by Phil Wilson

When is a Union Not a Union?

This week I attended and spoke at the Oklahoma HR State Conference. Every year this conference gets better and better. They have to if they’re going to overcome people like me on the agenda!

The kickoff speaker was “business magician” Jon Petz. He was so entertaining that I even forgave him for living in Columbus! Jon performed several incredible illusions, but one blew my mind. Jon asked for anyone in the audience who had a $100 bill in their wallet (I was thankful I did not). Once he had his victim he asked her to come on stage and sign her name on the c-note.

Jon then put her through a “game show” where she learned her “prize” was a lemon. The business magician then pulled up a bag of lemons and asked her to pick one of the half-dozen lemons out of the bag. He then cut open her lemon and rolled up inside was - you guessed it - her signed $100 bill!

I was in the front row for this whole performance and it was stunning. Nothing was what it seemed. But what if Jon cut open the lemon and there was no $100? What if he kept cutting open all the lemons and none of them had the $100? What if he then said, “oops, sorry, I guess you lost the $100.” How would you feel? If that was my $100 his next trick better be making himself disappear!

Unions have been playing a trick like that for a number of years, with an assist from the Department of Labor. They hide money (and a LOT more than a $100) in “Worker Centers.” These organizations do everything the Labor Management Reporting and Disclosure Act of 1959 (LMRDA) defines as a “labor organization.” However, they have never been required to report their receipts and disbursements like every other labor union in America. Hopefully that is about to change.

Here is the problem with the current system. These worker centers (think about organizations like the Fast Food ForwardOUR Walmart, or the Coalition of Immokalee Workers) operate as labor organizations. They seek to organize and represent workers, and sometimes even negotiate on their behalf.

Unlike all other labor organizations, the receipts and expenditures of worker centers are completely hidden from public view. Often these organizations receive funding directly from labor unions that ARE required to report. For example, in a House hearing today one witness stated that the SEIU spent over $90 million funding worker centers over the last several years. This means members - who would ordinarily get visibility to how their dues money was spent by their union - have no way of knowing once these funds are transferred to worker centers.

The $90 million spent by SEIU is just one union. Many other unions perform the same “union magic” trick. The other funding sources for these worker center organizations are, of course, unknown since they don’t have to report their funding sources or expenditures.

Labor Secretary Acosta has mentioned on several occasions that the Department of Labor is looking into these organizations. Today the House Committee on Education and the Workforce held a hearing on the subject of worker centers and this week the US Chamber of Commerce also issued a report on them.

The bottom line: there is simply no reason these worker centers should be treated differently from any other labor organization. Labor organizations have a well-documented history of corruption and malfeasance. That’s why the LMRDA exists in the first place. Congress wanted to make sure that members and contributors to these labor organizations had an easy way to see how their money is being spent.

Today worker center organizations subvert the spirit and, in my view, the letter of the LMRDA. These worker centers are labor organizations and coordinate extensively (if not directly controlled) with organizations that do have a reporting obligation. It is about time for this massive “worker center” loophole to get closed. Like the $100 bill inside the lemon, we might be surprised about what we find.