PUBLISHED
June 16, 2017

Dive Brief:

• President Donald Trump signed an executive order on Thursday that will increase apprenticeship funding to $200 million and give the private sector more influence in designing apprenticeship programs, with the unofficial goal of creating 5 million apprenticeships in the next five years, according to the Associated Press. 

• Last year, according to the Department of Labor, apprenticeships totaled a little more than 500,000, with roughly 50% of those in the construction industry.

• The funding for Trump’s plan would come from existing DOL job training funds, but critics point out that Trump’s proposed 2018 budget would cut the DOL’s training and employment services by 21%, according to Time, as well as other workforce programs. The budget also cuts $1 million in women’s training programs, but the administration said that will be made up in this broader apprenticeship initiative.
   

Dive Insight:  

The Associated Builders and Contractors lauded the announcement Thursday and said the measures outlined in the executive order would help the construction industry with skills training and help eliminate a 500,000-worker shortage.   

One controversial aspect of the executive order is the fact that Trump does not require apprenticeship programs to be registered with the DOL, which currently sets program parameters and certifies them to make sure they’re in compliance and provide quality training and education. Oversight of unregistered programs, critics say, could result in some sham offerings.

Administration officials said there are unique training requirements for each industry, and the private sector could be better positioned than the DOL to develop industry-specific apprenticeship programs.

If the program is successful in creating more skilled workers, it would certainly come as a welcome relief to the construction industry. According to an Associated General Contractors of America survey, 73% of companies anticipate hiring new workers this year, but 73% also said they anticipate difficulty in doing so.

Earlier this month, when the president revealed more details about his $1 trillion infrastructure plan, he said he wanted to create at least 1 million new apprenticeship positions in the next two years. This, as well as the order, was most likely in response to industry concerns about how such an ambitious program would further stress the limited skilled-labor pool. 

A contractor working on the University of Tennessee’s Strong Hall construction project will pay more than $300,000 in fines for labor violations. 

JAC Jack Construction LLC, a Knoxville-based labor provider, has agreed to pay a penalty of $336,987 assessed by the Tennessee Department of Labor Bureau of Workers’ Compensation (BWC).

The penalty is based on over a year’s worth of work at the University, where labor was provided for Proffitt & Sons, Inc.

In the settlement agreement, JAC Jack “understated or concealed …[its]…payroll, number of employees and/or appropriate classification of employees in an effort to avoid payment of proper workers’ compensation insurance premiums.”

Read the settlement agreement, below.

The Mid-South Carpenters Regional Council consistently tries to prevent this type of payroll fraud by calling attention to the problem. Here’s a background article about the effort surrounding JAC Jack and the UT project, and why it’s so dangerous to a community.

“Those workers were exploited, immigrant labor,” said Mike Boner, executive secretary-treasurer of the Regional Council.

Many contractors in Tennessee, such as Proffitt & Sons, get most of their workers from labor brokers.

“These labor providers aren’t name-brand companies,” said Boner. “They’re usually a guy with a cell phone that can round up dozens or even hundreds of workers. Then the labor brokers pay the workers off the books. We call that ‘payroll fraud.’”

The use of labor brokers is a serious problem in the construction industry because workers lose important workplace protections like workers’ compensation benefits, unemployment insurance and overtime. In addition, employment taxes for Social Security and Medicare are not paid.  That enables the cheating contractor to underbid law-abiding businesses by up to 30 percent.

“All of this cheating hurts every one of us by driving down our wages and driving up our taxes and insurance costs,” said Boner. “The fine from the BWC is large and should be a warning to all of the other companies out there who use the same practices.”

File: JAC Jack Settlement TNBWC 3-10-17.pdf