New Rules for Apprentices on Energy Projects Come with Uncertainty for Contractors and Developers

On January 1, 2021, a new law went into effect setting benchmarks for use of apprentices on energy generation facility construction projects. Enacted in 2019, the law was part of “An Act to Establish a Green New Deal for Maine” and can be found at 26 M.R.S.A. §§ 3501 and 3502. Under the new law, employers engaged in construction energy generation facilities are required to use a prescribed number of apprentices. Beginning on January 1, 2021, “10% of all persons employed in the construction” of an energy generation facility must be apprentices. That percentage increases to 17.5% on January 1, 2025, and then increases again to 20% on January 1, 2027.

Under the regulations the phrase “persons employed in the construction” means “all persons employed in an apprenticeable occupation during any phase or time period of an operation to construct a generation facility, or during the entire duration of such an operation or during some combination of those periods of time.” This definition narrows the project workforce to which these apprentice percentage requirements apply to those jobs that traditionally offer an apprenticeship path to career development. [1]

The statute also authorized the Maine Department of Labor (MDOL) to develop and issue regulations for the implementation and enforcement of the new law. This rule-making process is important because the statute itself offers little guidance about how contractors should comply with the law or what to do if they are unable find enough apprentices. The MDOL’s regulations for the new law were finally issued on January 15, 2022. These new regulations can be found here. Unfortunately, the regulations provide little guidance for affected contractors and subcontractors meaning that there is likely to be some confusion over how the law will be enforced.

The primary concern with the implementation of this law is the general lack of available apprentices and apprenticeship programs within the State of Maine. Maine contractors are open-shop for the most part. Although a few larger Maine-based non-union contractors have apprentice programs up and running, most Maine-based contractors will be at a serious disadvantage in complying with these new laws in the short term. Industry associations such as Associated General Contractors (AGC) of Maine have played a significant role in development of apprentice programs for its members and the industry as a whole. Upstart apprentice programs present a challenge due to Maine’s relatively small population and the limited number of young people interested in entering the trades.

The regulations do allow contractors and subcontractors an opportunity to claim that “an insufficient number of qualified apprentices were available to meet the required percentage.” In order to prove this, the regulations require that an employer show that it “made reasonable efforts to find and employ” apprentices. “Reasonable efforts” may “include evidence of having contacted or attempted to contact the Maine Apprenticeship Program, sponsors of apprenticeship training programs such as labor organizations and employers with a presence in Maine, or other appropriate sources.” How MDOL interpret “reasonable efforts” remains to be seen.

The regulations also set forth guidelines for employer self-monitoring and reporting. These rules require that:

• Before starting a project or a “phase” of a project, an employer must submit to Bureau of Labor Standards (Bureau) within MDOL “a plan for locating and employing a sufficient number of qualified apprentices.”
• Upon completion of each phase of the construction project, “the employer must submit to the Bureau an interim report of the employer’s efforts to employ qualified apprentices including a clear explanation if they failed to hire a sufficient number of qualified apprentices during that phase of the project.”
• Upon completion of the project, “the employer must submit a final report also including a clear explanation if they failed to hire a sufficient number of qualified apprentices during the entire project.”

The regulations offer no guidance about what qualifies as a “phase” of an energy facility construction project other than providing that an employer’s “established pay period” may be considered a “phase”. As a practical matter, this term does not have a generally accepted meaning in the industry.

The regulations also include record-keeping requirements including that payroll records must be “available to a Bureau representative on each site covered by the statute” or, if not at the site, “within 10 miles of the site while the project is active”, that the records “be current within three days of the latest pay period that was paid by the contractor or sub-contractor”, and that the records “be retained, preserved, and open to inspection by the Bureau for at least three years following completion of the project.”

Requiring storage at the site or within 10 miles of the site suggests a requirement for the maintenance of paper records. These requirements seem out of step with current electronic record-keeping practices. It seems unreasonable to fault a contractor subject to these rules for storing records electronically on a server residing at its home office.

Finally, the statue allows the Bureau to assess fines of between $50 and $200 per violation. According to the regulations, “[e]ach day a sufficient number of apprentices are not employed in accordance with the law and these rules is a separate violation.”

The goal of using more apprentices on energy construction projects is laudable. Unfortunately, it may be difficult for contractors to comply with the law without further guidance and there is the potential for there to be significant confusion and disagreement over its enforcement. At this point in time, we are not aware of any efforts on MDOL’s part to take any enforcement action on these new rules.

If you have any questions about navigating this new law and its accompanying regulations, please reach out to a construction law attorney at Verrill.