An administrative law judge has blocked an attempt by the state Department of Labor and Industry to lower apprentice wages.

The April 24 decision by Richard C. Luis is a victory for Building Trades unions and union contractors, who had vigorously opposed efforts to alter how apprentice wages are calculated. The proposed rule change, unions argued, threatened to undermine the entire framework of prevailing wages, and would have provided state clearance for nonunion contractors to pay their workers even less.

Labor and Industry made no secret that it was attempting to change the apprentice wage rule on behalf of Associated Builders and Contractors, an anti-union contractor organization.

But the rule the department came up with is vague and arbitrary, the administrative law judge said, does not have a rational basis, and leaves too much discretion in setting wage formulas. Further, he said, the department failed to meet its statutory requirements and failed "to demonstrate the need for and reasonableness of" the rule change.

"We were fortunate to get a common-sense judge who could see through the inadequacies of the proposal," said Dick Anfang, president of the Minnesota Building and Construction Trades Council.

"One of the key reasons we were able to be successful is we had a unified message coming from the entire industry ? general contractors, specialty contractors, unions," he said. "I think the judge saw we were talking about an industry, not just the needs of a small group of contractors.? The current rules have been in place over 25 years and have worked very successfully for thousands of people going through the construction trades. I think the judge saw that."

Nonunion contractors seek end-around
By law, apprentices covered under a state-registered apprenticeship program currently must be paid a percentage of the prevailing wage that is paid to journey workers in that particular craft. There are separate prevailing wage rates in each county, based on local wages in the private sector. Apprentices are paid an increasing percentage of the prevailing wage, as their experience and skills increase.

In Minnesota, 99.5 percent of the 7,967 registered construction apprentices are part of joint programs run by unions and contractors. Only apprentices in registered programs can be paid apprentice wage rates on publicly funded construction projects; unregistered apprentices and trainees must be paid the full prevailing wage amount.

Nonunion contractors say current law hamstrings them, because it would force them to pay registered apprentices more than they pay their journey workers. As a result, they say, they don't register apprentices and apprenticeship programs, even though they acknowledge the advantages of having a registered training program in place.

Proposal doesn't follow the law
To get around their dilemma, nonunion contractors asked Labor and Industry to create a dual-rate system to determine apprentice wages. Labor and Industry obliged, coming up with a rule that would allow apprentice pay to be based on the median wage for a particular craft as determined by the Occupational Employment Survey conducted regularly by the state Department of Employment and Economic Development (DEED).

From the time Labor and Industry first floated the rule change a year ago, Building Trades unions fought it, saying the state, in essence, helping to cut apprentice pay. That argument is based on the fact that the OES median wage is lower than the prevailing wage in 81 percent of cases, according to the department's own research.

Administrative Law Judge Luis upheld the union challenge, saying evidence fails to support any claim "that the OES median wage rate is a valid indicator of the journeyman wage rate," which state law requires as the basis for setting apprentice wages.

Dual rate still a possibility
"We're very pleased the ALJ understood the issues as we did, particularly the misapplication of the DEED OES data," said Jessica Looman, staff attorney for the Laborers District Council of Minnesota and North Dakota, which sponsors the state's largest apprenticeship program.

Luis did say the state can establish a dual-rate system for apprenticeship programs that are not covered by collective bargaining agreements, which means the issue may not go away.

But, Looman said, "I think there won't be a DEED rate included in an apprenticeship wage rate calculation anytime soon ... To have a different dual-rate system, the department would have to go through the rule-making process again, and they still have the statutory requirements they'd have to meet in establishing a dual rate."

The department has not decided how it will proceed with the proposed rule in light of Luis' findings, said Communications Director James Honerman. "We are reviewing our options," he said.

Adapted from The Union Advocate, the official newspaper of the St. Paul Trades and Labor Assembly. E-mail The Advocate at: advocate@stpaulunions.org