Ninth Circuit Limits Scope of Federal Apprenticeship Regulation in California

On September 18, 2013, the Ninth Circuit issued a big win for California apprenticeship and training programs. Independent Training and Apprenticeship Program v. California Department of Industrial Relations concernedan independent apprenticeship program that was approved by the Department of Labor (DOL) but not California’s Department of Industrial Relations (DIR), Division of Apprenticeship Standards (DAS).

California’s apprenticeship regulations include what’s known as the “needs test” for the approval of new apprenticeship programs in the building and construction trades. Under the needs test, California may only approve a new apprenticeship program in the trades if there is no existing apprenticeship program serving the same craft or trade and geographic area, or if the existing programs serving the same craft or trade and geographic area do not have the capacity or neglect or refuse to dispatch sufficient apprentices to qualified employers at a public works site or have been identified as deficient in meeting their obligations. Because California’s needs test tends to favor the existing Union apprenticeship and training programs, the DOL no longer allows California’s DAS to approve an apprenticeship program for “Federal purposes.”

The independent apprenticeship program filed suit against the California DIR after the DIR threatened to sanction and then did sanction two contractors that used apprentices from the independent program on public works projects in California. The projects were funded through tax-exempt municipal bonds and Build America bonds.

The question before the court was what constituted “Federal purposes” for purposes of implementing the Fitzgerald Act, which would require that the apprenticeship program be DOL-approved. The independent apprenticeship program relied on two earlier DOL Opinion Letters that defined “Federal purposes” broadly to include any federally funded or supported project. The Ninth Circuit asked the DOL to weigh in on the question. The DOL stated that the earlier Bush-era Opinion Letters were officially derecognized as of May 14, 2012, and the DOL now provided a narrower interpretation of “Federal purposes,” limiting its application to projects that make compliance with federal apprenticeship standards a condition of eligibility for funding, such as Davis-Bacon Act projects. The Ninth Circuit adopted the DOL’s new interpretation, which means more projects will require apprentices from California state-approved apprenticeship programs that are in compliance with California’s apprenticeship standards.

The Ninth Circuit also upheld California’s needs test, rejecting several constitutional challenges. The Ninth Circuit described the benefit of the needs test as “improving the chances that a graduating apprentice will be able to obtain employment in a specific trade within a particular geographic area.”

For more information about this case or California apprenticeship programs, please contact your Trust Fund counsel.

By Kristina M. Zinnen | October 30, 2013

Legal Developments