Prevailing Wage Law Catch 22: Restrictions on Use of Out-of-State Apprentices Held Unconstitutional

Federal Judge Sue L. Robinson, U.S. District Court for the District of Delaware, has issued an important decision affecting Delaware employers in a case captioned, Tri-M Group, LLC v. Sharp, C.A. No. 06-556-SLR (D. Del. Apr. 14, 2010).

Tri-M Group, LLC, a Pennsylvania electrical contractor, was the successful bidder on a Delaware state construction project. It used apprentices registered in Pennsylvania, and paid them the apprentice wage rates prescribed under the Delaware prevailing wage law. An investigator for the Delaware Department of Labor learned that the apprentices were not registered in Delaware. The contractor asked him how it could register its apprentices in Delaware and was told that the Delaware law requires sponsors of apprentice programs to maintain a permanent place of business in Delaware.

Even though Tri-M had maintained a construction trailer at AstraZeneca for some years, that was not considered to be a “permanent place of business.” The DDOL determined that the contractor was in violation of Delaware law and since the apprentices were not registered in Delaware, they had to be paid the higher journeyman’s rate. The contractor sued in Delaware District Court, contending that favoring in-state contractors by forcing others to pay higher rates violated the Commerce Clause of the U.S. Constitution.

Judge Robinson agreed. She pointed out that several states in the region, “in a contest of wills over apprentice recognition,” had adopted discriminatory statutes designed to retaliate against and disfavor out of state contractors. Delaware’s statute was particularly blatant, in that it “discriminates against out-of-state employers on its face.” Therefore, a heightened scrutiny standard applied and the requirement that an apprenticeship program maintain a permanent place of business in Delaware would be declared invalid unless the state could show that the requirement “advances a legitimate local purpose that cannot be adequately served by reasonable nondiscriminatory alternatives.” The court concluded that the DDOL could adequately protect its apprentices without using discriminatory means, and granted Tri-M’s motion for summary judgment.

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