Labor Department Staff Union Embroiled in Political Battle

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By Ben Penn (Bloomberg BNA) and Josh Eidelson (Bloomberg)

The union representing 3,000 Labor Department employees was placed into trusteeship by its parent organization, which accuses the ousted leaders of misusing union money.

In a letter obtained by Bloomberg News, the national head of the American Federation of Government Employees told members Oct. 4 he was immediately relieving the local’s officers and delegates of duty and installing a trustee. President J. David Cox alleged AFGE Local 12’s leaders had “failed to abide by” a membership vote to conduct an audit and that “there have been expenditures without proper approval, specifically $18,000 at the Hyatt Regency.” The local’s leaders violated federal law requiring labor organizations to have accounting controls necessary to ensure their fiscal integrity is maintained, he said.

The removal of Local 12 officers at the DOL’s Washington headquarters follows an acrimonious history between the nation’s largest federal employee union and its affiliate at the agency charged with protecting workers’ welfare. It also comes weeks before members were set to vote on local leadership. Ousted Local 12 President Alex Bastani and two other officers told Bloomberg BNA that the charges are baseless and part of a ruse to overthrow a local outpost that has repeatedly clashed with the union’s national leadership.

“There have been no financial or representational misdeeds,” the removed leaders wrote in a position paper they provided to Bloomberg BNA. “There has simply been a sloppy coup d’état by AFGE National Office and District 14.”

The deposed officers plan to file an unfair labor practice complaint accusing the Labor Department of unlawfully assisting the national union in imposing the trusteeship. Eleanor Lauderdale, who was removed as Local 12 vice president, said the department, acting as an agent of AFGE, last week escorted an officer and a steward out of the office with armed guards and took their department-issued computers.

The Labor Department didn’t provide a comment.

Deposed Leaders Hit Back

Bastani has twice run against Cox for AFGE national president. He also publicly slammed the union for its 2015 endorsement of Hillary Clinton over Sen. Bernie Sanders (I-Vt.) more than a year before the 2016 election.

Nate Nelson, an AFGE district representative who is now the trustee overseeing Local 12 operations, told Bloomberg BNA that he investigated members’ complaints and concluded that probable cause existed to institute the trusteeship. Nelson said he wasn’t aware of the bad blood between Bastani and Cox at the time of his investigation.

“One thing we cannot tolerate is allegations of abuse of the members’ funds and money,” Nelson said. “Whenever we’ve got evidence indicating that, we’ve got to take action.”

Bastani, who claimed an internal AFGE straw poll showed only 22 percent of members supported Clinton for the Democratic ticket when the union endorsed her, said he refused to shake Cox’s hand during a March 2016 labor function in Washington. Bastani joins other local labor leaders who complained during the run-up to the 2016 election that their parent organizations, by endorsing Clinton, betrayed the majority of membership who favored Sanders.

The trusteeship “has everything in the world to do with Alex opposing Cox. That is the crux of it,” Lauderdale said in an interview.

Abuse of Membership Funds

At the center of the allegations cited in the trusteeship letter are $18,000 in hotel expenses that Nelson said Local 12 was never able to prove that members had authorized. Bastani says the hotel event was properly held to distribute back-wage checks to members. Local 12 won those wages in 2016 as part of decadelong arbitration settlement with the DOL for $7 million in overtime pay owed.

Another allegation concerns a membership vote to hire a new auditor to review the local’s books. Local 12 continued to use the same CPA firm it had used in recent years in September 2017 to meet an annual filing deadline, the former leaders said. Lauderdale and ousted treasurer Kevin McCarron defended the decision, saying AFGE never produced credentials for the new auditor selected by members. The deposed officers said they had no choice but to rely on the firm that was already familiar with their books or else they wouldn’t meet the deadline. They argued that the local didn’t disregard the member vote because the firm didn’t actually conduct an audit.

A panel appointed by Cox is slated to hold a hearing regarding the trusteeship Dec. 1 and then vote to either ratify or rescind it. AFGE requires that trusteeships last no more than 12 months. Cox wrote that the union tries to elect new local officers and end trusteeships “as soon as possible so as to restore autonomy to the trusteed local, once the irregularities that caused the trusteeship have been cured or no longer exist.”

“The protocol of trusteeship is articulated in the AFGE Constitution. We put a lot of effort into oversight of our locals, but we do not comment on pending internal matters,” Ashley De Smeth, spokeswoman for AFGE national, told Bloomberg News via email. “There will be a hearing conducted in the near future to ensure due process.”

Bastani, Lauderdale, and McCarron are Labor Department employees, who plan to resume their jobs at the DOL after their ouster.

Canceled Election

Bastani and Lauderdale said that if members were truly dissatisfied with Local 12 leadership, they would have voted those leaders out of office at an election that was scheduled for Oct. 18. The national office effectively canceled the election two weeks before it would have occurred because it recognized that the removed officers would be re-elected, the officers said.

The candidates running against the Bastani administration have now been installed by the trustee as acting union leaders. They will have an opportunity to run for office to remove their temporary labels.

“I would like to get out of the trusteeship and get an election as soon as possible,” Nelson said.

The newly appointed acting Local 12 leadership didn’t respond to requests for comment.

Bastani and Lauderdale said Cox, District 14—the AFGE regional office with oversight over Local 12—and the opposition slate were all working in tandem to overthrow Bastani and his officers.

“It is essential that proper financial controls and democratic principles be restored,” Cox wrote in the letter to members.

‘Breaking Point’

Bastani said his already tense relationship with Cox reached “a breaking point” after the Clinton endorsement.

Their rapport was fraying even before the rebuffed handshake. During their most recent race for the AFGE presidency, Bastani called attention to what he claimed was an inappropriate trip to Israel that Cox and his officers took using $650,000 in membership dues.

Bastani received 11 percent of the vote in that election but said he believes the union headquarters still saw him as a threat. The trusteeship was motivated by “the fact that maybe I’ll never be an executive officer of the national office, but I’m never going away and continuing to complain about poor leadership on” Cox’s “behalf and the culture that I think he’s established in the union.”

Lauderdale is currently reviewing the local’s legal options to challenge the trusteeship’s expedited process, without giving advance notice that she says is required by the AFGE constitution. She plans to file an administrative complaint with the Labor Department’s Office of Labor-Management Standards. OLMS investigators are represented by a separate union, to avoid a possible conflict if they were to investigate Local 12.

DOL Union in Flux

The leadership drama comes at a fraught moment for Local 12, which represents DOL career staff at agencies such as the Wage and Hour Division and Occupational Safety and Health Administration. The Trump administration proposed a 20 percent cut in the DOL’s budget earlier this year, although Congress is now considering more moderate reductions.

Also, the White House is tasking all federal agencies to develop a reorganization plan designed to reduce the federal workforce.

The DOL union, meanwhile, is entering its busiest time of the year, just after employee appraisals. Local 12 typically receives an influx of grievances from members over the ensuing weeks.

To contact the reporters on this story: Ben Penn (Bloomberg BNA) and Josh Eidelson (Bloomberg) in Washington at bpenn@bna.com and jeidelson@bloomberg.net

To contact the editors responsible for this story: Chris Opfer (Bloomberg BNA) at copfer@bna.com; Wes Kosova (Bloomberg) at wkasova@bloomberg.net

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

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