Taft-Hartley multiemployer trust funds are governed by a joint board of trustees consisting of equal representation from labor and management. As such, the management control provision mentioned above would not apply.

However, the financial dominance provision would apply to Taft-Hartley multiemployer trust funds. In the proposed rule, as with the 2008 final rule, employer contributions to a trust made pursuant to a collective bargaining agreement are considered the labor organization’s contributions.

Do unions have to file for all trusts?

As did the 2008 final rule, this new proposed rule includes a filing exemption for certain trusts, notably those for which a Form 5500 is filed. This means pension and benefit trust funds under ERISA are exempted; a Form T-1 does not need to be filed for them.

DOL-OLMS has identified the types of trusts that will need to be reported: credit unions, strike funds, labor-management cooperation funds, redevelopment or investment groups, training funds, apprenticeship programs, building funds, and educational funds.

They state, “A careful analysis … indicates that most of the Form T–1s will be filed for building trusts, strike funds, labor-management cooperation committees, and apprenticeship and training funds.”

Next steps

DOL-OLMS is accepting comments through July 29, 2019.

[Related Reading: Multiemployer Pension Reform Update]

Julie Stich, CEBS
Vice President, Content, at the International Foundation

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