85R10391 MK-F     By: Button H.B. No. 3540       A BILL TO BE ENTITLED   AN ACT   relating to financial reporting requirements for certain labor   organizations; creating new criminal offenses; imposing an   administrative penalty.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Chapter 101, Labor Code, is amended by adding   Subchapter H to read as follows:   SUBCHAPTER H. REPORTING REQUIREMENTS FOR CERTAIN LABOR   ORGANIZATIONS          Sec. 101.351.  DEFINITIONS. In this subchapter:                (1)  "Commission" means the Texas Ethics Commission.                (2)  "Labor organization" means any organization in   which public employees participate and that exists wholly or partly   to deal with one or more public employers concerning grievances,   labor disputes, wages, hours of employment, working conditions, and   terms of employment and includes a labor organization that is   exempt from taxation under Section 501(c)(5), Internal Revenue Code   of 1986.                (3)  "Member" means a person who has fulfilled the   requirements for membership in a labor organization, and who has   not:                      (A)  voluntarily withdrawn from membership in the   organization; or                      (B)  been expelled or suspended from membership in   the organization after appropriate proceedings consistent with   lawful provisions of the constitution and bylaws of the   organization.                (4)  "Officer" means a constitutional officer of a   labor organization or any person authorized to perform the   functions of the president, vice president, secretary, or   treasurer, or other executive functions of a labor organization,   and any member of the executive board or similar governing body of a   labor organization.                (5)  "Public employer" means:                      (A)  a county, a municipality, or another   political subdivision of this state, including a school district;   or                      (B)  a board, a commission, an office, a   department, or another agency in the executive, judicial, or   legislative branch of state government, including an institution of   higher education.          Sec. 101.352.  APPLICABILITY OF SUBCHAPTER. This subchapter   does not apply to a labor organization that is required to file   reports with the United States secretary of labor under Section   201, Labor-Management Reporting and Disclosure Act of 1959 (29   U.S.C. Section 431) or a successor statute.          Sec. 101.353.  INITIAL REGISTRATION OF LABOR ORGANIZATION.   (a) Not later than December 1, 2017, each labor organization must   file with the commission:                (1)  a copy of the organization's constitution and   bylaws; and                (2)  a report, signed by the president and secretary of   the organization, or the corresponding principal officers of the   organization, containing the following information:                       (A)  the name and mailing address of the   organization and any other address where the organization maintains   its principal office or at which the organization's records are   kept;                      (B)  the name and title of each officer of the   organization;                      (C)  the initiation fee or fees required from a   new or transferred member and fees for work permits required by the   organization;                      (D)  the regular dues or fees or other periodic   payments required to remain a member of the organization; and                      (E)  detailed statements or references to   specific provisions of the constitution or bylaws of the   organization that contain the provisions and procedures governing   each of the following:                            (i)  qualifications for or restrictions on   membership;                            (ii)  levying of assessments;                            (iii)  participation in insurance or other   benefit plans;                            (iv)  authorization for disbursement of   funds of the organization;                            (v)  audit of financial transactions of the   organization;                            (vi)  the calling of regular and special   meetings;                            (vii)  the selection of officers and   stewards and of any representatives to other bodies composed of   labor organizations' representatives, with a specific statement of   the manner in which each officer is elected, appointed, or   otherwise selected;                            (viii)  discipline or removal of officers or   agents for breaches of their trust;                            (ix)  imposition of fines against members   and suspensions and expulsions of members, including the grounds   for action and any requirements for notice, hearing, judgment on   the evidence, and appeal procedures;                            (x)  authorization for bargaining demands;   and                            (xi)  ratification of contract terms.          (b)  A labor organization must include any updates to the   information reported under this section with the organization's   annual report filed under Section 101.354.          (c)  A labor organization formed on or after December 1,   2017, must file the information listed under Subsection (a) with   the commission not later than the 90th day after the date the   organization is formed.          Sec. 101.354.  ANNUAL REPORT. (a) Not later than the 90th   day after the last day of a labor organization's fiscal year, the   organization must file with the commission a financial report   disclosing the financial condition and operations of the   organization for the fiscal year. The report must be signed by the   president and treasurer of the organization or the corresponding   principal officers of the organization.           (b)  The report must contain the following information:                 (1)  assets at the beginning and end of the fiscal year,   including a schedule disclosing on separate lines the totals for:                      (A)  cash;                      (B)  accounts receivable, including a detailed   schedule that states:                            (i)  the name of the person or entity;                            (ii)  the total amount receivable from that   person or entity;                            (iii)  any amounts that are 90-180 days past   due;                            (iv)  any amounts that are more than 180 days   past due; and                            (v)  any amounts that have been liquidated;                      (C)  loans receivable, including a detailed   schedule that states:                            (i)  the name of the person or entity   receiving the loan;                            (ii)  the purpose for the loan;                            (iii)  the security received for the loan;                            (iv)  the terms of repayment;                            (v)  the amount of loans outstanding from   the person or entity at the start of the reporting period;                            (vi)  the amount of loans made to the person   or entity during the reporting period;                            (vii)  the amount of cash repayments made   during the reporting period;                            (viii)  the amount of repayments made by   means other than cash; and                            (ix)  the amount of loans outstanding for   each person or entity at the end of the reporting period;                      (D)  United States Treasury securities;                      (E)  investments, including a detailed schedule   containing:                            (i)  the name and amount of each marketable   security that has a book value of $5,000 or more and that exceeds   five percent of the total of all marketable securities; and                            (ii)  the name and amount of each other   investment that has a book value of $5,000 or more and that exceeds   five percent of the total of all other investments;                      (F)  fixed assets, including a detailed schedule   that states:                            (i)  the location, cost, book value, and   value of property;                            (ii)  the location, cost, total depreciation   or amount expensed, book value, and value of buildings;                            (iii)  the cost, total depreciation or   amount expensed, book value, and value of automobiles and other   vehicles;                            (iv)  the cost, total depreciation or amount   expensed, book value, and value of office furniture and equipment;   and                            (v)  the cost, total depreciation or amount   expensed, book value, and value of other fixed assets; and                      (G)  other assets, including a detailed schedule   that states the description and value of the asset;                (2)  the labor organization's liabilities at the   beginning and end of the fiscal year, including a schedule   disclosing on separate lines the totals for:                      (A)  accounts payable, including a detailed   schedule that states:                            (i)  the name of the person or entity;                            (ii)  the total amount payable to that   person or entity;                            (iii)  any amounts that are 90-180 days past   due;                            (iv)  any amounts that are more than 180 days   past due; and                            (v)  any amounts that have been liquidated;                      (B)  loans payable, including a detailed schedule   that states on separate lines for each loan:                            (i)  the source of loans payable at any time   during the reporting period;                            (ii)  the amount owed at the beginning of the   reporting period;                            (iii)  any loans obtained during the   reporting period;                            (iv)  the amount of cash repayments made   during the reporting period;                            (v)  the amount of repayments made by means   other than cash during the reporting period; and                            (vi)  the total owed at the end of the   reporting period;                      (C)  mortgages payable, including a detailed   schedule that states on separate lines for each mortgage:                            (i)  the source of mortgages payable at any   time during the reporting period;                            (ii)  the amount owed at the beginning of the   reporting period;                            (iii)  any mortgages obtained during the   reporting period;                            (iv)  the amount of cash repayments made   during the reporting period;                            (v)  the amount of repayments made by means   other than cash during the reporting period; and                            (vi)  the total owed at the end of the   reporting period; and                      (D)  other liabilities, with a separate detailed   schedule that discloses on separate lines a description of each   liability and the amount owed at the end of the reporting period;                (3)  receipts of any kind and the sources of the   receipts, including a schedule disclosing on separate lines the   totals for:                      (A)  dues and agency fees and dues transmitted to   the organization by a parent body or other affiliate and a separate,   detailed schedule that states on separate lines any amounts   received from employers through a checkoff arrangement;                      (B)  per capita tax and a separate, detailed   schedule that states on separate lines:                            (i)  the per capita tax portion of dues   received directly by the organization from members of affiliates;                            (ii)  the per capita tax received from   subordinates, either directly or through intermediaries; and                            (iii)  the per capita tax portion of dues   received through a checkoff arrangement in which local dues are   remitted directly to an intermediate or parent body by employers;                      (C)  fees, fines, assessments, and work permits;                      (D)  sale of supplies;                      (E)  interest;                      (F)  dividends;                      (G)  rents;                      (H)  sale of investments and fixed assets,   including a detailed schedule that states:                            (i)  a description of the investment,   including the address if the investment is land or buildings;                            (ii)  the cost of the investment;                            (iii)  the book value of the investment;                            (iv)  the gross sales price; and                            (v)  the amount of the investment obtained;                      (I)  loans obtained by the organization;                      (J)  repayments of loans made by the organization;                      (K)  receipts on behalf of affiliates for   transmittal to the affiliates; and                      (L)  receipts on behalf of members for   disbursement to the members;                (4)  expenditures for salaries, allowances, and other   direct or indirect disbursements, including reimbursed expenses,   and benefits;                (5)  for each officer or employee who, during the   fiscal year, received more than $10,000 in the aggregate from the   organization and any other affiliated labor organization, an   estimation of the amount of time spent in the functional expense   categories of:                      (A)  contract administration;                      (B)  organizing activities;                      (C)  political activities;                      (D)  lobbying;                      (E)  contributions;                      (F)  gifts and grants;                      (G)  general overhead; and                      (H)  union administration;                (6)  direct and indirect loans made to any officer,   public employee, or member, which aggregated more than $250 during   the fiscal year, with a statement of the purpose, security, if any,   and arrangements for repayment;                (7)  direct and indirect loans made to any business   enterprise, with a statement of the purpose, security, if any, and   arrangements for repayment;                (8)  if the organization purchased investments or fixed   assets during the fiscal year, a detailed schedule that states:                      (A)  a description of the investment, including   the address if the investment is land or buildings;                      (B)  the cost of the investment;                      (C)  the book value of the investment;                      (D)  the gross sales price; and                      (E)  the amount paid for the investment;                (9)  for each payer or payee for whom there is an   individual receipt or disbursement of $1,000 or more, or total   receipts or disbursements that aggregate to $1,000 or more during   the reporting period for any of the following, an itemization   schedule that includes the name and address, purpose, date, amount,   and classification of the disbursement:                      (A)  other receipts;                      (B)  contract administration;                      (C)  organizing activities;                      (D)  political activities;                      (E)  lobbying;                      (F)  contributions, gifts, and grants;                      (G)  general overhead;                      (H)  union administration; and                      (I)  benefits; and                (10)  any other disbursements made by the organization   in an additional category prescribed by the commission.          Sec. 101.355.  SIMPLIFIED REPORT. (a)  The commission may   adopt rules allowing labor organizations with receipts of less than   $250,000 in a fiscal year to file a simplified version of the report   required under Section 101.354.  The commission shall prescribe the   form of the simplified report.          (b)  The commission may revoke the ability of a labor   organization described under Subsection (a) to file a simplified   report if the commission determines, after an investigation, proper   notice to the organization, and a hearing, that the organization   should file a full report in the interest of financial   transparency.          Sec. 101.356.  FILING AND PUBLICATION OF REPORTS BY   COMMISSION. (a)  The commission shall create a system for the   electronic filing of the reports required under this subchapter.  A   labor organization must file the reports required under this   subchapter electronically unless the organization receives a   hardship exemption from the commission.          (b)  The commission may adopt rules governing the format of   the reports filed under this subchapter.          (c)  The commission shall make the reports filed under this   subchapter and any data included with the reports available in a   searchable format on the commission's Internet website.          (d)  The commission may use the information and data   contained in the reports filed under this subchapter for   statistical and research purposes and may publish the results of   any studies or analyses produced using the data.          Sec. 101.357.  RETENTION OF RECORDS. A labor organization   that files reports under this subchapter must maintain the records   of the organization that may be used to verify, explain, clarify, or   check for accuracy and completeness the information contained in   each report for at least five years after the date the report was   submitted.          Sec. 101.358.  ACCESS TO REPORTS AND INFORMATION BY MEMBERS.   (a)  A labor organization shall make the information contained in   the reports submitted under Sections 101.353 and 101.354 available   to the members of the organization.          (b)  A member of a labor organization is entitled to inspect   the books, records, or accounts of the organization for the purpose   of verifying the information contained in the reports submitted by   the organization under Sections 101.353 and 101.354.          (c)  If a labor organization does not allow a member of the   organization to conduct an inspection under Subsection (b), the   member may bring an action against the organization or any officer   of the organization to compel the inspection.  The court may order   the organization or the officer to reimburse the member for court   costs and attorney's fees associated with the suit.          Sec. 101.359.  INVESTIGATIONS. (a)  The commission may   conduct investigations as necessary to determine whether a person   or a labor organization has violated or is about to violate any   provision of this subchapter.          (b)  The commission is entitled to inspect on demand and   access relevant places, records, and accounts of a labor   organization and interview persons as necessary to determine facts   related to an investigation.          (c)  The commission may report the findings of an   investigation conducted under this section to the appropriate   prosecuting attorney for civil enforcement actions or criminal   prosecutions.          Sec. 101.360.  ADMINISTRATIVE PENALTY FOR FAILURE TO FILE   REPORT. A labor organization that does not file the report required   under Section 101.354 within the time frame specified by that   section is subject to an administrative penalty of $100 imposed by   the commission for each additional day after the deadline that the   organization does not file the report.  The commission shall   deposit penalties collected under this section as general revenue   in the state treasury.          Sec. 101.361.  ENFORCEMENT; CRIMINAL OFFENSE; CIVIL ACTION.     (a)  If the commission determines that a person has violated or is   about to violate any of the provisions of this subchapter, the   commission may bring a civil action for appropriate relief,   including an injunction.          (b)  A person who intentionally violates this subchapter   shall be fined not more than $10,000 or imprisoned for not more than   one year, or both.          (c)  A person who knowingly makes a false statement or   representation of a material fact, or who knowingly fails to   disclose a material fact, in any document, report, or other   information required under this subchapter shall be fined not more   than $10,000 or imprisoned for not more than one year, or both.          (d)  A person who wilfully makes a false entry in or wilfully   conceals, withholds, or destroys any books, records, reports, or   statements required to be kept under this subchapter shall be fined   not more than $10,000 or imprisoned for not more than one year, or   both.          (e)  Each person required to sign reports under this   subchapter is considered to be personally responsible for the   filing of such reports and for any statement contained in the report   that the person knows to be false.          SECTION 2.  This Act takes effect September 1, 2017.