AO 2006-12: Labor organization affiliation during merger

Two labor organizations that have signed a merger agreement are affiliated for purposes of the Federal Election Campaign Act (the Act) and Commission regulations during the transition period pending their full merger. As a result, the organizations’ separate segregated funds (SSFs) must share contribution limits and may undertake other activities typical of affiliated entities, including merging into one SSF.

Background

Under the Act, committees and sponsoring organizations that are established, financed, maintained or controlled by the same labor organization are affiliated. 11 CFR 100.5(g)(2) and (4).

If the sponsoring organizations are not affiliated per se, the Commission considers several factors in the context of the overall relationship between the organizations to determine whether they are affiliated, such as governance; common officers, employees or members; financing and the formation of organizations. 11 CFR 100.5(g)(3) and (4).

Analysis

In July 2005, the International Association of Machinists and Aerospace Workers (IAM) and the Transportation Communications International Union (TCU) entered into a merger agreement that will culminate in a full merger no later than January 1, 2012.

While the two organizations may not meet the per se affiliation criteria until their merger is complete, there is sufficient evidence to conclude that are affiliated with one another during the transition period.

The merger agreement itself and the actions taken by IAM and TCU during the transition period demonstrate a formal and ongoing relationship between the two organizations. For example:

• IAM has chartered TCU/IAM as a new “affiliate,” effectively folding the former TCU into its own structure;
• TCU/IAM pays a significant monthly per capita tax to IAM; and
• IAM and TCU/IAM have overlapping employees. IAM has hired some former TCU employees to further the integration of the two organizations.

Since both organizations maintain SSFs, those committees are also affiliated. As a result, they must share limits on contributions they make and receive. 11 CFR 110.3(a)(1). Both organizations may use general treasury funds to pay for the costs of establishing, administering and soliciting contributions to both SSFs. The SSFs may solicit contributions from and may make express advocacy communications to the restricted classes of both IAM and TCU/IAM. As affiliated committees, the SSF’s may transfer unlimited funds from one to the other and may actually merge into one SSF.

Date: April 25, 2006 Length: 6 pages