Mandatory health and pension provisions – the court also determined that the REO violated the provisions of ERISA. In general terms, ERISA is a federal act that establishes standards and requirements for employee benefit plans. A plan is considered an “employee benefit plan” under ERISA if its purpose is to provide benefits, among others, of medical, disability, death, unemployment, vacation, retirement income, or apprenticeship programs. ERISA preempts almost all state laws that “relate” to an ERISA employee benefit plan.4 The Fall River REO mandated that contractors and subcontractors provide employees with pension/annuity, hospitalization and medical benefits. The court found the REO violated ERISA because it required contractors to provide employee benefits that clearly fell within the scope of ERISA benefits. Apprenticeship requirements – the court determined that ERISA also preempted Fall River REO’s apprenticeship program requirements. ERISA preempts any state law that “relates” to apprenticeship training programs. The REO clearly related to an ERISA apprenticeship program as it mandated that all contractors and subcontractors have a state-approved apprenticeship program that had been in existence for at least three years prior to bidding, from which at least two apprentices per year graduated, and that met the REO’s residency requirements for apprentices. Since the REO demanded a specific apprenticeship program5, it was invalid and preempted by ERISA. The court noted the REO apprenticeship program continued to require the hiring of Fall River residents, and was thus unlawful on that ground as well.
The appeal period is still open; however, the court enjoined Fall River from enacting or enforcing the provisions of the 2010 REO or any similar REO during any appeal. While each REO has its own set of requirements, this decision sheds some insight on what municipalities may or may not mandate with respect to residency, employee benefits and apprenticeship. s 1 The Privileges and Immunities Clause of the U.S. Constitution protects
against discriminatory treatment of out of state citizens for certain protected privileges and immunities such as the right to possess property, travel, pursue a livelihood, and receive protection from the state government. 2 United Building and Construction Trades Council of Camden County and Vicinity v. Mayor and Council of the City of Camden, 465 U.S. 208, 218 (1984). 3 The Privileges and Immunities Clause test comes from the Supreme Court case, Toomer v. Witsell, 334 U.S. 385, 398 (1948). 4 Some state laws that deal with state insurance, banking or security laws, applicable criminal laws, and domestic relation orders are not preempted by ERISA. 5 In support of its apprenticeship requirement, Fall River tried to rely on another case involving a California state law which allowed contractors to pay lower wages to participants of a state-approved apprenticeship program. California Div. of Labor Standards Enforcement v. Dillingham Construction, 519 U.S. 316 (1997). Unlike the Fall River REO, the California law in Dillingham did not relate to an ERISA apprenticeship program because it did not require contractors to hire workers from approved apprenticeship programs.
The Professional Contractor
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