If You Can’t Dazzle Em’ With Brilliance, Baffle Em’ With BS: Apprentices on Public Works Projects

The “Big Four” when it comes to public works contracting on state and local projects in California are:

1. Registration with the California Department of Industrial Relations (“DIR”);
2. Payment of prevailing of wages and maintenance and submission of certified payroll;
3. Compliance with the “skilled and trained workforce” requirements on certain projects; and
4. Hiring apprentices on state and local public works projects with a value of $30,000 or more.

The next case, GRFCO, Inc. v. Superior Court, 89 Cal.App.5th 1295 (2023), discusses the last of these requirements. The case also reminded me of W.C. Field’s old saying – “If you can’t dazzle em’ with brilliance, baffle em’ with bullshit” – and which ended with expected results. 

The GRFCO Case

Public works contractors GRFCO, Inc. and Garcia Juan Construction (“GJC”), the apparent alter ego of GRFCO, were barred from bidding on state and local public works projects for three years. They were barred for violating the apprenticeship requirements on six local public works projects and for submitting false certifications to the DIR.

Under Labor Code section 1777.5 and its implementing regulations, public works contractors on state and local public works projects with a value of $30,000 or more must use no less than one hour of apprentice work for every five hours of journeyman work. To that end, public works contractors who are not approved to train apprentices by an apprenticeship program sponsor must:

1. Before commencing work, send contract award information on DAS Form 140  to all apprenticeship committees in the geographical area of the project; and
2. At least 72 hours, Saturdays, Sundays and holidays excluded, before apprentices are to start work, send a request for apprentices on DAS Form 142 to an apprenticeship program in the geographical area of the public works project. If apprentices are not dispatched as requested, the contractor must request dispatches from another apprenticeship committee in the geographical area, either consecutively or simultaneously, until the contractor has requested dispatches from each committee. If no apprentices are dispatched within 72 hours of the contractor’s requests, the contractor is deemed to have satisfied its obligations under the apprenticeship requirements.

Labor Code section 1777.5 provides that contractors failing to comply with apprenticeship requirements can be barred from bidding on state and local public works projects for up to one year for the first violation and up to three years for any subsequent violation. When determining the length of debarment, the Labor Commissioner is required to consider:

1. Whether the violation was intentional;
2. Whether the contractor has committed other violations of Labor Code section 1777.5;
3. Whether, upon notice of the violation, the contractor took steps to voluntarily remedy the violation;
4. Whether, and to what extent, the violation resulted in lost training opportunities for apprentices; and
5. Whether, and to what extent, the violation otherwise harmed apprentices or apprenticeship programs.

The six local public works projects in which the apprenticeship requirements were not complied with were as follows:

The apprenticeship requirement violations were brought to the attention of the California Division of Labor Standards Enforcement by the Center for Contract Compliance – if there’s anything to be learned here it’s that you don’t want these groups sending you notices – and the Division ended up assessing civil wage and assessments of nearly $35,000 on the six projects.

The two false certifications were as follows:

Ultimately, in May 2018, the Division filed a debarment action against the contractors. At the hearing, the hearing officer found that the contractors had knowingly committed serious violations of the apprenticeship requirements and that the contractors had further submitted false certifications under penalty of perjury. The hearing officer ruled that the contractors be debarred for three years.

The contractors filed an administrative mandate with the superior court that was denied and the contractors appealed.

The Appeal

On appeal to the 4th District Court of Appeal, the contractors raised a number of issues. Among them:

The Hearing Officer Was Biased

The contractors argued that the hearing officer was biased because the hearing officer would have “obviously” worked with the investigator and both were with Labor Commissioner’s office.

According to the Court of Appeal, “this is not ‘obvious[ ]’ at all. And the contractors do not cite any support for it in the record. Further held the Court, “[t]he regulations which govern debarment hearings do not prohibit an attorney from [the Division] from also serving as a hearing officer in this type of proceeding” and, further, “in addition, a party is not denied an impartial adjudicator simply because an administrative entity performs both the functions of a prosecutor and judge.”

Finally, held the Court of Appeal, while the Administrative Procedure Act requires disqualification of a presiding officer where: (1) The person has served as investigator, prosecutor, or advocate in the proceeding or its pre adjudicative stage; or (2) the person is subject to the authority, direction, or discretion of a person who has served as investigator, prosecutor, or advocate in the proceeding or its pre adjudicative stage, “[t]here is neither evidence, or even suggestion, in the Administrative Record that the Hearing Officer participated ‘as investigator, prosecutor, or advocate in the present proceeding,” nor held the Court, “is there any evidence in the Administrative Record that the Hearing Officer was subject to the ‘authority, direction, or discretion’ of the DLSE advocate . . . .” 

Inability to Call Labor Commissioner as  Witness

The contractors also argued that they served a notice to appear on the then-Labor Commissioner Julie Su, but that the Division objected to the notice, arguing that the contractors had not shown good cause to cause the agency head to appear.

Because the contractors did not raise this issue before the hearing officer, or in its administrative mandate before the superior court, the Court of Appeal held that they waived the argument. Further, held the Court, despite the contractors’ late argument on appeal that they were entitled to question the Labor Commissioner as to why she had stepped up enforcement of DAS Form 140 and 142 violations and what her relationship was with the Center for Contract Compliance, “even now, the contractors have not shown any compelling reason to call the Labor Commissioner.”

Hearing Officer’s Refusal to Reopen Case

The contractors also argued that the hearing officer erred in refusing to reopen the case over a year after conclusion of the case in September 2018. According to the contractors, they requested that the hearing officer reopen the case in October 2019, after they deposed Pierre Weakley, a former representative of the Center for Contract Compliance, in July 2019. According to the contractors, during the deposition, Weakley testified that:

• The Center for Contract Compliance targeted non-union contractors by submitting bid protests accompanied by allegations of apprenticeship violations;
• Weakley asked the Division to start debarment proceedings against contractors; and
• Weakley had a “direct line of communications” with the Division.

I’m not sure what kind of deposition this was, but according to the Court of Appeal, none of Weakley’s statements were made under oath, and furthermore, the contractors’ claims were not supported with excerpts from a deposition.

Further, explained the Court of Appeal, the contractors’ claims, even if true: (1) did not show that Division had a pro-union bias; and (2) did not show that the hearing officer was motivated by a pro-union bias.

Conclusion

So there you have it. An overview of the apprenticeship law and why, if you’re going to try to drag the government through the mud, you better have bullets and bats rather than bull.