|9-138.020||Investigative and Supervisory Jurisdiction|
|9-138.030||Consultation Prior to Prosecution|
|9-138.040||Consultation Prior to Relief of Convicted Individuals From Labor-Management and Pension-Welfare Position Disqualification|
|9-138.130||Coordination with the Department of Labor|
|9-138.150||Litigating Authority of Department of Labor Attorneys in District Court Proceedings Under ERISA—29 U.S.C. § 1111|
|9-138.160||Special Appointment of Department of Labor Attorneys in District Court Proceedings Under LMRDA (29 U.S.C. § 504)|
|9-138.170||Delegation of United States Attorney's Responsibility to Appear on Behalf of Federal Prosecuting Officials|
9-138.010 - Introduction
The felony offense in 29 U.S.C. § 504 prohibits persons convicted of certain crimes from being employed or serving in specified prohibited capacities, including as labor union officials, corporate employees engaged in labor-management relations, and as labor relations consultants. The statute applies only to labor unions and employers in the private sector of the economy which are regulated by the Labor-Management Reporting and Disclosure Act (LMRDA) (29 U.S.C. § 401, et seq.).
The felony offense in 29 U.S.C. § 1111 prohibits persons convicted of certain crimes from being employed or serving in specified prohibited capacities related to employee pension or welfare benefit plans regulated by title I of the Employee Retirement Income Security Act (ERISA) and as consultants to such plans. See 29 U.S.C. § 1001, et seq. Convicted individuals are disqualified automatically by operation of both statutes upon sentencing.
9-138.020 - Investigative and Supervisory Jurisdiction
Questions about 29 U.S.C. § 504 and § 1111 should be directed to the Labor Management Unit of the Organized Crime and Gang Section, Criminal Division, which has supervisory authority over these statutes.
By a Memorandum of Understanding dated January 18, 2005, between the Secretary of Labor and the Attorney General, both the Federal Bureau of Investigation (FBI) and the Department of Labor (DOL) have authority to investigate violations of 29 U.S.C. § . Pursuant to a Memorandum of Understanding dated Feburary 9, 1975, between the Secretary of Labor and the Attorney General, the FBI has authority to investigate violations of 29 U.S.C. § 1111 under delegation from the DOL. The 1975 Memorandum permits different arrangements to be made on a case-by-case basis because the DOL has statutory authority to investigate violations of § 1111.
In regard to issues concerning the appropriateness of a grant of an exemption under 29 U.S.C. §§ 504 or 1111, investigation is conducted by Department of Labor investigators with the assistance of the Office of the Solicitor of Labor in Washington, D.C.
9-138.030 - Consultation Prior to Prosecution
Prior to instituting grand jury proceedings, as well as seeking an indictment, or filing an information, under either 29 U.S.C. § 504 or 29 U.S.C. § 1111, consultation is required with the Criminal Division through the Labor-Management Unit of the Organized Crime and Gang Section. Because the underlying purpose is to eliminate undesirable persons from the labor movement in the case of 29 U.S.C. § 504 or from access to or management of the assets of an employee benefit plan in the case of 29 U.S.C. § 1111, a procedure of notification prior to proceeding with criminal prosecution has been adopted by the Criminal Division in certain cases.
In the absence of a clear demonstration of a knowing and intentional violation of either statute, the disqualified individual and the responsible person(s) who permit(s) the disqualified person to serve in violation of either statute are notified and given the opportunity to vacate the prohibited position and avoid prosecution. This policy furthers the remedial purposes of the statute and has generally resulted in compliance by the affected individuals. Following consultation with the Criminal Division, the procedure need not be used where available evidence indicates that the affected individuals were aware that the disqualified person's service was prohibited by reason of conviction at the time such service was rendered.
In those cases where notification of the disability is required prior to prosecution, the Criminal Division or the interested investigating agency will give notice of the disqualification by certified mail or by delivery through the case investigator. In the case of a convicted officer or employee of a labor organization or employer association or convicted labor consultant disqualified by 29 U.S.C. § 504, the individual serving in a prohibited capacity and the chief executive officer of the local and international labor organizations, employer associations, etc., are notified of the violation and advised that prosecution will be initiated unless the prohibited relationship is terminated. In the case of a convicted benefit plan officer, employee, fiduciary, or consultant, etc. disqualified by 29 U.S.C. § 1111, the individual in violation, the benefit plan administrator/trustees/attorney and the chief executive officer of any affected business firm is given similar notice and advice.
In order to effectuate this procedure, all United States Attorneys are requested to forward to the Labor-Management Unit, Organized Crime and Racketeering Section copies of the accusation, indictment, or criminal information, any plea agreement and the judgment and commitment order (or equivalent documents) for any convicted individuals in their respective districts who are known to occupy a position in a labor organization, employee benefit plan, employer association, or to be serving as a consultant, adviser, or labor relations consultant with respect to such organizations. The following information should be furnished if possible: the address of the convicted individual, the name of the chief executive officer of the affected organization and the organizations's address, and the name of the benefit plan administrator, trustee, attorney, etc., and his/her address. In some cases a copy of the transcript from the sentencing hearing and any plea hearing also may be requested in order to facilitate a determination of whether the convicted individual's crime disqualifies him or her from service prohibited by the statutes.
It should be noted that convicted organizations are treated differently from convicted individuals for purposes of the ERISA disability. Convicted corporations and partnerships are not automatically disqualified upon sentencing from prohibited service with employee benefit plans as described in 29 U.S.C. § 1111. The Federal sentencing court (or a United States District court for the district where the disqualifying state crime was committed) must first determine, after notice to the convicted organization, the prosecuting attorney, and the Secretary of Labor, that the convicted organization's service would be inconsistent with the purposes of the ERISA disability. 29 U.S.C. § 1111(a)(B).
[updated January 2020] [cited in JM 9-130.300]
9-138.040 - Consultation Prior to Relief of Convicted Individuals From Labor-Management and Pension-Welfare Position Disqualification
The Labor-Management Unit of the Organized Crime and Gang Section recommends that it be consulted by promptly by telephone or email whenever a United States Attorney's Office learns that a convicted individual seeks relief from the employment or office holding disqualifications of 29 U.S.C. §§ 504 or 1111. The Labor-Management Unit can advise attorneys of the procedures to be followed in such proceedings and assist in the coordination of these matters with the Labor Department. The Labor-Management Unit can assist whenever a convicted individual files in district court (for disqualifying crimes completed after November 1, 1987) or with the United States Parole Commission (for disqualifying crimes committed before that date) an application for exemption from disqualification in a particular position at any time following conviction and sentence, moves a sentencing court for a reduction of the period of disqualification under the statutes to a minimum period of three years following conviction and sentence or end of resulting imprisonment, or whenever such relief is contemplated for inclusion in a plea or sentencing agreement. See Policy Statement Sec. 5J1.1, United States Sentencing Commission, Guidelines Manual (Effective June 15, 1988).
[updated January 2020] [cited in JM 9-16.060]
9-138.130 - Coordination with the Department of Labor
In accordance with memoranda of understanding between the Secretary of Labor and the Attorney General, the Department of Labor is responsible for conducting the investigation concerning the appropriateness of granting an application for exemption from a disqualified individual's employment disability under both 29 U.S.C. § 504 and § 1111. Moreover, because it is the policy of the Department of Justice to treat motions for reduction of the period of disability similarly to applications for exemption, any investigation concerning the appropriateness of a reduction of the length of disability should also be conducted in cooperation with the appropriate office of the Department of Labor.
Therefore, when a petition for exemption from the disqualification in a particular prohibited capacity is filed by the convicted individual in a federal district court or when a motion for reduction of the length of disability is filed in the federal or state court in which the convicted individual was sentenced for his or her disqualifying crime, ordinarily it will be necessary to seek a continuance of the proceeding. The continuation allows the Department of Justice and the Department of Labor an adequate opportunity to coordinate their litigative positions and to provide sufficient time for any necessary investigation by the Office of Labor-Management Standards (29 U.S.C. § 504) or the Employee Benefits Security Administration (29 U.S.C. § 1111) of the Department of Labor. At the time of sentencing, a continuance may be sought on the grounds that neither statutory disability is a part of the sentence and, therefore, relief may be considered in a separate and subsequent proceeding.
When relief by way of exemption or reduction of the disability is considered as part of a plea or sentence agreement, the Secretary of Labor's statutory rights to notice and representation in these relief proceedings may not be waived or negotiated away as a part of the plea or sentencing bargain. Coordination with the Department of Labor furthers the statutory scheme which is intended to ensure that the disability not be set aside for purposes which are inconsistent with the Federal laws governing the internal affairs of labor unions and the operation of employee benefit plans and which reflect a “clear demonstration by the convicted person that he or she has been rehabilitated since commission of the disqualifying crime and can therefore be trusted not to endanger the organization in the position for which he or she seeks relief from disability.” U.S. Sentencing Commission, Guidelines Manual § 5J1.1. Relief from Disability Pertaining to Convicted Persons Prohibited from Holding Certain Positions (Policy Statement). The Federal prosecutor should consider carefully the effect which the convicted offender's continued employment in regard to a labor union, employee benefit plan or employer association may have on the organization's members and participants.
[updated January 2020] [cited in JM 9-138.100]
9-138.150 - Litigating Authority of Department of Labor Attorneys in District Court Proceedings Under ERISA—29 U.S.C. § 1111
With respect to disqualifying crimes committed on or after November 1, 1987, the Department of Labor has litigating authority in district court proceedings pertaining to relief from disqualification imposed by 29 U.S.C. § 1111. ERISA Section 502(j) provides that "in all civil actions under this subchapter, attorneys appointed by the Secretary may represent the Secretary but all such litigation is subject to the direction and control of the Attorney General." 29 U.S.C. § 1132(j). An application for relief is viewed as a civil action because it involves a separate proceeding from the criminal prosecution and because the statutory prohibition is remedial rather than punitive in nature. See DeVeau v. Braisted, 363 U.S. 144 (1960).
Therefore, in relief proceedings arising under 29 U.S.C. § 1111 attorneys from the office of the Solicitor of Labor may be designated by the Secretary to appear on his behalf. Supervision of such litigation by the Attorney General is exercised by each United States Attorney for the judicial district where the proceeding for relief will be held in consultation with the Assistant Attorney General, Criminal Division, pursuant to 28 C.F.R. § 0.55(i).
[cited in JM 9-138.170]
9-138.160 - Special Appointment of Department of Labor Attorneys in District Court Proceedings Under LMRDA (29 U.S.C. § 504)
With respect to disqualifying crimes committed on or after November 1, 1987, the Department of Labor has no litigating authority under the LMRDA with respect to relief proceedings in United States District Court under 29 U.S.C. § 504. As a result, attorneys from the Office of the Solicitor of Labor must be specially appointed by the Department of Justice in order to appear on behalf of the Secretary of Labor. These appointments should be made upon the recommendation of the United States Attorney for the judicial district where the proceeding for relief will be held on a case-by-case basis pursuant to 28 U.S.C. § 543.
[cited in JM 9-138.170]
9-138.170 - Delegation of United States Attorney's Responsibility to Appear on Behalf of Federal Prosecuting Officials
In the case of a convicted person’s request to a federal district court for relief from a disability in a particular prohibited capacity, the state or federal prosecuting attorney is entitled to notice and opportunity to appear in any hearing concerning the federal court’s determination that the convicted person’s exempted service would not be contrary to the purposes of the LMRDA and in accordance with the Sentencing Commission’s policy of prior rehabilitation at U.S.S.G. § 5J1.1. Therefore, a United States Attorney's responsibility to appear in an United States district court on behalf of the Federal prosecuting officials who have standing to participate in relief proceedings may be delegated to those Department of Labor attorneys who are given special appointments pursuant to 28 U.S.C. § 543 or Department of Justice attorneys designated by the Assistant Attorney General, Criminal Division. See JM 9-138.160. However, with respect to district court proceedings for relief under ERISA, attorneys appointed by the Secretary of Labor pursuant to ERISA and 29 U.S.C. § 1132(j) are authorized to represent only the Secretary of Labor. See JM 9-138.150.
9-138.180 - Conflict Resolution
Any conflict with respect to litigation strategy among representatives of the Secretary of Labor and the Federal prosecutors should be submitted to the Assistant Attorney General, Criminal Division, for review and recommended resolution. It is the policy of the Department of Justice that, in the absence of exceptional circumstances, each party to these relief proceedings be permitted to present to the district court its views on the merits for or against relief without regard to which agency represents that party.
9-138.200 - Civil Actions—Coordination
Civil actions against the Department of Justice for declaratory judgment, injunction, and/or relief from the disabilities imposed by 29 U.S.C. §§ 504 and 1111 are coordinated with the Labor-Management Unit of the Organized Crime and Gang Section, Criminal Division.
A civil action to remove a fiduciary of an employee benefit plan for violation of 29 U.S.C. § 1111 may be brought by the United States Department of Labor, or by a benefit plan participant, beneficiary or fiduciary. See 29 U.S.C. §§ 1109(a) and 1132(a)(2). Civil actions litigated by the Department of Labor are subject to the direction and control of the Civil Division, United States Department of Justice. See 29 U.S.C. § 1132(j).
[updated May 2011]