U.S. Department of Labor Steps up Enforcement of Apprenticeship Funds

Since the U.S. Department of Labor’s Employee Benefits Security Administration (EBSA) began stepping up enforcement of training funds last year, there has been much confusion about what are deemed “allowable” expenses for a Registered Apprenticeship training fund. In particular, the EBSA has ruled that some aspects of apprenticeship graduation parties are not allowable expenses. As the level of scrutiny has increased, so has confusion as local officials have given different answers to the question: Can the apprenticeship training fund pay for an apprenticeship graduation party? The short answer is: yes. The longer answer is that a training fund’s primary responsibility is to fund training. It is also allowed to pay for “reasonable administrative expenses for participants and trustees,” according to Phyllis C. Borzi, Assistant Secretary of Labor for EBSA. Therefore, a simple graduation ceremony at the training center that invites a few local dignitaries to speak to the graduates should be an allowable expense. However, a party that includes families and friends of the graduates, a band and an open bar, etc., is crossing the line. More elaborate parties can be held; they just can’t be paid for out of apprenticeship and training funds. An employer(s) and/or the local union can pay for the event. While training funds are encouraged to have a written policy in place, EBSA is still in the process of developing guidance sheets to help apprenticeship and training funds develop their policies. At this point, it is not known when these guidance sheets or other information (such as webcasts) will be made available. AGC will disseminate such information when it becomes available. According to a webinar sponsored by the federal Office of Apprenticeship last year, EBSA is reviewing expenditures on gifts, meals and alcohol provided at fund functions, as well as the purchase expensive gifts and travel reimbursement paid for meetings held at exotic locations. AGC of America advises all participants in a joint training and apprenticeship committee (JATC) and fund trustees to be aware that EBSA recently stepped up its enforcement of apprenticeship and training fund   compliance with Employee Retirement Income Security Act (ERISA), launching an unprecedented number of investigations over the past year.  In light of this initiative and because funds are finding inconsistent interpretations by investigators across the country, a stakeholders group has been formed to engage with EBSA and encourage its adoption of reasonable and uniform audit positions.  AGC is monitoring progress and will report on any significant developments. The federal government has noted that just because a local/regional representative from the federal or state department of labor participates in a graduation ceremony does not mean that your expenses are justified. For more information, contact Liz Elvin at elvinl@agc.org.