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.Doherty, Robert Emmett. Industrial and Labor Relations Terms: A Glossary. Ithaca, N.Y.: Cornell University Press, 1989. 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.
Criminal uses of paper locals Organized crime Paper locals are often used as a means of extorting 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."Conglomerate of Crime". Time. August 22, 1969. 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.Reppetto, Thomas A. Bringing Down the Mob: The War Against the American Mafia. New York: Macmillan, 2006.
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.Cressey, Donald. Theft of the Nation: The Structure and Operations of Organized Crime in America. New York: Harper and Row, 1969. 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 a lucrative contract. 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 the individual[s] controlling the paper local to pocket the difference in wages and benefits).Newman, Andy. "Building Chief Admits Theft From M.T.A." New York Times. April 1, 2003; Geiger, Daniel. "Contini Cooperates With Investigators". Real Estate Weekly. September 22, 2004; Baglia, Charles V. "M.T.A. Project Rocked Anew By Mafia Link". New York Times. September 16, 2004.
On occasion, employers have formed paper locals in order to establish company unions, and prevent unionization of their workforce.Goldstein, Robert Justin, Political Repression in Modern America (University of Illinois Press, 1978, 2001), .
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 Teamsters 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."No Ordinary Hoodlum", New York Times, August 30, 1956. When the paper locals applied for charters from the international union, Hoffa's political foes were outraged.Katz, Ralph. "Teamsters' Union in Control Fight". New York Times. January 10, 1956.Raskin, A.H. "Teamster Units Stir New Storm". New York Times. February 4, 1956; Raskin, A.H. "Hoffa of the Teamsters Forcing Labor Showndown". New York Times. March 4, 1956. 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.Ranzal, Edward. "7 Teamster Units Face U.S. Inquiry". New York Times. March 30, 1956; Kihss, Peter. "Local Chartered With No Members", New York Times, April 25, 1956; Kihss, Peter. "Teamsters' Rules Appall U.S. Judge". New York Times. April 26, 1956; "Racketeer Is Guilty of Contempt". New York Times. May 10, 1956; Levey, Stanely. "Writ Restores Lacey As Teamster Leader". New York Times. May 13, 1956; "Dio Indicted Here In Union Sell-Out". New York Times. June 20, 1956; "Dio's Locals Face Charter Reviews". New York Times. June 21, 1956; Raskin, A.H. "Senators Study Dio Union Tie-In". New York Times. September 14, 1956; Roth, Jack. "Dio and Unionist Named Extorters". New York Times. October 30, 1956; "Teamsters Spurn 'Dio Local' Order". New York Times. December 5, 1956; "Lacey Will Defy Teamster Chief". New York Times. December 6, 1956; Raskin, A.H. "Dio 'Paper' Unions Offer First Dues". New York Times. December 13, 1956; Raskin, A.H. "O'Rourke Wins Post". New York Times. January 9, 1957. Beck and other Teamster leaders challenged the authority of the U.S. Senate to investigate the union,Loftus, Joseph A. "Teamsters Aide Balks at Inquiry on Union Rackets". New York Times. January 19, 1957; Raskin, A.H. "Teamsters Avoid Challenge to U.S.". New York Times. January 24, 1957; Raskin, A.H. "Teamsters Seek Way to Avoid a Showdown". New York Times. January 27, 1957. 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."New Senate Unit to Widen Inquiry In Labor Rackets". New York Times. January 24, 1957; "Teamster Study Is 3 Months Old". New York Times. May 26, 1957; "Senate Votes Inquiry on Labor Rackets". New York Times. January 31, 1957. 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."Beck Visiting in the Bahamas". New York Times. February 6, 1957; "Citation Is Asked for 3 Teamsters". New York Times. February 7, 1957; "Beck On Airliner Bound for London". New York Times. February 8, 1957; Love, Kenneth. "Beck Denies Aim to Dodge Inquiry". New York Times. February 9, 1957; "Tourist Beck". New York Times. February 10, 1957; Raskin, A.H. "Beck Slips Back to U.S. and Faces Senate Subpoena". New York Times. March 11, 1957. 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.Raskin, A.H. "Union Dissolves Four Dio Locals". New York Times. February 15, 1957; Loftus, Joseph A. "Senators Study Two Unions Here". New York Times. February 16, 1957; "4 Teamsters' Aides Cited for Contempt In Balking Inquiry". New York Times. February 20, 1957; "Records Destroyed, M'Clellan Charges". New York Times. February 22, 1957; "More Data of Union Reported Missing". Associated Press. February 23, 1957; "Teamster Admits Destroying Data". New York Times. March 14, 1957; "A Teamster Local, Under Fire, Robbed". United Press International. March 17, 1957; "Wiretaps on Dio and Hoffa Cited". New York Times. February 23, 1957; "Labor Inquiry Gets Secret Tape Talks". New York Times. February 24, 1957; Mooney, Richard E. "M'Clellan Hunts Auditor of Union and Son of Beck". New York Times. April 28, 1957. 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.Loftus, Joseph A. "Beck Appearance Today Indicated". New York Times. March 26, 1957; Loftus, Joseph A. "Beck Uses 5th Amendment to Balk Senate Questions About Teamsters' $322,000". New York Times. March 27, 1957; Loftus, Joseph A. "M'Clellan Scores Beck for 'Theft' of Union's Funds". New York Times. March 28, 1957. 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."Inquiry to Stress History of Hoffa". Associated Press. August 11, 1957; Drury, Allen. "Two Racketeers Tied to O'Rourke". New York Times. August 16, 1957; Mooney, Richard E. "Inquiry Set to Press Hoffa on Role Here". New York Times. August 18, 1957; Loftus, Joseph A. "Hoffa Says He Got $120,000 In Loans Without Security". New York Times. August 21, 1957; Loftus, Joseph A. "Senators Reveal Hoffa Bid to Get Dio In Teamsters". New York Times. August 22, 1957; Loftus, Joseph A. "Hoffa Is Accused of Using Dio in Bid for Control Here". New York Times. August 23, 1957; "M'Clellan Seeks A Perjury Check On Hoffa Replies". New York Times. August 25, 1957; Drury, Allen. "New Fund Abuses Charged to Hoffa". New York Times. September 24, 1957; Drury, Allen. "M'Clellan Seeks Teamsters' Files". New York Times. October 11, 1957; "Hoffa Called Ruler of Hoodlum Empire". New York Times. March 26, 1958. 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."Union Curbs Foreseen". New York Times. May 13, 1957; "M'Clellan Sees Stiff Labor Law". New York Times. May 18, 1957; Loftus, Joseph A. "Congress Disclosures Forecast New Labor Legislation". New York Times. June 2, 1957; Raskin, A.H. "White House Gives Program to Curb Abuses in Unions". New York Times. December 6, 1957; Higgins, John E. and Janus, Peter A. The Developing Labor Law: The Board, the Courts, and the National Labor Relations Act. 5th ed. Washington, D.C.: BNA Books, 2006. ; Wilson, Phillip B. "Conquering the Enemy Within: The Case for Reform of the Landrum-Griffin Act". Journal of Labor Research. 26:1 (December 2005); Wilson, Phillip B. "Conquering the Enemy Within: The Case for Reform of the Landrum-Griffin Act". Journal of Labor Research. 26:1 (December 2005); Jacobs, James B. Mobsters, Unions, and Feds: The Mafia and the American Labor Movement. New York: NYU Press, 2006. .
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.Silverstein, Ken. "Internal Dispute at SEIU Deepens". Harper's Bazaar. February 13, 2008.
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