IR # 96-13
Tuesday, April 16, 1996

Louis Bonsignore
(415) 972-8835

DIR Seeks U.S. Supreme Court Ruling to Restore
Protection of California Apprentices

Lloyd W. Aubry Jr., Director of the California Department of Industrial Relations, announced that the U.S. Supreme Court will decide whether states can enforce certain national apprenticeship standards on state public works, just as the federal government does on similar jobs.

The high court will consider a case brought by Dillingham Construction and a ruling is not expected until 1997. It will affect how construction companies bid for publicly-funded projects, such as schools, government buildings, highways and hospitals.

"The federal government uses the Department of Industrial Relations to determine who is an apprentice," Aubry said. "The Dillingham decision removed the state authority to do that on state-funded or jointly-funded jobs. DIR is petitioning the Supreme Court to reverse Dillingham and give us back our authority."

The decision pits California's prevailing wage laws against the federal Employee Retirement Income Security Act (ERISA). At issue is whether states can restrict apprentices, for prevailing wage purposes, to only those in recognized programs. The Supreme Court involvement came after the Department of Industrial Relations won a decision in a San Francisco trial court against Dillingham Construction that a contractor can not pay a lower rate to apprentices before the apprentice program is registered--the same rule that is followed on federal public works. The decision was overturned by the 9th Circuit Court of Appeals.

In the case, Dillingham Construction was a general contractor on a public works project. An audit of a subcontractor's payroll found it was paying some workers below the mandated prevailing wage. Caught paying the lower rate, the subcontractor quickly deemed the underpaid workers "apprentices." At the time, the subcontractor was not participating in a California Apprenticeship Council (CAC) approved program. The state allows contractors to pay a below prevailing wage rate only after the apprentice's program gets CAC approval.

To get such CAC approval, apprentice programs commit to a skilled trade or occupation which requires 2,000 hours--and more typically up to 6,000 hours--of on-the-job training. Additionally, apprenticeship programs require related and supplemental instruction and are multi-year programs. In testimony by the subcontractor at trial, these "installer apprentices receive no formal training and engaged in cable pulling tasks such as speaker hanging."

Dillingham argued that its subcontractor's right to declare who is an apprentice was established by the federal benefit-protection law under the broad Employee Retirement Income Security Act. The argument, adopted by the circuit court, was that the federal statute's mention of "apprenticeship" supersedes state control over who is an apprentice.

The Department will argue that even if ERISA rules pertain to who is an apprentice on public works projects, DIR's long-standing cooperative arrangement under the National Apprenticeship Act means the state maintains authority.


Note: A copy of the Cert. Petition and Reply in State of California v. Dillingham Contruction is availiable