March 10, 2020

Today, the U.S. Department of Labor released its final rule on Industry-Recognized Apprenticeship Programs (IRAPS), which will be published in the Federal Register tomorrow, March 11, 2019.  SWACCA is pleased to report that we achieved our goal of having the construction industry permanently exempted from this new type of apprenticeship program.  We are also pleased that the final rule responds to SWACCA’s demand that the final rule include a clear and broad definition of the construction industry that is excluded from IRAPs.  The preamble to the new regulation also reflects SWACCA’s advocacy affirming that participants in IRAPs are not apprentices for purposes of Davis-Bacon prevailing wage rates.

SWACCA’s Efforts Contribute to a Great Result

SWACCA has been highly engaged in protecting Registered Apprenticeship since June 2017 when President Trump issued his Executive Order Expanding Apprenticeships in America. From the outset, SWACCA’s advocacy team has conveyed the following points to Administration officials and members of Congress in numerous direct meetings and reinforced by written comment submissions: 1) Registered Apprenticeships are already effective and substantially widespread in the construction industry based on the Department of Labor’s own data, and it would harm this well-functioning, privately-funded and proven training system to allow the new types of apprenticeship programs in the construction industry; 2) the construction industry in which IRAPs should not be allowed must be clearly and broadly defined; and 3) trainees in IRAPs should not be eligible for the apprenticeship rate under Davis-Bacon.

After making these arguments repeatedly to Administration officials, SWACCA conveyed them in comments submitted for consideration by the Task Force on Apprenticeship Expansion in November 2017.  In November 2018 SWACCA restated and expanded on these arguments in comments on the voluntary information collection request (ICR) titled, “Industry-Recognized Apprenticeship Programs Accrediting Information.”  SWACCA also worked closely with industry allies to magnify these arguments for protecting the construction industry’s registered apprenticeship programs.

Equally important were the comments submitted by SWACCA affiliates and members last summer that were among the 326,800 comments submitted on this proposed rule.  SWACCA’s public policy team and its General Counsel contributed a 28-page comment letter on the rule.

SWACCA also wants to thank the dozens of Members of Congress we spoke with—Democrats and Republicans—who voiced concern about this rule and the impact it could have had on the privately-funded registered apprenticeship programs in the construction industry.  We especially appreciate the Congressmen and Senators who signed letters urging the Administration not to allow this new breed of programs in our industry. 

The final rule shows that SWACCA’s efforts have been impactful as all three of our primary concerns are addressed in the final rule.  

Overview of the Final Rule

The final rule creates a new “Subpart” in the federal regulations governing apprenticeship at 29 C.F.R. Part 29 that: (1) establishes a process for organizations to apply to become DOL-recognized Standards Recognition Entities (SREs); and (2) provides measures and guidelines to facilitate the recognition of IRAPs. 

The Construction Exclusion

The final rule provides that DOL will not recognize SREs that intend to approve IRAPs in the construction sector. The rule defines the construction sector clearly and broadly as consisting of: (1) the erecting of buildings and other structures (including additions); (2) heavy construction other than buildings; and (3) alterations, reconstruction, installation, and maintenance and repairs.  The final rule similarly prohibits recognized SREs from recognizing IRAPs that seek to train apprentices to perform these construction activities.  This exclusion for construction is permanent and defines the construction sector consistent with section 23 of the North American Industry Classification System (NAICS) Manual. DOL justifies its exclusion of construction by stating that its goal is to “expand apprenticeships to new industry sectors and occupations [and] industries where apprenticeships are emerging or underutilized.”  As a result, DOL has decided to solely exclude construction “because it sees no reason to take the risk, whatever the magnitude, of disrupting the registered programs in light of the [agency’s] stated purpose to create an alternative pathway for developing apprenticeship programs in new industry sectors and occupations.”  The final rule also rejects the idea of a sunset for this exemption.

DOL notes that “it conceivably could be appropriate in the future to reconsider its decision not to allow IRAPs in the construction sector” if, for example, “new and compelling” evidence shows that: (1) IRAPs have worked so well in other sectors that repealing the construction exclusion is worth risking the disruption or displacement of established registered construction programs; or (2) registered construction programs have materially faltered either in terms of prevalence or quality.

Davis-Bacon

In the final rule, DOL reassures commenters, including SWACCA, concerned about IRAP participants being treated as apprentices for Davis-Bacon purposes.  Specifically, DOL says it is “confident” that the regulations pertaining to the Davis-Bacon wage differential for apprentices in Registered Apprenticeship programs are sufficiently clear so as to only apply to Registered Apprenticeship programs and, therefore, not IRAPs.

Elimination of Expedited Registration Provision

The final rule also eliminates a provision of the proposed rule that would have permitted DOL to consider IRAPs for expedited registration under the Registered Apprenticeship provisions of Subpart A.  Under the proposed rule, a certified IRAP could request that DOL register it within 60 days of receiving all information necessary to demonstrate the program’s compliance with both Subpart A as well as 29 CFR 30 (“Equal Opportunity in Apprenticeship”).  At the time, DOL asserted that federal registration was the best means of ensuring consistency and efficiency in registering IRAPs that meet the requirements of Subpart A and 29 CFR 30.  DOL now states, however, that the requirements, processes, and procedures outlined in Subpart A “continue to be appropriate and useful in the administration of the Registered Apprenticeship system by [DOL] and its partners in recognized [SAAs].”

Recognition of Standards Recognition Entities (SREs)

Under the final rule, entities that may be recognized as SREs may include, but are not limited to: (1) trade, industry, and employer groups or associations; (2) corporations and other organized entities; (3) educational institutions, such as universities or community colleges; (4) state and local government agencies or entities; (5) non-profit organizations; (6) unions; (7) joint labor-management organizations; (8) certification and accreditation bodies or entities for a profession or industry; or (9) a consortium or partnership of these entities.  Specifically with respect to state and local government agencies, such as state apprenticeship agencies (SAAs), DOL has explicitly rejected comments arguing that these entities should not be recognized as SREs.  To this end, DOL emphasizes the “importance of SAAs and believes that they are well positioned to be recognized as a SRE due to their level of expertise and experience with identifying quality apprenticeships, not only in the private sector but also in the public sector.”

In order to receive recognition as a SRE, an entity would be specifically required to: (1) demonstrate the expertise to set competency-based standards, through a consensus-based process involving industry experts, for the requisite training, structure, and curricula for a prospective IRAP; (2) demonstrate sufficient capacity and quality assurance processes and procedures; (3) possess the resources necessary to operate as a SRE for a five-year period; (4) disclose relationships with subsidiaries or other related entities that could reasonably impact its impartiality; (5) demonstrate that it is not suspended or debarred from conducting business with the U.S. government; (6) mitigate any actual or potential conflicts of interest (including, but not limited to, conflicts that could arise from the entity recognizing its own apprenticeship programs); and (7) demonstrate that it has the appropriate knowledge and resources to recognize IRAPs in the sectors and occupations in the intended geographic area, which may be nationwide or limited to a region, state, or local area.  If approved, a SRE would be recognized for five years and would be required to reapply if it seeks continued recognition after that time. 

Recognition of Industry Recognized Apprenticeship Programs (IRAPs)

The final rule mandates that SREs may only recognize IRAPs that meet the following requirements, which DOL identifies as the “standards of high-quality apprenticeship programs”: (1) the IRAP must maintain a written apprenticeship agreement for each apprentice that outlines the terms and conditions of the apprentice’s employment and training (e.g., the duration of the apprenticeship, wages and any wage progression, costs or expenses charged to the apprentice, and the competencies and industry-recognized credential to be attained by completion); (2) the IRAP must train apprentices for employment in jobs that require specialized knowledge and experience and involve the performance of complex tasks; (3) the IRAP must have a written training plan that details the program’s structured work experiences and appropriate related instruction, is designed so that apprentices demonstrate competency and earn credential(s), and provides apprentices progressively advancing industry-essential skills; (4) the IRAP must ensure that, where appropriate, apprentices receive credit for prior knowledge and experience relevant to the instruction of the program; (5) the IRAP must provide apprentices with one or more credentials that are industry-recognized during participation in or upon completion of the program; (6) the IRAP must provide a working environment for apprentices that complies with all applicable federal, state, and local safety laws and regulations and any additional safety requirements of the SRE; (7) the IRAP must provide apprentices structured mentorship opportunities to ensure apprentices have additional guidance on the progress of their training and their employability; (8) the IRAP must ensure that apprentices are paid at least the applicable federal, state, or local minimum wage and must provide a written notice of what wages apprentices will receive and under what circumstances apprentices’ wages will increase; (9) the IRAP must affirm its adherence to all applicable federal, state, and local laws pertaining to Equal Employment Opportunity (EEO), but is not required to comply with 29 CFR 30; and (10) the IRAP must disclose to apprentices, before they agree to participate in the program, any costs or expenses that will be charged to them (e.g., costs related to tools or educational materials).  SREs will be required to validate to DOL, on an initial and annual basis that the IRAPs it recognizes are in compliance with these requirements.

Quality Control and Public Disclosure

With respect to quality control, the final rule provides that the specific means and nature of the relationship between the SRE and an IRAP will be defined by the SRE, provided that the relationship: (1) results in reasonable and effective quality control that includes (as appropriate) consideration of apprentices’ credential attainment, program completion, and job placement rates; (2) does not place barriers on the program receiving recognition from another SRE; (3) does not conflict with these regulations or violate any applicable law; (4) involves periodic compliance reviews; and (5) includes policies and procedures for suspension or derecognition of IRAPs.

In addition, and on an annual basis, SREs will be required to report to DOL and make publicly-available the following information for each IRAP it recognizes: (1) up-to-date contact information for each IRAP; (2) the total number of new and continuing apprentices annually training in the IRAP under an apprenticeship agreement; (3) the total number of apprentices who successfully completed the IRAP annually; (4) the annual completion rate for apprentices; (5) the median length of time for IRAP completion; (6) the post-apprenticeship employment retention rate, calculated six and 12 month after IRAP completion; (7) the industry-recognized credentials attained by apprentices and the annual number of such credentials obtained; (8) the average earnings of an IRAP’s former apprentices, calculated six and 12 months after IRAP completion; (9) training costs per apprentice; and (10) basic demographic information on participants.  DOL is also required to make publicly available a list of SREs and the IRAPs they recognize.  Suspended and derecognized SREs must also be publicly disclosed.

Severability

The final rule includes a new “severability” provision that was not in the June 2019 proposed rule.  This new provision provides that if any provision of Subpart B is declared invalid via litigation, DOL intends for all other provisions of Subpart B that are capable of operating in the absence of the invalidated provision to remain in effect.

Conclusion

This final rule is the clear result of a tremendous effort put forth by SWACCA, its members, and the many other industry stakeholders that pushed back on the risk that IRAPs presented to the construction industry.  Barring additional regulatory action or litigation, this chapter on IRAPs is closed and will not result in a new risk to our industry.  Thank you to the SWACCA members that participated in and supported this effort. 

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