Paper local
Encyclopedia
A paper local is a local union
with no or few members, chartered by an existing union (usually an international or national union body) or self-chartered, and formed for the purpose of criminal activity. As implied by the name, paper locals often "exist only on paper," and have no members. In some cases, however, paper locals may have members, but the members are not workers but rather friends, family members, or criminal associates of the individual or individuals in control of the paper local.
Although paper locals may occur wherever labor unions are given formal, legal status and rights, they have been a particular problem in the United States
. Paper locals are denounced by the AFL-CIO
Code of Ethical Practices.
money. The individual who controls a paper local may threaten to unionize an employer's workers unless he receives a payoff. The paper local may even list the workers at a worksite as "members" and accept the payment as "union dues
," when in fact the workers have not consented to forming or joining the union, have not paid dues, and do not receive the benefits of collective bargaining
. In at least one case, a paper local based its extortion fee not on the number of workers an employer had but the number of coin-operated machines it had installed in local businesses.
Paper locals often enter into sweetheart contracts that are grossly unfair to workers, and then the employer and paper local embezzle
money from the business. While a legitimate union contract might cost X amount of money in wages and benefits, the sweetheart contract costs much less; the difference is split between the individual(s) who control the paper local and the company owners. In one infamous example, a paper local and an employer entered into a sweetheart contract in which workers were able to take only one holiday off each year, Passover
. Since the workers were almost all Puerto Rican
and non-Jewish, they did not take the holiday off and the employer was not forced to pay workers for a day off.
When a paper local is controlled by organized crime
, the paper local may also accept bribes
in order to guarantee that there will be no strikes, grievances, or work stoppages (e.g., "labor peace"), or it may intimidate, coerce, vandalize, or sabotage the employer's competitors in order to protect the employer and the sweetheart deal. This can create distinct competitive advantages for the employer, which can be higher than the bribes paid.
More recently, paper locals have been used for committing fraud
. Paper locals have charged real estate developers
for union services while hiring non-union workers (allowing theindividual[s] controlling the paper local to pocket the difference in wages and benefits).
On occasion, employers have formed paper locals in order to establish company union
s, and prevent unionization of their workforce.
in the mid-1950s. Midwestern
Teamster leader Jimmy Hoffa
wished to unseat Dave Beck
, the union's international president. In October 1956, mobster Johnny Dio met with Hoffa in New York City
and the two men conspired to create as many as 15 paper locals to boost Hoffa's delegate totals. When the paper locals applied for charters from the international union, Hoffa's political foes were outraged. A major battle broke out within the Teamsters over whether to charter the locals, and the media attention led to inquiries by the U.S. Department of Justice
and the Permanent Subcommittee on Investigations of the U.S. Senate Committee on Government Operations
. Beck and other Teamster leaders challenged the authority of the U.S. Senate to investigate the union, which caused the Senate to establish the Select Committee on Improper Activities in Labor and Management
—a new committee with broad subpoena and investigative powers. Senator John L. McClellan
, chair of the select committee, hired Robert F. Kennedy
as the subcommittee's chief counsel and investigator.
The Select Committee (also known as the McClellan Committee, after its chairman), exposed widespread corruption in the Teamsters union. Beck fled the country for a month to avoid its subpoenas before returning. Four of the paper locals were dissolved to avoid committee scrutiny, several Teamster staffers were charged with contempt of Congress, union records were lost or destroyed (allegedly on purpose), and wiretaps were played in public before a national television audience in which Dio and Hoffa discussed the creation of even more paper locals. Beck appeared before the select committee for the first time on March 25, 1957, and notoriously invoked his Fifth Amendment
right against self-incrimination 117 times. The McClellan Committee turned its focus to Hoffa and other Teamsters officials, and presented testimony and evidence alleging widespread corruption in Hoffa-controlled Teamster units. The scandals uncovered by the McClellan committee, which affected not only the Teamsters but several other unions, led directly to the passage of the Labor-Management Reporting and Disclosure Act (also known as the Landrum-Griffin Act) in 1959.
The use of paper locals may still be a problem for American labor unions. The Service Employees International Union
(SEIU) has been accused of establishing paper locals (known in the union as "provisional locals") so that leaders can win election to office and dominate political opponents.
and International Ladies' Garment Workers' Union
in the early part of the 20th century. It has also been used in the late 20th century by SEIU as an organizing tactic.
Trade union
A trade union, trades union or labor union is an organization of workers that have banded together to achieve common goals such as better working conditions. The trade union, through its leadership, bargains with the employer on behalf of union members and negotiates labour contracts with...
with no or few members, chartered by an existing union (usually an international or national union body) or self-chartered, and formed for the purpose of criminal activity. As implied by the name, paper locals often "exist only on paper," and have no members. In some cases, however, paper locals may have members, but the members are not workers but rather friends, family members, or criminal associates of the individual or individuals in control of the paper local.
Although paper locals may occur wherever labor unions are given formal, legal status and rights, they have been a particular problem in the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
. Paper locals are denounced by the AFL-CIO
AFL-CIO
The American Federation of Labor and Congress of Industrial Organizations, commonly AFL–CIO, is a national trade union center, the largest federation of unions in the United States, made up of 56 national and international unions, together representing more than 11 million workers...
Code of Ethical Practices.
Organized crime
Paper locals are often used as a means of extortingExtortion
Extortion is a criminal offence which occurs when a person unlawfully obtains either money, property or services from a person, entity, or institution, through coercion. Refraining from doing harm is sometimes euphemistically called protection. Extortion is commonly practiced by organized crime...
money. The individual who controls a paper local may threaten to unionize an employer's workers unless he receives a payoff. The paper local may even list the workers at a worksite as "members" and accept the payment as "union dues
Union dues
Union dues are a regular payment of money made by members of unions. Dues are the cost of membership; they are used to fund the various activities which the union engages in...
," when in fact the workers have not consented to forming or joining the union, have not paid dues, and do not receive the benefits of collective bargaining
Collective bargaining
Collective bargaining is a process of negotiations between employers and the representatives of a unit of employees aimed at reaching agreements that regulate working conditions...
. In at least one case, a paper local based its extortion fee not on the number of workers an employer had but the number of coin-operated machines it had installed in local businesses.
Paper locals often enter into sweetheart contracts that are grossly unfair to workers, and then the employer and paper local embezzle
Embezzlement
Embezzlement is the act of dishonestly appropriating or secreting assets by one or more individuals to whom such assets have been entrusted....
money from the business. While a legitimate union contract might cost X amount of money in wages and benefits, the sweetheart contract costs much less; the difference is split between the individual(s) who control the paper local and the company owners. In one infamous example, a paper local and an employer entered into a sweetheart contract in which workers were able to take only one holiday off each year, Passover
Passover
Passover is a Jewish holiday and festival. It commemorates the story of the Exodus, in which the ancient Israelites were freed from slavery in Egypt...
. Since the workers were almost all Puerto Rican
Puerto Rico
Puerto Rico , officially the Commonwealth of Puerto Rico , is an unincorporated territory of the United States, located in the northeastern Caribbean, east of the Dominican Republic and west of both the United States Virgin Islands and the British Virgin Islands.Puerto Rico comprises an...
and non-Jewish, they did not take the holiday off and the employer was not forced to pay workers for a day off.
When a paper local is controlled by organized crime
Organized crime
Organized crime or criminal organizations are transnational, national, or local groupings of highly centralized enterprises run by criminals for the purpose of engaging in illegal activity, most commonly for monetary profit. Some criminal organizations, such as terrorist organizations, are...
, the paper local may also accept bribes
Bribery
Bribery, a form of corruption, is an act implying money or gift giving that alters the behavior of the recipient. Bribery constitutes a crime and is defined by Black's Law Dictionary as the offering, giving, receiving, or soliciting of any item of value to influence the actions of an official or...
in order to guarantee that there will be no strikes, grievances, or work stoppages (e.g., "labor peace"), or it may intimidate, coerce, vandalize, or sabotage the employer's competitors in order to protect the employer and the sweetheart deal. This can create distinct competitive advantages for the employer, which can be higher than the bribes paid.
More recently, paper locals have been used for committing fraud
Fraud
In criminal law, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation...
. Paper locals have charged real estate developers
Real estate development
Real estate development, or Property Development, is a multifaceted business, encompassing activities that range from the renovation and re-lease of existing buildings to the purchase of raw land and the sale of improved land or parcels to others...
for union services while hiring non-union workers (allowing the
On occasion, employers have formed paper locals in order to establish company union
Company union
A company union is a trade union which is located within and run by a company or by the national government, and is not affiliated with an independent trade union. Company unions were outlawed in the United States by the 1935 National Labor Relations Act, due to their use as agents for interference...
s, and prevent unionization of their workforce.
Union democracy and fraud
Paper locals have sometimes been established by labor union leaders in efforts to fraudulently win internal elections. Perhaps the most famous example is the establishment of the "Dio locals" in the International Brotherhood of TeamstersTeamsters
The International Brotherhood of Teamsters is a labor union in the United States and Canada. Formed in 1903 by the merger of several local and regional locals of teamsters, the union now represents a diverse membership of blue-collar and professional workers in both the public and private sectors....
in the mid-1950s. Midwestern
Midwestern United States
The Midwestern United States is one of the four U.S. geographic regions defined by the United States Census Bureau, providing an official definition of the American Midwest....
Teamster leader Jimmy Hoffa
Jimmy Hoffa
James Riddle "Jimmy" Hoffa was an American labor union leader....
wished to unseat Dave Beck
Dave Beck
Dave Beck was an American labor leader, and president of the International Brotherhood of Teamsters from 1952 to 1957...
, the union's international president. In October 1956, mobster Johnny Dio met with Hoffa in New York City
New York City
New York is the most populous city in the United States and the center of the New York Metropolitan Area, one of the most populous metropolitan areas in the world. New York exerts a significant impact upon global commerce, finance, media, art, fashion, research, technology, education, and...
and the two men conspired to create as many as 15 paper locals to boost Hoffa's delegate totals. When the paper locals applied for charters from the international union, Hoffa's political foes were outraged. A major battle broke out within the Teamsters over whether to charter the locals, and the media attention led to inquiries by the U.S. Department of Justice
United States Department of Justice
The United States Department of Justice , is the United States federal executive department responsible for the enforcement of the law and administration of justice, equivalent to the justice or interior ministries of other countries.The Department is led by the Attorney General, who is nominated...
and the Permanent Subcommittee on Investigations of the U.S. Senate Committee on Government Operations
United States Senate Committee on Homeland Security and Governmental Affairs
The United States Senate Committee on Homeland Security and Governmental Affairs has jurisdiction over matters related to the Department of Homeland Security and other homeland security concerns, as well as the functioning of the government itself, including the National Archives, budget and...
. Beck and other Teamster leaders challenged the authority of the U.S. Senate to investigate the union, which caused the Senate to establish the Select Committee on Improper Activities in Labor and Management
United States Senate Select Committee on Improper Activities in Labor and Management
The United States Senate Select Committee on Improper Activities in Labor and Management was a select committee created by the United States Senate on January 30, 1957, and dissolved on March 31, 1960...
—a new committee with broad subpoena and investigative powers. Senator John L. McClellan
John Little McClellan
John Little McClellan was a Democratic Party politician from Arkansas. He represented Arkansas in the United States Senate from 1943 until 1977. He also earlier represented Arkansas in the United States House of Representatives.-Early life:McClellan was born in Sheridan, Grant County, Arkansas...
, chair of the select committee, hired Robert F. Kennedy
Robert F. Kennedy
Robert Francis "Bobby" Kennedy , also referred to by his initials RFK, was an American politician, a Democratic senator from New York, and a noted civil rights activist. An icon of modern American liberalism and member of the Kennedy family, he was a younger brother of President John F...
as the subcommittee's chief counsel and investigator.
The Select Committee (also known as the McClellan Committee, after its chairman), exposed widespread corruption in the Teamsters union. Beck fled the country for a month to avoid its subpoenas before returning. Four of the paper locals were dissolved to avoid committee scrutiny, several Teamster staffers were charged with contempt of Congress, union records were lost or destroyed (allegedly on purpose), and wiretaps were played in public before a national television audience in which Dio and Hoffa discussed the creation of even more paper locals. Beck appeared before the select committee for the first time on March 25, 1957, and notoriously invoked his Fifth Amendment
Fifth Amendment to the United States Constitution
The Fifth Amendment to the United States Constitution, which is part of the Bill of Rights, protects against abuse of government authority in a legal procedure. Its guarantees stem from English common law which traces back to the Magna Carta in 1215...
right against self-incrimination 117 times. The McClellan Committee turned its focus to Hoffa and other Teamsters officials, and presented testimony and evidence alleging widespread corruption in Hoffa-controlled Teamster units. The scandals uncovered by the McClellan committee, which affected not only the Teamsters but several other unions, led directly to the passage of the Labor-Management Reporting and Disclosure Act (also known as the Landrum-Griffin Act) in 1959.
The use of paper locals may still be a problem for American labor unions. The Service Employees International Union
Service Employees International Union
Service Employees International Union is a labor union representing about 1.8 million workers in over 100 occupations in the United States , and Canada...
(SEIU) has been accused of establishing paper locals (known in the union as "provisional locals") so that leaders can win election to office and dominate political opponents.
Other uses
Paper locals can sometimes be used as a legitimate organizing tool. Some unions form them in industries where they have no foothold and yet anticipate organizing workers. This was a common organizing tool of the Industrial Workers of the WorldIndustrial Workers of the World
The Industrial Workers of the World is an international union. At its peak in 1923, the organization claimed some 100,000 members in good standing, and could marshal the support of perhaps 300,000 workers. Its membership declined dramatically after a 1924 split brought on by internal conflict...
and International Ladies' Garment Workers' Union
International Ladies' Garment Workers' Union
The International Ladies' Garment Workers' Union was once one of the largest labor unions in the United States, one of the first U.S. unions to have a primarily female membership, and a key player in the labor history of the 1920s and 1930s...
in the early part of the 20th century. It has also been used in the late 20th century by SEIU as an organizing tactic.