Do the Right Thing

Union officers must learn how to manage finances

Volume CIV, No. 12December, 2009

Jay Blumenthal and Harvey Mars, Esq

Being a Union officer carries with it important duties and responsibilities. One has only to briefly glance at the Local 802 constitution and bylaws to see the numerous obligations elected officers are sworn to uphold. These responsibilities are neither facile nor routine and require the officer’s utmost devotion to the best interests of all the members of the union.

Perhaps the most significant responsibility a union officer has is not found in our bylaws.

It is found in a federal statute: 29 U.S.C. Section 501, the provision in the Labor Management Reporting and Disclosure Act setting forth union officers’ “fiduciary responsibilities.”

What is a fiduciary?

A fiduciary is a person to whom property or power is entrusted for the benefit of another.

Fiduciaries serve in a position of trust, confidence and responsibility.

Union officers are fiduciaries entrusted with the dues paid by members as well as other assets belonging to the union.

Lest you think fiduciary responsibilities are trivial and unimportant, think again.

Standards of conduct for fiduciaries are set forth in common law.

A breach of this trust occurs when the fiduciary misuses the property they are entrusted with, such as if they use the property as their own. In that case, there is a fiduciary breach. Civil or criminal liability could result.

Section 501 establishes a statutory basis for fiduciary obligations. In the event of a breach, severe penalties may be imposed. Section 501 (c) is a criminal statute that imposes a five-year incarceration upon an individual found guilty of transgressing it.

Despite the fact that an officer’s Section 501 fiduciary responsibilities are so significant, no training or education is mandatory for newly-elected officers by the Department of Labor regarding these responsibilities.

While the AFM does, from time to time, offer new officer training, fiduciary responsibilities should be the centerpiece of that training.

The grave consequences mentioned earlier could await those who are found responsible for the breach.

The Cornell Industrial Labor Relations School offers a two-day workshop about managing union finances.

The instructor begins the class by giving a small gift to all those in attendance.

Students eagerly open their unexpected gifts to find the box contains handcuffs!

“This is what is in store for you if you are found responsible for a fiduciary breach,” warns the instructor.

Recent news events have underscored the need for union officer education.

All too often we read about fiduciary breaches that could have been avoided had the proper training taken place.

It is true that all the training in the world will not turn a dishonest person into an honest one, but educating officers would leave little doubt in what should be the correct action for those wanting to do the right thing.

If you’re interested in reading the exact statute applicable to officers of labor organizations, e-mail Harvey Mars at