Policies and Procedures

Affiliates, particularly larger affiliates with more complex operations, should establish clearly defined written policies and procedures. These should be consistent with legal and Financial Standards Code requirements, be approved by the Executive Board and should at a minimum address the following:

Allowances
Hiring of Employees
Wage Rates
Benefits
Paid Employee Absences
Employee Severance Payments
Credit Cards
Leased Cars
Expenditures
Expense Reimbursements
Audits

Allowances

If the affiliate makes any of the following payments, a formal policy, adopted by the Executive Board and/or the membership should exist to authorize the payment:

Officer Allowances/Stipends

Allowances/stipends cover out-of-pocket expenses incurred while conducting affiliate business. Receipts are not required to document these payments. Allowances or stipends must be reported as wages to the recipient, subject to withholding, payroll taxes and preparation of IRS Form W-2.

Policy must require the identification of individuals and amounts authorized for officer and Executive Board allowances or stipends. Allowances must be approved by the membership or the Executive Board and such approval must be reflected in the minutes of the membership or Executive Board meetings.

Lost Time Payments

These are payments made to officers or members as compensation for taking uncompensated leave from their job to perform union duties. Payments for lost time constitute taxable income to the recipient and must be reported as wages subject to withholding, payroll taxes and preparation of IRS Form W-2

Payments for lost time can be based on the actual salaries lost by an individual, or at a rate that represents an average for all people being paid. Some government agencies consider payment of lost time, where the individual was also actually paid by their employer, to be illegal and could subject the individual to criminal charges.

Policy must clearly identify the union positions which qualify for lost time payments. Policy must require payments to be supported by adequate records showing purpose, approval, calculation method, and documentation to verify that the individual suffered a loss of income that is being made up by the affiliate as lost time. Authorized lost time payments must be documented in the minutes of the membership or Executive Board meetings.

Reimbursed Dues

Reimbursement of union dues withheld by employer. Reimbursed dues compensate officers, Executive Board members and/or stewards for union related services.

Policy must clearly identify the union positions which qualify for reimbursement of dues and establish requirements (e.g. attendance at meetings, etc.), if any, which limit eligibility for reimbursement.

Policy must require payments to be supported by adequate records showing approval and tracking of pay periods reimbursed. Authorized dues reimbursements must be documented in the minutes of the membership or Executive Board meetings or in the affiliate’s approved constitution.

Per Diem Payments

Per diem payments are general daily allowances to cover incidental costs, for which no accounting is required, constitute taxable income to the recipients and must be reported as wages subject to withholding, payroll taxes and preparation of IRS Form W-2. Out-of-town per diem paid in excess of the allowable federal rate is also taxable income to the recipient to the extent that the payment exceeds the federal guidelines. Per diem payments should be supported by authorization, purpose, and basis for amount paid.

Meal allowances paid for overnight out-of-town union-related business are non-taxable per diem payments as long as they do not exceed the maximum daily non-taxable rates authorized to be paid by the federal government. An expense report must be filed to allow these payments to be treated as "accountable" and therefore non-taxable.

Policy must clearly identify the types of union activities which qualify for per diem payments and must state the authorized amount to be paid. Policy must require payments to be supported by expense reports showing union activity performed and containing appropriate approvals. Authorized per diem payments must be documented in the minutes of the membership or Executive Board meetings.

Car Allowances

Car allowance payments provide compensation for the business use of officers’ and/or employees’ personal vehicles. Car allowance payments are taxable wages subject to withholding, payroll taxes and preparation of IRS Form W-2.

Policy must clearly identify the individuals and amounts authorized for car allowance payments. Authorized car allowance payments must be documented in the minutes of the membership or Executive Board meetings stating amounts as well as individuals who are authorized to receive car allowance payments.

Expense Advances

Expense advances are payments made to an individual for affiliate expenses that have not yet been incurred. Advances should subsequently be accounted for by submission of expense reports, invoices and other documentation required for expense reimbursement. Any advances in excess of amounts reported on expense reports must be required to be returned to the affiliate and deposited to the appropriate bank account.

Policy must clearly identify when the affiliate can issue advances (e.g., conventions, conferences, etc.) and how recipients must account for advances. Authorized advances must be documented in the minutes of the membership or Executive Board meetings.

Hiring of employees

Authority for hiring and firing must be established. Policy must clearly identify the staffing positions which qualify for permanent employment. Appropriate procedures must be developed to determine necessary qualifications for positions. Policy must also require a process for obtaining applications, conducting interviews, obtaining and maintaining all documentation required by law, etc.

Wage rates

Policy must establish authority for the initial setting of rates and for approvals and changes. It should include how wage rates are to be determined and should establish who has authority for approvals and changes.

Payment of salaries causes the affiliate to be liable for payroll taxes, withholdings and payroll tax returns. Failure to file such reports may result in tax penalties and subject the financial officers to personal liabilities. Therefore the policy must require compliance with all applicable filing requirements.

Benefits

Policy should include procedures to determine types of benefits to be provided, eligibility requirements, and documentation to be maintained.

Paid employee absences

If the affiliate employs staff, polices should be established for the following:

Vacation and Sick Leave

The policy must state the number of vacation and sick leave days earned each year and if those days are carried forward from one year to the next. The policy must also state any advance and/or buy-out arrangements and the conditions under which one form of leave can be converted to cash or another form of leave. The affiliate must keep accurate records of leave earned, taken and accumulated balances. The value of vested leave balances should also be reflected as liabilities in the affiliates’ financial statements at the end of the year.

Holidays

The policy must specify all paid holidays and the conditions required to qualify (e.g. Do part-time or only full-time employees qualify? How long must individuals be employed to qualify?).

Other Paid Absences

The policy must clearly identify the type of absences that will be paid, conditions required to qualify, how balances are accumulated, when payments will be made, conversion options, and under what circumstances accumulated balances expire.

Employee severance payments

The affiliate must have a policy which addresses any payments required to be made in the event of employee severance from service. The policy must state the conditions necessary to qualify for any payments due to severance (e.g., required years of service, part-time vs. full-time, no payment if terminated for cause). It must clearly identify how the amount of severance is to be calculated, identify the maximum allowable, if there is a maximum, and state when it is to be paid.

Credit cards

Adequate procedures for prompt reimbursement of authorized expenditures generally eliminate the need for the use of a credit card that creates exposure of the union to potentially excessive liabilities. However, while AFSCME does not recommend the use of union-owned credit cards, should an affiliate choose to provide employees and/or officers with credit cards that are billed directly to the union, written policy or procedures manuals must clearly identify the union positions which qualify for use of a card and must explain the types of authorized expenditures.

The policy should provide details of the types of both authorized and prohibited usage. Approval of individuals authorized to use a union-owned credit card should be clearly documented in the minutes of the membership or Executive Board meetings.

Policy must require all individuals authorized to make a charge directly to an affiliate credit card to provide an itemized expense report detailing each and every charge made as well as its union purpose. The actual credit card receipt and the itemized sales slip must also be attached to the expense report. Personal charges to the union credit card must be prohibited and any inadvertent personal use must be required to be repaid promptly.

An affiliate must not, under any circumstances make a payment directly to a credit card company for any individual’s personal credit card.

Leased cars

The establishment of car allowances or prompt reimbursement of a mileage allowance for union business use of a personal car generally eliminates the need for affiliates to lease cars. However, should an affiliate opt to provide its employees and/or officers with leased cars, written policy or procedures manuals must explain the authorized use of the car.

The policy should provide details of the types of both authorized and prohibited usage. Approval of individuals authorized to use a union-paid leased car should be clearly documented in the minutes of the membership or Executive Board meetings.

Policy must require the employee to maintain usage logs. The value of any personal usage (including commuting) must be reimbursed to the affiliate or if such usage is authorized by the membership or the Executive Board to be union-paid, the value must be included as taxable income to the employee and reported on the employee’s W-2 form.

Expenditures

In general, policies for expenditures should encourage adherence to the requirements of the Financial Standards Code, applicable laws, and other good business practices.

Policy must require that expenditures be properly authorized by one of the methods identified in the Financial Standards Code and must be for legitimate union business purposes. Extravagant and/or unnecessary expenditures should be prohibited. Larger expenditures require the use of appropriate purchasing procedures such as competitive bidding to ensure that the best price and terms are obtained.

Expense reimbursements

Policy must clearly identify the types of union activities for which expenditures will be reimbursed. It must require the use of expense reports to document all reimbursements to officers and employees. Each item to be reimbursed must be documented to indicate its date, amount and union purpose. Receipts must be attached and each expense report must be approved.

The policy must also identify the union positions authorized to approve the reports. In the case of employee expense reimbursements, approval must be from the employee’s supervisor; for officer expense reimbursements, expense reports should be approved by the Executive Board or a committee of officers selected for that purpose.

Audits

Policy should indicate whether audits are to be performed by an outside auditor or by Trustees elected for that purpose in accordance with the provisions of the affiliate’s constitution.

All Councils and any Local Union having either 2,000 or more members must have an annual audit prepared by a Certified Public Accountant, performed in accordance with Generally Accepted Auditing Standards. All other affiliates are encouraged to use a CPA to perform an audit, review or compilation of the financial records.