Skilled & Trained Workforce – What is it and What Happens if you Don’t Comply?

Skilled & Trained Workforce – What is it and What Happens if you Don’t Comply?

By: Carrie Bushman, Esq.

As many public works contractors are becoming aware, over the last several years, California has adopted skilled and trained workforce requirements which mandate that contractors working on specific types of projects employ a certain percentage of apprenticeship program graduates for those working in an apprenticeable occupation.  Among others, the primary projects which include skilled and trained workforce requirements are:

• • School District (K-12) Design Build > $1 Million
  • School District (K-12) Lease Leaseback
  • Local Agency & other Specified State Agency Design Build > $1 Million
  • LAUSD Best Value > $1 Million

• Alameda, Los Angeles, Riverside, San Bernardino, San Diego, Solano & Yuba County Best Value > $1 Million

The only workers who can be employed on these projects are apprentices who are currently registered in a state approved apprenticeship program and “skilled journeypersons” who are either apprenticeship program graduates or have worked enough hours in their trade to meet the on the job training requirements of a state approved apprenticeship program in that trade; however, a certain percentage of the skilled journeypersons working on these projects must be apprenticeship program graduates.  The graduation percentages are as follows:

In general, most contractors working on these projects must submit monthly reports which demonstrate compliance with the skilled and trained workforce requirements.  The penalties for failing to submit a monthly report reflecting compliance are steep.  As if 1/1/19, if a contractor fails to submit a monthly report, the awarding body can withhold payment until a complete report is submitted.  If the prime contractor’s failure to submit a complete report is due to a subcontractor’s failure to submit the required compliance information, the awarding body can withhold an amount up to 150% of the value of the monthly billing for that sub.  Similarly, if the monthly report demonstrates non-compliance by the contractor or any of its subcontractors, the awarding body can withhold an amount up to 150% of the value of the monthly billing for the non-compliant contractor or sub.  In both instances, the contractor is permitted to withhold the same amount from the subcontractor.  Depending on the circumstances, the awarding body must immediately resume making payments (1) once a complete report is submitted, (2) the non-compliant subcontractor is replaced by one willing to make an enforceable commitment to comply, or (3) the non-compliant contractor or subcontractor submits a plan to achieve substantial compliance with the skilled and trained workforce requirements.

Upon receipt of a non-compliant report, the awarding body is required to report the violation to the Labor Commissioner’s office, which is authorized to issue penalties against the non-compliant contractor or subcontractor of up to $5,000 per month of non-compliance for a first violation and up to $10,000 per month of non-compliance for subsequent violations.  Prime contractors will be liable for penalties issued against their subcontractors if the prime contractor had knowledge of the subcontractor’s failure to comply or if the prime contractor fails to comply with any of the following requirements:

• For contracts entered into on or after 1/1/19, the subcontract must include a copy of the skilled and trained workforce statutes;
• The contractor must periodically monitor the subcontractor’s use of a skilled and trained workforce;
• Upon becoming aware of non-compliance, the contractor must take corrective action, including retaining 150% of the amount due to the non-compliant subcontractor until the failure to comply is corrected;
• Prior to making final payment to the subcontractor, the contractor must obtain from the subcontractor a declaration signed under penalty of perjury that the subcontractor has satisfied the skilled and trained workforce requirements.

It is crucial that contractors and subcontractors understand their obligations on skilled and trained workforce jobs and create a plan for compliance, including identifying existing employees who meet the skilled journeyperson definition, recruiting apprenticeship program graduates into their workforce, and determining whether they have access to an apprenticeship program which can be a resource for providing access to apprenticeship program graduates or a pathway for existing employees to enroll in and graduate from an apprenticeship program on an expedited basis.  Prime contractors also need to revise their subcontracts to include the required skilled and trained workforce language.

To learn more, join Cook Brown LLP attorney Carrie Bushman on July 18, 2019 for a seminar on Prevailing Wage and Skilled & Trained Workforce Compliance.  Register now!