Economic liberty for apprenticeship programs

January 25, 2012 | By TIMOTHY SANDEFUR

Today the Pacific Legal Foundation filed a lawsuit against the state of California for enforcing an anti-competitive law regulating apprenticeship programs. Apprenticeship is a key component of the state’s economy, and the route to self-sufficiency for many hardworking Californians, who learn marketable skills and find jobs through apprenticeship programs. One of those programs is run by the Air Conditioning Trade Association, which operates a program teaching the skills of sheet metal work and repair. But their program is only allowed to operate in four counties—Mariposa, Merced, Stanislaus, and Tuolumne. When ACTA requested permission to expand its program to recruit apprentices from the rest of the state’s 58 counties, the state refused that permission because ACTA might compete with other, existing apprenticeship programs.

Under California law, anyone can run an apprenticeship program. But if you want your students to get work on state projects, then your apprenticeship program has to be approved by the Department of Apprenticeship Standards, and if you want to get that approval, you must first prove to the Department that “apprentice training needs justify the establishment” of a new program. The same rule applies to expanding an existing apprenticeship program, so when ACTA sought permission to expand, it was forced to prove that there was a “public need.”

What does “public need” mean? The law says that the state considers three factors: first, if there’s no existing apprenticeship program serving the same trade and geographic area; second, if existing programs are unable or unwilling to dispatch enough apprentices to employers who want to hire them; or third, if the existing programs are breaking the law in some way. What this means is that existing apprenticeship programs are given a special privilege to block new, competing programs from opening up. They file objections whenever someone asks the state to approve a new apprenticeship program, on the grounds that they’re already running one, so there’s no “public need.”

As the California Supreme Court noted in a 1992 decision, “the only apparent purpose” of this law “is to restrict competition among apprenticeship programs.” In 2007, the federal Department of Labor even ruled that this “public needs” statute conflicted with federal regulations regarding apprenticeship and revoked the state’s authority to qualify apprenticeship programs when it comes to federal construction projects. In other words, unlike most states, the federal government won’t rely on California officials to determine what apprenticeship programs are sufficient under the Federal Apprenticeship Act. This harms the state’s apprentices, but California officials refuse to change the rule.

The “public needs” test is just another example of government protectionism masquerading as a regulation of public safety. Just like with the Missouri law regulating moving companies, or many other “certificate of need” laws, the statute allows existing companies to veto their own competition rather than compete fairly.

The real victims of all of these machinations are the students themselves—people who need educational and vocational opportunity, but who are barred from it by archaic restrictions that privilege existing firms against new apprenticeship programs that only want to offer the public services they need at prices they’re willing to pay.

Such laws violate the Constitution’s protections of equal treatment and due process of law. As the Ninth Circuit Court of Appeals has explained, “economic protectionism for its own sake, regardless of its relation to the common good, cannot be said to be in furtherance of a legitimate governmental interest.”

You can read more about the case by reading this in-depth litigation backgrounder.