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UAW Reaches Settlement Deal, Bringing Corruption Probe Closer To Completion

The Department of Justice reached a civil settlement with the United Auto Workers (UAW) union, marking the end of a multiyear federal corruption investigation into the union. The proposed settlement, which still has to be approved by a federal judge, includes a six-year period of independent oversight. During that period, a monitor nominated by the union and approved by the Department of Justice will oversee investigations of corruption allegations and administer disciplinary actions. The UAW has also agreed to pay $1.5 million to the IRS to resolve outstanding tax issues, in addition to the $15 million it has already paid to worker training centers for improper kickbacks.

The union has also agreed to hold a referendum, overseen by the monitor, amongst rank-and-file members to vote on the manner in which they elect top union leaders. The UAW currently elects top leaders through a delegate system at its conventions, and elects local leaders through direct election. Union members will now decide if they want to keep the current system in place or move to a direct election for top leaders as well.  

By agreeing to an independent monitor overseeing UAW reforms as part of the settlement, the union will also avoid the potential of a federal takeover of the union, which the Department of Justice previously proposed as a possibility. The proposed settlement will end the probe into the union, but investigators are still pursuing unspecified individuals and investigating Ford and Fiat Chrysler Automobiles. The U.S. Attorney’s office in Detroit began investigating the union for corruption in 2015 and has uncovered embezzlement of over $1.5 million in union dues, kickbacks to union officials from vendors, and $3.5 million in illegal payments from executives at Fiat Chrysler. The investigation has led to 15 convictions so far, including two former UAW presidents. This has been a huge black eye for the union. 

The UAW, which has seen a significant drop in membership over the years, is now operating in damage-control mode. The UAW’s current president, Rory Gamble, has pledged to reform the union by weeding out bad actors and appointing an independent ethics officer. The UAW and its leadership face a heavy task of restoring trust in its leadership amongst its members. We’ll see if they’re up for it.

© 2021 BARNES & THORNBURG LLPNational Law Review, Volume X, Number 352
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About this Author

Associate

A detailed-oriented and strategic thinker, Colleen Naumovich is committed to helping her clients navigate the ever-changing field of labor and employment law, understand how the laws affect every facet of their business, and implement best practices.

Colleen brings focus and dedication to assisting her employer clients with various workplace and employee needs they have. She conducts legal research and drafts memoranda, motions, and positions statements to the National Labor Relations Board. She also helps clients prepare for trial by reviewing depositions and providing summaries of...

317-231-6408
David J. Pryzbylski, Barnes Thornburg Law Firm, Indianapolis, Labor Law Attorney
Partner

David concentrates a large portion of his practice on assisting employers with traditional labor matters. His deep experience includes collective bargaining, work stoppages, arbitrations, union avoidance training and strategies, union representation elections, unfair labor practice charges, contract administration, and various other labor relations issues.

David has helped companies secure favorable outcomes with labor issues around the country. He has experience with numerous labor unions, including the Steelworkers, Teamsters, Laborers, Sheet...

317-231-6464
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