ARIZONA STATE SENATE

JASON THEODOROU

LEGISLATIVE RESEARCH ANALYST

COMMERCE COMMITTEE

Telephone: (602) 926-3171

RESEARCH STAFF

TO:                  MEMBERS OF THE SENATE

COMMERCE COMMITTEE

DATE:            February 14, 2022

SUBJECT:      Strike everything amendment to S.B. 1278, relating to labor organizations; fiduciary guidelines; definitions

Purpose

            Defines labor organization relating to prescribed fiduciary guidelines.

Background

Statute subjects a labor organization that collects benefit monies or union dues to similar fiduciary guidelines as required by employers or third-party administrators providing benefits to employees of Arizona, including all of the following: 1) the annual disclosure of certain information to its members and its members' employers under prescribed conditions; 2) the use of generally accepted accounting principles for a benefit plan; 3) the allowance of a member of the labor organization to obtain health and welfare, pension, vacation, sick or holiday benefits of the member's choosing instead of the benefits offered by the labor organization; 4) the requirement that any fringe benefit contribution that a union receives and that are in excess of the costs that the union incurs with respect to that fringe benefit to either be refunded to the employee or deposited into a defined contribution plan on the employee's behalf within 75 days after the end of the year; 5) the prohibition on accepting dues or benefits contributions for employees that have not voluntarily joined the labor organization; and 6) the prohibition on considering an individual to be a member of a labor organization without the individual's affirmative consent.

The prescribed fiduciary guidelines apply to any labor organization that is collecting benefit monies or union dues on behalf of residents of Arizona or an employer that is domiciled within Arizona. The fiduciary guidelines do not apply to labor organizations for employees working for the state, a political subdivision or the federal government (A.R.S. § 23-1421).

There is no anticipated fiscal impact to the state General Fund associated with this legislation.

Provisions

1. Defines labor organization relating to prescribed fiduciary guidelines to include:

a) any organization of any kind, or any agency or employee representation committee or plan, in which employees participate and which exists for the purpose, in whole or in part, of dealing with employers concerning grievances, labor disputes, wages, rates of pay, hours of employment or other conditions of employment; and

b) any Taft-Hartley Act trust benefit plan that is jointly operated by a labor organization.

2. Excludes, from the definition of labor organization, an employer-sponsored benefit plan that is not managed by a labor organization.

3. Makes technical and conforming changes.

4. Becomes effective on the general effective date.