MCA today provided testimony to the Standing Committee on Economic Development in the City of Worcester. The committee is considering an ordinance to essentially place an apprenticeship mandate on private construction as a condition of receiving city tax breaks.
We've been down this road before in Quincy, where we won a ruling that apprentice mandates on public construction violate federal law. The First Circuit Court of Appeals upheld the lower-court ruling, creating a precedent that covers all of Massachusetts and the First Circuit's jurisdiction.
In the testimony, we address why an apprentice mandate on a private project is essentially the same as on a public project, and we've cited a compelling legal opinion from a former Worcester city solicitor who issued an opinion in a very similar situation.
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August 23, 2023
Dear Mr. Chairman:
This letter addresses concerns with the new TIF/TIE policy that the Worcester City Council has referred to the Economic Development Committee for consideration as a city ordinance.
The Merit Construction Alliance represents merit shop construction contractors across Massachusetts, many who employ countless city residents at competitive wages and benefits. They invest company resources in training employees and apprentices. They are longstanding, respected members of the business community, and are responsible, local employers.
These merit shops are acutely interested in the policies and ordinances adopted by the city that impact both public and private construction projects. This is an area where union lobbyists try to weaponize public policy against their merit shop competition. The TIF/TIE policy is just the latest venue. We believe this Committee should consider carefully that the TIF/TIE policy is heading into the territory of codifying mandates already struck down by federal courts.
Inclusion of an apprenticeship mandate in a policy or ordinance runs counter to legal precedent. In 2014, the US Court of Appeals for the First Circuit upheld a lower court ruling that invalidated an apprentice mandate ordinance on municipal construction projects. (Merit Construction Alliance v. City of Quincy.) It is now settled throughout the First Circuit’s jurisdiction, including all of Massachusetts, that apprenticeship provisions like those contained in Worcester’s ordinances are unlawful and unenforceable under ERISA, which expressly preempts any and all state laws and local ordinances which “relate to” any employee benefit plan.
The question naturally arises, does a precedent striking down an apprentice mandate on public construction apply to a municipal TIF policy regarding private construction. This question also arose after a 2002 federal court order prohibiting the City of Worcester from imposing a residency requirement on municipal construction projects as it violates the U.S. Constitution’s Privileges and Immunities clause, “which guarantees every citizen of the country all the rights and privileges enjoyed by every other citizen.”
Do these legal precedents, which involved public construction projects, apply to a city’s TIF/TIE agreements which involve private construction? In a September 22, 2011, letter to then-City Manager Michael V. O’Brien, then-City Solicitor David M. Moore wrote:
“While a TIF agreement is not a construction contract that the city puts out to bid, I believe that the inclusion of the residents jobs ordinance provisions in a TIF agreement would be governed, if not by the UCANE injunction itself, then by the legal principles that resulted in the UCANE injunction.”
This is no small legal matter. Considerable effort and investment have gone into defending the legal rights of merit shop contractors against the weaponization of residency and apprenticeship requirements by organized labor and its allies to create a monopoly for union contractors.
Organized labor promotes apprenticeship mandates and similar schemes to reduce competition from merit shops. Every local signatory contractor to that trade union is deemed to participate in a Registered Apprenticeship program, by virtue of being signatory to the local craft CBA. The apprenticeship program requirement would have no impact on a union contractor, even if that contractor does not use an apprentice.
Most of the Commonwealth’s 500-plus state-registered apprentice programs are operated by merit shop contractors. Others have unregistered apprentices for work on private construction, as a registered program is only required for work on public projects. Merit shops invest company resources in training the future and current workforce. Yet not every merit shop has an apprentice program, and it should not be public policy to mandate one.
Additional observations regarding the apprenticeship TIF/TIE policy:
1. An apprenticeship mandate would harm small businesses and Minority- and Women-Owned Business Enterprises. Most MWBE construction firms are merit shops and small businesses which do not have the wherewithal to create an apprenticeship program. Ironically, the apprenticeship requirement could hurt the ability of TIF/TIE applicants to meet the MWBE goals. Is the city even aware of what is required to establish an apprenticeship program and the financial commitment being asked of an individual contractor?
2. A state-registered apprenticeship program is only required for contractors bidding on public projects and not private. Many merit shops have apprentice programs, but they are not registered with the state, because they exclusively perform private construction. This policy could actually result in fewer opportunities for apprentices by locking out contractors and apprentices not required to be registered with the state.
3. Has the city done any research as to whether there is a shortage of opportunities for apprentices? Has it looked at whether apprentices are currently used on TIF/TIE projects? With a shortage of construction workers in Massachusetts, we have not seen a lack of opportunity for apprentices in merit shop.
The policy also seeks to impose a $5,000 fine against the TIF/TIE applicant if “the Program and Compliance Manager determines that the project is failing to meet the requirements or expectations of this policy.” First, imposition of a fine on what is largely described as “goals” throughout the policy crosses the line to creating mandates. If those mandates run counter to case law, it will predictably trigger legal action by aggrieved parties. Second, the ability to fine based on unmet “expectations” should give any sensible person pause for concern. Financial penalties should not be based on an individual’s expectations that can shift like sand or interpretation of a policy that can become an ever-moving end zone.
We urge this Committee, in its wisdom, not to proceed with an apprenticeship mandate and imposition of fines due to failing to meet “expectations.” Thank you for your time and consideration of this matter.
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