Apprenticeship Programs – Acceptable Graduation Expenses
The Department of Labor’s (DOL) Employee Benefits Security Administration (EBSA) recently issued a bulletin that explains what expenses are appropriate for graduation ceremonies for training and apprenticeship funds.
EBSA made clear that training programs are subject to ERISA’s fiduciary requirements, and therefore that plan assets must be used for the exclusive purpose of providing apprenticeship or training benefits to participants. Even so, EBSA recognized that a graduation ceremony can be an appropriate expense if it “serves to congratulate graduates on their achievements and encourage them on their future endeavors,” and creates “an incentive and goal for participants to successfully complete the program.”
EBSA then clarified what expenses are appropriate, noting that plan fiduciaries “must be able to justify plan expenses as appropriate means of carrying out the plan’s mission of training workers.”
First, the expenses must be modest in relationship to the plan’s assets, and must only be for the cost of the ceremony. Expenses must be approved in accordance with accounting, recordkeeping, and administrative controls. Plans should have, and should use, written expense policies in connection with graduation ceremonies. Although graduation expenses are to be treated on a case-by-case basis, some guidelines are clear:
Acceptable expenses:
The cost of a modest ceremony, attended by graduating apprentices, family, plan officials, and other persons connected with the program or industry outreach
Light refreshments
Diplomas/ certificates for graduates
Token awards or gifts for instructors or supporters
Some costs, however, will not be included in the “cost of the ceremony:”
Dinner for all attendees is not acceptable
Valet parking
Travel or hotel expenses for graduates or guests
For specific advice about graduation expenses, please contact your trust fund counsel.
Author: Daniel Brome
