Tag Archive for Apprenticeship

West Sacramento School District Uses Union-Only Apprenticeship Policy to Boot Lease-Leaseback Contractor

Tonight (April 23, 2015), the board of trustees for the Washington Unified School District (in West Sacramento) will reject a construction company from a lease-leaseback contract because unions will not agree to dispatch apprentices to the company.

The staff report for “Adopt Resolution 1415-22 for the Bryte Career Technical Education Campus Phase #1 Project (Implement the Capital Investment Program for Sustainability Initiatives / Facility Improvements through Measure V Funds)” states the following:

Bid #3, Landmark Construction, was highest bid by almost $1,000,000 (17%). Bidder #1 and #2, the point spread between them was significant (10%) and after the formal interviews the team felt that the best value of the three (3) submittals received was from Bobo Construction (bidder #2). The team began contract negotiations with Bobo Construction to finalize a lease lease-back (LLB) document. Unfortunately, during contract negotiations it was determined that the District’s pre-apprenticeship requirements could not be met by Bobo Construction. As a result, the team is reaching out to Landmark Construction in an effort to negotiate and finalize a contract.

At various times over the past 15 years, construction trade unions have lobbied Northern California local governments for local apprenticeship policies that supplant existing state law. Of course those self-interested policies are meant to cut bid competition and limit workers’ freedom of choice in training programs.

Those policies have been rejected by elected boards at some local governments and passed by others, often after amendments. But until now there has not been a high-profile case in which a construction company lost a major project because of such a policy.

The Washington Unified School District board of trustees quietly passed the union-backed apprenticeship policy in November 2013 that requires all contractors to obtain apprentices from union-affiliated programs. Now unions have been able to use this policy as the basis to get the school district to deprive a Merit Shop construction company of a contract. This action raises the cost of the project by $1 million (17%).

Here is the discriminatory policy: Washington Unified School District Resolution #1314-10 – Resolution Establishing Apprenticeship Graduation and Local Hire Requirements for Hiring on School Construction Projects.

For details, see the email below from the Coalition for Fair Employment in Construction to the elected board and administrators of the Washington Unified School District.

From: “Eric Christen”
Date: April 23, 2015 at 9:40:01 AM PDT

Board of Trustees,

As your staff and legal counsel have been unresponsive to our earlier email I am now forwarding this issue on to you.

The Washington Unified School District has implemented illegal pre-qualification requirements and is arbitrarily using these requirements to favor certain construction contractors, certain state-approved apprenticeship programs, and certain apprentices at the expense of others.

On April 21, 2015, the Coalition for Fair Employment in Construction (CFEC) learned that your selected (but not contracted) lease-leaseback contractor Bobo Construction will not be working on the district’s Bryte Culinary Arts project or on the District Office project. The vague reason given by a district consultant for this decision: “During contract negotiations, it was determined that the District’s Apprenticeship requirements could not be met by Bobo Construction.”

We inquired with Bobo Construction representatives, who informed us they left voice mails and sent emails to the Washington Unified School District asking specifically what requirements it did not meet, how the district determined that it could not meet the requirements, and who determined it could not meet the requirements. Suspiciously but not surprisingly, there has been no official response from the school district.

This unusual and disturbing incident, based on both the current situation and previous attempts to discriminate against non-signatory firms using similar tactics leads us to conclude that unions have engineered this latest episode so as to benefit its members. We will be submitting a public records request to confirm the involvement of union officials in these discussions leading to this decision and to determine specifically why the district ceased communication with Bobo Construction.

Bobo Construction had submitted a pre-qualification questionnaire and was approved and deemed eligible to work on these projects. It also submitted bids by the deadline. We will be checking on this to ensure Bobo Construction complied with every requirement.

Bobo Construction representatives say they typically request Carpenters and Laborers apprentices from the state-approved unilateral apprenticeship programs operated by the Northern California Chapter of Associated Builders and Contractors (ABC). These programs are approved by the California Division of Apprenticeship Standards to train apprentices on public works projects in Yolo County.

But the Washington Unified School District insists in its regulations that its contractors have to request and train apprentices exclusively from programs overseen by Joint Apprenticeship Training Committees (JATCs) affiliated with trade unions. Unilateral (union-free) apprenticeship programs are not regarded as eligible or legitimate training programs. The attached resolution, that the board approved in November of 2013, is where this language comes from.

Apprentices in these JATC programs pay union dues and fees and their fringe benefits indicated in prevailing wage determinations are paid into union-affiliated trust funds. The district’s decision to only accept apprentices from those programs is clearly favoritism for union apprentices, for union-affiliated apprenticeship programs overseen by Joint Apprenticeship Training Committees, and for construction companies that have agreements to train through union-affiliated apprenticeship programs overseen by Joint Apprenticeship Training Committees.

Nevertheless, to try to keep the peace and comply with this illegal requirement, Bobo Construction contacted representatives of the Carpenters and Laborers unions to arrange for a one-job subscription agreement to use union apprentices on Washington Unified School District projects. By refusing to arrange such agreements (an illegal action), these union officials disqualified Bobo Construction.

Basically, the Washington Unified School District has given union officials the power to decide which contractors get construction contracts at the district. Unions – not contractors – have the authority to dispatch apprentices. A union apprenticeship program can withhold its apprentices from being dispatched to any contractor (including a union contractor) and thus disqualify it.

Subcontractors for Bobo Construction are now reportedly being told that Bobo Construction was “kicked off the job” because it was non-union, and anyone wanting to work at the district better be unionized. Reportedly union officials had been lobbying the elected board of trustees and district administrators and contractors to deny the work to Bobo Construction. We will be submitting a public records request to confirm the extent of these communications.

The Coalition for Fair Employment in Construction is committed to ensuring that all capable and responsible bidders and their capable and qualified workers are able to work on taxpayer-funded construction projects. Following are the next steps we will be taking to ensure that all contractors, workers, and apprentices are treated equally and fairly:

Submission of the aforementioned public record request the goal of which is twofold: Show who in 2013 gave you the discriminatory language you voted to approve and secondly, what special interests have been involved in seeing that Bobo Construction was rejected in favor of a signatory firm whose bid was $1 MILLION HIGHER.

Undertake a public relations campaign to inform community leaders, the general public, and area media about how staff and elected officials of the Washington Unified School District are breaking the law and manipulating the district’s bidding process to raise construction costs and benefit union special interests. Your decision to choose Landmark Construction over Bobo alone will cost the District $1 million!

We will be researching the origin of this discriminatory apprenticeship requirement(s) and will expose it to the public.

Should this issue not be resolved by the board at your meeting tonight (April 23rd) we will recommend that Bobo Construction file a lawsuit against the Washington Unified School District over its patently illegal apprenticeship requirements.

Finally, a stench of corruption envelopes this entire process. CFEC has been protecting the rights of contractors, workers, and apprentices in California for almost 16 years and I have never seen such a blatant political power play as I have witnessed in the past few days. CFEC will do everything within its considerable resources to see to it that whomever is behind this attempt to play favorites using taxpayer dollars will be held accountable to the people for those actions, especially if public records or other documents unearthed in various stages of litigation reveal what the District has done in pursuit of political ambition.

In conclusion, we encourage you to work with Bobo Construction, which is a well-established company willing to resolve reasonable differences in order to perform the outstanding work that your district expects. The alternative is getting to deal instead with this organization, exceptional for its zeal to expose the bidding corruption eroding many school districts in California.

We look forward to hearing that Bobo Construction is back performing the best work at the best price for the taxpayers and students of the Washington Unified School District. We also look forward to hearing that the Washington Unified School District will no longer implement illegal policies that favor unionized contractors, unionized apprenticeship programs, and unionized apprentices. It’s not necessary, it’s wrong, it’s not desired by the public, and it’s illegal.

You are encouraged to contact me at xxx or xxx.

Eric Damian Christen
Executive Director
Coalition for Fair Employment in Construction

A Small Electrical Apprenticeship Program Tries to Overcome Rigid State Government Control of Apprenticeship Programs for the Construction Trades in California

UPDATE: On September 18, 2013, the Independent Training and Apprenticeship Program (I-TAP) lost its appeal to the U.S. Court of Appeals for the Ninth Circuit in Independent Training v. California Department of Industrial Relations. As the decision noted, “The panel affirmed the district court’s judgment in favor of the defendants in a suit seeking declaratory and injunctive relief on the ground that the California Department of Industrial Relations’ actions were inconsistent with federal Fitzgerald Act regulations governing the employment of apprentices on public works projects qualifying as ‘Federal purposes.'”

Construction trade unions are sometimes accused of misusing the government-regulated apprenticeship structure as a tool to control who, how, and how many people enter the construction workforce. Sponsors of proposed apprenticeship programs who aim to compete against existing union programs have long endured legal obstacles in states such as Washington, Oregon, and Nevada.

But as usual, California takes the prize for the best use of government to cut competition and freedom of choice in the marketplace. From 2002 to 2007, the U.S. Department of Labor threatened to punish – and then proceeded to punish – the State of California for failing to follow federal laws meant to encourage the construction industry to train the future American workforce through apprenticeships.

Now a California-based training program for apprentices, approved by the federal government in 2004 to train electrical workers, is suing the State of California because the state takes a very narrow interpretation of the federal punishment – so much so that the punishment is effectively meaningless. This apprenticeship program contends that its apprentices have lost a substantial number of opportunities to get on-the-job training on state and local construction projects as a result of this inappropriately narrow interpretation.

Background of How the State of California Has Traditionally Regulated Apprenticeship for the Construction Trades

California Labor Code Section 1777.5 outlines the statutory requirements for construction contractors regarding apprenticeship when these companies work on public works projects of $30,000 or more. These contractors must request apprentices from state-approved training programs. Contractors must employ these apprentices in a ratio not less than one hour of apprentice work for every five hours of journeyman work (with a few exceptions).

Because they are less than fully trained, apprentices are the only workers on a public works project to whom contractors can pay less than the full “journeyman” prevailing wage. For trades such as electrical inside wireman, the pay rate for apprentices increases in conjunction with the progress of the apprentice through classroom instruction and on-the-job training.

The state generally understands that a contractor is required to request apprentices from a program approved by the Chief of the Division of Apprenticeship Standards to train workers for that trade in the county where the work is performed. Contractors are required to make payments designated for “apprenticeship and training” in the state-mandated prevailing wage rate to the program or programs that provided the apprentices, or (if not enough apprentices are dispatched to fulfill the 5:1 ratio) to any program approved to train workers for that trade in the county where the work is performed, or to the California Apprenticeship Council.

Under California Labor Code Section 1773.1(a)(6), contractors are able to take a “credit” for the payments for apprenticeship and training against the total hourly state-mandated “prevailing wage” rate, provided that the amount paid to the program is reasonably related to the cost of the program. In other words, the state-mandated hourly wage to a worker is reduced by the amount paid for apprenticeship and training, but the contractor cannot pay an excessive amount to a training program’s trust fund.

When does the reasonable cost for apprenticeship and training become an issue? The state sets the standard employer payment amounts for apprenticeship and training based on the applicable union collective bargaining agreement for that trade in that geographical region, so a competing program not affiliated with that union might charge a contractor a different rate for apprenticeship and training than the amount designated in the applicable state-mandated prevailing wage rate.

Under California Labor Code Section 3075 (a), the Director of the Division of Apprenticeship Standards is authorized to approve three categories of apprenticeship programs: (1) those run by unions and their affiliated contractor associations through joint apprenticeship committees, (2) those run by non-union contractor associations through unilateral apprenticeship committees, and (3) programs run by individual corporate employers. Unions had a complete monopoly on apprenticeship training in the California construction trades until 1988, and they still monopolize apprenticeship training for many trades in many geographic areas.

Why the Federal Government Took Away California’s Authority to Regulate Apprenticeship for Federal Purposes

President Franklin Delano Roosevelt signed the National Apprenticeship Act (the Fitzgerald Act) into law in 1937. This law authorizes the U.S. Department of Labor to “formulate and promote the furtherance of labor standards necessary to safeguard the welfare of apprentices and to cooperate with the States in the promotion of such standards.”

California is one of 27 states that exercise an option to perform their own oversight and regulation of apprenticeship programs, rather than leaving it to the U.S. Department of Labor’s Office of Apprenticeship Training, Employment and Labor Services (OATELS). They are commonly called “SAC states” – that is, states with State Apprenticeship Councils.

In 1999, Governor Gray Davis signed into law Assembly Bill 921, a union-backed bill that amended California Labor Code 3075 in order to establish a stringent “needs test” that a proposed apprenticeship program or an apprenticeship program seeking to expand to a new trade or geographic jurisdiction must fulfill before the program can be approved or expanded.

Construction unions have exploited this language to block the approval of new programs or programs expanding into new trades or geographical regions, thus cutting competition in training and limiting the choice in comprehensive training programs for people seeking a career in the construction trades. The law also creates confusion about who has the authority to approve or reject applications for new or expanding apprenticeship programs: the Chief of the California Division of Apprenticeship Standards or the California Apprenticeship Council.

In response to this needs test, the U.S. Department of Labor in 2002 began the process of “derecognition,” or taking away the State of California’s authority to regulate apprenticeship for federal purposes. The California Division of Apprenticeship Standards under the Davis Administration and the union-controlled California Apprenticeship Council both challenged the derecognition process.

In January 2007, a U.S. Department of Labor Administrative Review Board ruled that the U.S. Department of Labor has the right to “derecognize” California’s authority to regulate apprenticeship for federal purposes. The decision upheld an earlier Administrative Law Judge decision noting that the “needs test” in Section 3075 of the California Labor Code used by unions to prevent new or expanded apprenticeship programs “does not promote competition among programs, does not consider the needs of individuals seeking apprenticeship training, and limits training opportunities for apprentices.”

At the demand of the State Building and Construction Trades Council of California, the California State Legislature has stopped four bills that included a provision to repeal the needs test: Assembly Bill 2660 in 2006 (sponsored by Associated Builders and Contractors (ABC) of California), Assembly Bill 947 in 2007 (sponsored by the Schwarzenegger Administration), Assembly Bill 734 in 2008 (a bipartisan bill amended at the very end to eliminate the repeal provision), and Senate Bill 362 in 2012 (sponsored by ABC of California). (Note: I was State Government Affairs Director of ABC of California when these bills were introduced and considered.)

What’s the Practical Effect of Derecognition? The Independent Training and Apprenticeship Program (I-TAP) Seeks to Clarify the Meaning through a Lawsuit

The U.S. Department of Labor’s Office of Apprenticeship Training, Employment and Labor Services (OATELS) approved the Independent Training and Apprenticeship Program (I-TAP) to train apprentices on federal projects in January 2004. This unambiguously means that contractors can classify and pay workers dispatched from the I-TAP program as apprentices on purely federal projects. The workers would also be unambiguously classified as apprentices in states that have not exercised the option of preempting apprenticeship regulatory authority from the U.S. Department of Labor.

The ambiguity about the legality of I-TAP providing on-the-job training to its apprentices working on state and local government projects results from the meaning of “derecognition” and the meaning of “federal purposes” in a state that had long claimed statutory and regulatory authority over apprenticeship.

For a few years after the U.S. Department of Labor’s 2007 derecognition of California’s authority to “register and oversee” apprenticeship policies for federal purposes, electrical contractors requested apprentices from I-TAP, employed them on the job at apprenticeship rates, and made payments on behalf of the apprentices to I-TAP under the belief that the derecognition allowed them to do so. Officials of the California Department of Industrial Relations (DIR) made occasional preliminary inquires about contractors’ compliance with state laws when using I-TAP as a source of apprentices, but did not take further action after contractors justified their use of I-TAP on the new conditions resulting from derecognition.

But in the fall of 2010, the California Department of Industrial Relations threatened to assess back wages and penalties against a contractor – Gray Electric Company – for classifying workers dispatched from I-TAP as apprentices on school construction projects in Marysville and in Grass Valley. Gray Electric had requested apprentices from I-TAP, employed them on the job at apprentice wage rates, and made payments on behalf of the apprentices to I-TAP. The contractor argued that it could regard these workers as apprentices because the project received federal financial assistance and I-TAP was a federally-approved program.

To avoid further controversy, Gray Electric ultimately withdrew from its agreement to train with I-TAP. Then, a labor-management cooperation committee affiliated with the International Brotherhood of Electrical Workers (IBEW) submitted a wage complaint to the California Department of Industrial Relations because another electrical contractor – Harold E. Nutter & Son, Inc. – was classifying workers dispatched from I-TAP as apprentices on a Stockton school construction project.

Harold E. Nutter & Son, Inc. and the individual apprentice argued that because the federal government has “derecognized” the state under the federal Fitzgerald Act and thus deprived the state of its authority to regulate apprenticeship policies for federal purposes, contractors on federally-funded projects are legally permitted to pay apprenticeship-level wages and take credits against the prevailing wage rate for payments to an apprenticeship program, even if the program is only approved by the federal government and not the state.

The California Department of Industrial Relations disagreed and assessed back wages and penalties against the contractor (Harold E. Nutter & Sons, Inc.) for paying apprentice-level wages to its worker enrolled in the federally-approved I-TAP. It did not recognize the I-TAP apprentice as a legitimate apprentice for purposes of state law. It also disallowed payments for “apprenticeship and training” to I-TAP as valid payments under the state prevailing wage law that could be taken as a credit against the total hourly wage.

As a result of the DIR crackdown on contractors classifying I-TAP apprentices as journeymen on projects not exclusively funded by the federal government, several contractors have ended their agreements to train with I-TAP, and apprentices in the program have lost paid on-the-job training opportunities. Some have dropped from the program.

Time for a Lawsuit

On May 19, 2011, the California Department of Industrial Relations (DIR) was sued by three parties: an apprentice indentured in the Independent Training and Apprenticeship Program, an employer with an agreement to train apprentices in the I-TAP program (Harold E. Nutter & Son, Inc.), and the I-TAP program itself. The case is Independent Training and Apprenticeship Program et al. v. California Department of Industrial Relations et al.

This is an interesting case probing the meaning of the U.S. Department of Labor’s “derecognition” of the authority of the State of California to regulate apprenticeship for federal purposes.

The plaintiffs complain that when the DIR alleges a contractor has violated prevailing wage laws for using I-TAP apprentices, the agency does not take responsibility to determine if a construction project is receiving federal funding and thus falls under “federal purposes” under derecognition, but leaves it to the contractor to determine the sources of funding.

The federal financial assistance for the Grass Valley and Stockton school construction projects was provided in the form of “Buy America Bonds,” which are subsidized by the federal government throughout their tax-exempt status. But the plaintiffs in this lawsuit went even further, contending that the federal Fitzgerald Act in essence makes any policies providing “apprenticeship opportunities” as a “federal purpose.”

The Outlook for This Case, and How You Can Help

A federal district court sided with the California Department of Industrial Relations against the I-TAP plaintiffs. However, the I-TAP plaintiffs have appealed to the U.S. Ninth Circuit Court of Appeals.

Obviously there are numerous entrenched interests that don’t want to see the California Department of Industrial Relations (DIR) lose its regulatory control over apprenticeship training opportunities on the construction projects of state and local governments. In contrast, the I-TAP plaintiffs are alone, but they see this case as a higher pursuit of freedom of choice in training for workers and the improvement of apprenticeship training as a whole through greater competition.

I-TAP plaintiffs are looking for funding for their lawsuit, amicus briefs to be submitted to the court in support of their case, and any assistance or evidence that provides additional backing for their arguments. For more information, contact Carolyn Nutter, Training Coordinator for the Independent Training & Apprenticeship Program, at (916) 332-3332 or via email.

Documents Related to Federal District Court Case

  1. 2011-04-18 I-TAP Complaint & Exhibits to District Court
  2. 2011-05-19 I-TAP Notice of Motion & Motion for Preliminary Injunction to District Court
  3. 2011-05-19 I-TAP Memo of Points & Authorities to District Court
  4. 2011-05-19 I-TAP Compendium of Evidence to District Court
  5. 2011-05-19 I-TAP Request for Judicial Notice and Exhibit A
  6. 2011-05-19 I-TAP Exhibits B C and D
  7. 2011-05-23 I-TAP Case – I-TAP Notice of Errata to Complaint to District Court
  8. 2011-06-27 DIR Opposition to Preliminary Injunction to District Court
  9. 2011-06-27 DIR Objections to I-TAP Evidence
  10. 2011-06-27 DIR DAS Director’s Declaration to District Court
  11. 2011-07-01 I-TAP Reply to DIR Opposing Motion for Preliminary Injunction to District Court
  12. 2011-07-01 I-TAP Declaration to District Court Rebut DAS Director’s Declaration
  13. 2011-08-15 District Court Order Denying Motion for Preliminary Injunction
  14. 2011-10-31 I-TAP Stipulation and Proposed Order

Documents Related to Ninth District US Court of Appeals Case

  1. 2012-04-20 I-TAP Opening Brief to Appeals Court
  2. 2012-06-22 DIR Brief to Appeals Court
  3. 2012-08-03 I-TAP Reply Brief to Appeals Court
  4. 2013-09-09 Ninth Circuit US Court of Appeals Decision I-TAP v DIR