Government Cutbacks: Will Federal Unions Chip In?

Federal Agencies are facing major cutbacks in an effort to resolve debt and other problems. Federal sector unions are almost entirely funded in day-to-day operations by appropriated funds. The author asks whether some thought has been given to asking unions to voluntarily dig into their untouched dues collection funds to help out in these tough times.

There is a little known and even less publicized fact about Federal
labor relations. Since the 1979 passage
of the Federal labor law, unions representing federal employees have been given,
through bargaining or otherwise, literally hundreds of millions of dollars
worth of space, goods and services that allow them to operate on a day-to-day basis
without resorting to the use of employee dues money for these purposes.

What is a Union, Anyway?

Federal unions are NOT government entities. The Internal Revenue Service considers unions
to be non-profit organizations under the provisions of section 501(c)(5) of the
tax code. In essence, they are a private
sector corporation of sorts. IRS says
the following to those who apply for tax-exempt status as a union:

“Labor Organizations

A labor organization is an
association of workers who have combined to protect and promote the interests
of the members by bargaining collectively with their employers to secure better
working conditions. To show that your organization has the purpose of a labor
organization, you should include in the articles of organization or
accompanying statements (submitted with your exemption application) information
establishing that the organization is organized to better the conditions of
workers, improve the grade of their products, and develop a higher degree of
efficiency in their respective occupations. In addition, no net earnings of the
organization can inure to the benefit of any member.

Composition of membership. While a
labor organization generally is composed of employees or representatives of the
employees (in the form of collective bargaining agents) and similar employee
groups, evidence that an organization’s membership consists mainly of workers
does not in itself indicate an exempt purpose. 

You must show in your application that your organization has the
purposes described in the preceding paragraph. These purposes can be
accomplished by a single labor organization acting alone or by several
organizations acting together through a separate organization.

Benefits to members. The payment
by a labor organization of death, sick, accident, and similar benefits to its
individual members with funds contributed by its members, if made under a plan
to better the conditions of the members, does not preclude exemption as a labor
organization. However, an organization does not qualify for exemption as a
labor organization if it has no authority to represent members in job-related
matters, even if it provides weekly income to its members in the event of a
lawful strike by the members’ union, in return for an annual payment by the

So these unions get tax-exempt status and have their operating funds at
Agencies subsidized by tax money. So
what do they use dues money for? I, for
one, have always thought that was a good question. How about you 

How Unions Can Help Out Federal
Employees in These Tough Times.

Federal unions get free office space, furniture and attendant
maintenance and cleaning services in Agency buildings. Perhaps these organizations could offer to
cut back on this space before Agency staffs shrink in coming years. This is certainly true of large Agencies such
as the Department of Veterans Affairs, for example, which provides space,
furniture and maintenance at a large number of locations. Certainly, the American Federation of
Government Employees (AFGE) could do some belt tightening and close some of
these offices, cutting back on the use of government funds and help DVA keep
more employees at work.

There are many other goods and services provided free to unions that
the unions could offer up in whole or in part to save both money and jobs. Do union representatives need a computer,
printer, internet access and the like in a separate office when these are
already around or about their work stations?

How about consumables such as phone service (and equipment)? Recently, AFGE has been making bargaining
demands  for union reps to get
Blackberries (the phone, not the fruit). Surely, they can get by without such equipment. Most people have a cell phone these
days. They could surely use that phone
for union business, couldn’t they? With
email availability, they don’t really need a fax, do they? Don’t you think the union could pony up its
own copy paper and offer to buy a toner cartridge for the copier or print
cartridge for the printer from time to time to save jobs?

As Agency budgets shrink and Executives look for costs to cut, perhaps
President Obama’s Agency-union forums, mandated by his Executive Order 13552,
could facilitate these issues. The Order
required each Agency to submit a plan, after consulting with its union to:

“…address how the
department or agency will work with the exclusive representatives of its
employees through its labor-management forums to develop department-, agency-,
or bargaining unit-specific metrics to monitor improvements in areas such as
labor-management satisfaction, productivity gains, cost savings, and other areas as identified by the relevant
labor-management forum’s participants; and (iv) explain the department’s or
agency’s plan for devoting sufficient resources to the implementation of the
plan.” (My Emphasis)

 So the mechanism already exists to get this
ball rolling. What are you waiting

As always, any opinion
you believe evident in the above is mine and mine alone.

For those Agency staff
interested in a 2011 look at the state of Federal labor relations, I’ll be
conducting an Advanced Labor Relations Workshop in Boston MA this fall. We’ll cover “Covered By”, ULP Handling,
Dealing with Pre-decisional Involvement, Strengthening Your Agency’s Grievance
and Arbitration Effort and other good stuff. If interested in more information, please connect with Dennis Hermann at I’ll let you know exact dates soon.

About the Author

Bob Gilson is a consultant with a specialty in working with and training Federal agencies to resolve employee problems at all levels. A retired agency labor and employee relations director, Bob has authored or co-authored a number of books dealing with Federal issues and also conducts training seminars.