Chapter 0347 - 551R - H Ver of SB1268

House Engrossed Senate Bill

labor organizations; fiduciary guidelines; disclosure

State of Arizona

Senate

Fifty-fifth Legislature

First Regular Session

2021

CHAPTER 347

SENATE BILL 1268

AN ACT

amending Title 23, chapter 8, Arizona Revised Statutes, by adding article 7; relating to labor relations.

(TEXT OF BILL BEGINS ON NEXT PAGE)

Be it enacted by the Legislature of the State of Arizona:

Section 1. Title 23, chapter 8, Arizona Revised Statutes, is amended by adding article 7, to read:

ARTICLE 7. LABOR ORGANIZATIONS

START_STATUTE23-1421. Labor organizations; fiduciary guidelines; disclosure; accounting methods; benefit choice; fringe benefit contributions; dues; contracts; applicability; definition

A. Notwithstanding any other law of this state and to the extent allowed under federal law, a labor organization that collects benefit monies or union dues is subject to similar fiduciary guidelines as required by employers or third-party administrators providing benefits to employees in this state, including all of the following:

1. The labor organization shall annually disclose to its members and its members' employers all of the following information on one consolidated statement:

(a) The labor organization's total revenue and expenditures for each benefit category within this state and on a national level.

(b) The price of each unit collected, which is typically listed as an hourly rate for each benefit category based on employee classification. This disclosure shall be provided in a manner that allows a member to determine the amount of benefit monies that have been collected on the member's behalf.

(c) The cost of each benefit provided to the member, which is typically listed as a monthly premium cost for insurance products or as another formula for noninsurance benefits. This cost disclosure shall be provided in a manner that is sufficiently detailed to allow a member to determine the true cost of the benefit provided on the member's behalf.

(d) A list of any payments that the labor organization makes during the year for each benefit category.

(e) A reconciliation and explanation of any differences between any amounts disclosed pursuant to subdivisions (a) and (d) of this paragraph.

2. The disclosure required pursuant to paragraph 1 of this subsection shall be made each year, not later than sixty days after the end of the labor organization's fiscal year or the fiscal year of the specific benefit trust funds, if different. The disclosure must be signed by an officer of the labor organization under penalty of perjury.

3. The disclosure required pursuant to paragraph 1 of this subsection must be either:

(a) Provided to each member and each member's employer either as a paper mailing or via email.

(b) Posted on the labor organization's publicly viewable website each year. If a labor organization posts the disclosure on a publicly viewable website pursuant to this subdivision, the labor organization shall both:

(i) Provide instructions to its members on how to access the disclosure.

(ii) Maintain the prior years' disclosures on the same website.

4. A labor organization benefit plan must use generally accepted accounting principles to account for benefit funds in a similar method as required by an employer benefit plan.

5. A member of a labor organization may obtain health and welfare, pension, vacation, sick or holiday benefits of the member's choosing instead of the benefits offered by the labor organization. The member has the ultimate discretion regarding which benefits the member chooses. If the member chooses:

(a) To obtain benefits from the member's employer, the employer may withhold payment to the labor organization for the hourly fringe charge for those benefits.

(b) To obtain benefits from a person outside of the employment relationship, the employer shall withhold payment to the labor organization for that particular fringe benefit category and forward the monies to the employee or benefit provider, as agreed to by employee and employer.

6. Any fringe benefit contributions that a union receives and that are in excess of the costs that the union incurs with respect to that fringe benefit must either be refunded to the employee or deposited into a defined contribution plan on the employee's behalf within seventy-five days after the end of the year.

7. A labor organization may not accept dues or benefits contributions for employees that have not voluntarily joined the labor organization. Any resident of this state has standing in a court of this state against the labor organization for monies that are paid to a labor organization on behalf of the resident without the resident's consent.

8. An individual may not be considered to be a member of a labor organization, or have any union dues or union benefits withheld from the individual or the individual's employer, without the individual's affirmative written consent. An employee or an employer may not pay any penalty or fee related to the employee's abstention or resignation from labor organization membership.

B. This section applies to any labor organization that is collecting benefit monies or union dues on behalf of a resident of this state or an employer that is domiciled within this state. This section does not apply to labor organizations for employees working for the state, a political subdivision of the state or federal governments.

C. Notwithstanding any other law of this state and to the extent allowed under federal law, any member or employer who is otherwise obligated to contribute benefit monies for a benefit category as defined in subsection D, paragraph 4 or 5 of this section or union dues has no such obligation during any time that the labor organization is in violation of subsection A of this section. A labor organization that is in violation of subsection A of this section for more than thirty days forfeits the labor organization's claim on the benefit monies the member or employer was obligated to contribute for a benefit category as defined in subsection D, paragraph 4 or 5 of this section or dues during the time the labor organization was in violation of subsection A of this section. This subsection does not allow a member or employer to halt contributions for a benefit category as defined in subsection D, paragraphs 1 through 3 of this section, and a labor organization does not forfeit its claim on benefit monies or dues for a benefit category as defined in subsection D, paragraph 1 through 3 of this section unless in accordance with an election made by the member pursuant to subsection A, paragraph 5 of this section.

d. For the purposes of this section, "benefit category" includes any combination of one or more of the following or additional benefit categories but may vary for each labor organization:

1. Health and welfare.

2. Pension.

3. Vacation, sick or holiday.

4. Training.

5. Other. END_STATUTE

Sec. 2. Severability

If a provision of this act or its application to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of the act that can be given effect without the invalid provision or application, and to this end the provisions of this act are severable.