The U.S. Labor Dept. has taken the unprecedented step of initiating "derecognition proceedings" against a state apprenticeship authority for not doing its job. Open-shop contractors say the state discourages nonunion programs.

In a May 10 letter to California Dept. of Industrial Relations Director Steve Smith, the federal agency says that it has "reasonable cause" to believe that California's State Apprenticeship Agency has failed to promote apprenticeship opportunities. The state has 30 days to respond, but officials say existing programs will not be affected.

Under long-standing California law, CDIR approves new apprenticeship programs in building and construction trades only where "needs" show justification for the craft, trade and geographic area specified in a program registration application.

The requisite need can only be demonstrated in certain circumstances: where there is no existing program approved for a craft, trade and geographic area in question; where there is an approved program, but it does not have the capacity or neglects or refuses to supply apprentices to employers at a public work site; or where there is an approved program, but it has been identified by state officials as deficient.

"We're concerned that the ‘needs requirement' is precluding new programs, which is counter to the National Apprenticeship Act," says a Labor Dept. source. Most complaints in the state are from nonunion contractors, but union programs could also be hurt, the source says.

Emily Stover DeRocco, assistant labor secretary for employment and training, says the department is only challenging the needs policy. "All legitimate, needed programs have the opportunity to be registered and offer worker training," she says. California predicts 103,600 new construction jobs in the state between 1998 and 2008, a 17.2% increase.

"The fact that the state has rules that preclude [growth] is the issue we're trying to address," DeRocco says. Within 30 days, California must take corrective action or show specifically how it would correct the program. Another option would be for the state to request a hearing before an administrative law judge. Regardless, state officials "have to give us an adequate response," DeRocco insists.

The Associated Builders and Contractors praised the Labor Dept.'s action. Bill Spencer, ABC vice president of government affairs, claims long established union-backed apprenticeship programs preclude the start of new, nonunion ones because of the needs policy. "If you're a worker, you should be able to choose between a union and a nonunion apprenticeship program," he says. More programs mean more people can be trained, Spencer adds.

California vehemently denies that the 1939 needs requirement has been used by Gov. Gray Davis (D) to discourage open-shop apprenticeship training.

"We have never, ever in the Davis administration not allowed a new apprenticeship program based on the needs standard," contends Smith. In one or two instances, California required regional programs that wanted to go statewide to apply as new programs. Nonunion employers sued to overturn one of the decisions.

The backdrop for the federal action is the struggle between unions and open-shop employers in heavily unionized California. The first nonunion apprenticeship program there only started in 1985.

Open-shop contractors portray the three-year-old Davis administration as one in which unions and their legislative surrogates are rewriting state labor laws and regulations. One of the biggest complaints is that the 18-member California Apprenticeship Council, which makes initial decisions on state approval of apprenticeship programs, lacks open- shop employer representation.

"Everyone is from organized labor as employer, union member, or ex-union member," says Chris Lang, owner of Westway Electric Systems Inc., Los Angeles. A handful of open-shop representatives on the council appointed during the administration of former Republican Gov. Pete Wilson all are gone, they say.

Not true, say state officials. Bill Burke, a retired Associated General Contractors official from San Diego, was involved in starting the state's first nonunion training program. He says the council has not been unfair to open-shop contractors. But Smith says council membership changes with each new governor and that it was nonunion-oriented under Wilson.

One rule change the council adopted in February requires all contractors to pay prevailing wage rates to apprentices in state-approved programs, even on private sector work. As a result, some nonunion contractors who say they can't afford to pay prevailing wages note that some apprentices quit to find work elsewhere. Lang says he has lost three of his five apprentices. "I can't charge enough to pay them any more," he adds.

A first-year apprentice electrician who earned $10 an hour now must be paid about $16, say contractors. Journeymen who would have earned about $20 per hour now must be paid more than $30. Both rates are too rich, some contractors say. But apprentices who stay to work at lower rates no longer can count those hours toward completing a state-approved training program.