Concerns About Controlling Union Employees' Benefit Funds by the Carpenters Collection Agency, Youngstown, OH

HRD-83-8: Published: Nov 12, 1982. Publicly Released: Nov 22, 1982.

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Linda G. Morra
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GAO was asked to examine: (1) the legality and functions of the Carpenters Central Collection and Administrative Agency (CCA), a nonprofit Ohio corporation that collects fringe benefit contributions from building trade employees; and (2) the timeliness and effectiveness of the Department of Labor's investigation and reporting of CCA activities.

GAO found that Labor did not take aggressive action to require Health and Welfare Fund trustees to correct Employee Retirement Income Security Act (ERISA) violations identified in its investigations of CCA activities. As a consequence, CCA has continued to control and use union employee fringe benefit funds in violation of ERISA provisions that are designed to prevent such abuses. CCA collects and controls union membership fringe benefit payments by employers, which may violate the Taft-Hartley Act, because it does not meet the statutory requirements of a Taft-Hartley trust; specifically, GAO is not aware of any written agreement between CCA and employers. CCA trustees represent only the employees and, therefore, employers and employees are not equally represented in the administration of CCA funds. In addition, the agreements between CCA and the employee benefit plans do not ensure that employee payments will be used for the sole and exclusive benefit of employees.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: It is unlikely action will be taken on this recommendation in the near future because: (1) CCA is involved in a law suit with the National Union concerning the Ohio State Council's trusteeship; and (2) Labor's proposed amendment to LMRDA probably will not be a priority item in the new administration.

    Recommendation: If the Solicitor's Office determines that CCA is not a labor organization under the Labor-Management Retirement Disclosure Act (LMRDA) and CCA cannot be required to report through the administrative process, the Secretary of Labor should propose to Congress that the statutory definition of a labor organization be changed to include such entities as CCA.

    Agency Affected: Department of Labor

  2. Status: Closed - Implemented

    Comments: In Justice's opinion, CCA conduct, described in reports furnished by Labor, did not constitute a violation of the Taft-Hartley Act.

    Recommendation: The Secretary of Labor should have the Solicitor seek the opinion of the Department of Justice as to whether CCA: (1) is a union representative; and (2) violates section 302(c) of the Taft-Hartley Act by collecting employee benefit funds from employers.

    Agency Affected: Department of Labor

  3. Status: Closed - Implemented

    Comments: On March 8, 1984, Labor entered into a settlement agreement with the Ohio Carpenters Health and Welfare Fund, the Trustees of the Ohio Carpenters Health and Welfare Plan, and CCA to remedy ERISA violations noted by Labor.

    Recommendation: The Secretary of Labor should issue a demand letter to the Health and Welfare Fund trustees directing them to enter into a consent order. The actions proposed by the Office of Enforcement to eliminate the reported CCA ERISA violations should be considered in the preparation of the demand letter.

    Agency Affected: Department of Labor


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