2020 -- S 2578

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LC004824

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2020

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A N   A C T

RELATING TO PROPERTY AND WORKS - LABOR AND PAYMENT OF DEBTS BY

CONTRACTORS

     

     Introduced By: Senators Ciccone, Lombardo, Lombardi, and Lawson

     Date Introduced: February 25, 2020

     Referred To: Senate Labor

     It is enacted by the General Assembly as follows:

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     SECTION 1. Legislative findings, intent, and purposes.

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     It is hereby found and declared as follows:

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     (1) It is the intent of the general assembly in enacting this act to protect the state's

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proprietary and financial interests in major school construction projects by requiring participating

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contractors and subcontractors working on such projects to maintain effective apprenticeship

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training programs as a means for ensuring they will deploy properly trained craft labor required for

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these projects.

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     (2) New school construction is a critical and pressing need for Rhode Island. A 2017 report

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commissioned by the School Building Authority, State of Rhode Island Schoolhouses, identified

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more than 2.2 billion dollars ($2,200,000,000) in deficiencies in the state's three hundred six (306)

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public schools. Subsequently, state and local authorities won voter approval in 2018 authorizing

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the issuance of 250 million dollars ($250,000,000) in general obligation bonds over five (5) years

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to fund school construction projects. It is essential that these vital resources be administered

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carefully to ensure the delivery of safe, timely, high-quality construction projects. To this end,

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public contracts awarded for this work must fully comply with the intent and purpose of existing

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state law provisions requiring the use of qualified, responsible bidders pursuant to § 45-55-5.

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     (3) School construction projects valued at five million dollars ($5,000,000) or more are

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inherently complex undertakings that utilize multiple site contractors and subcontractors and

 

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dozens or even hundreds of skilled craft personnel in various specialized trades. Errors in

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construction planning on such projects can result in cost overruns, inferior quality, increased safety

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risks, and schedule delays that can disrupt the timely delivery of educational services. Such effects

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are especially problematic where they are caused by flaws in project staffing insofar as construction

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is both a highly skilled and labor-intensive industry. While these challenges exist under virtually

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any market conditions, the construction industry is currently facing acute, widespread labor

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shortages that pose unprecedented risks to future project delivery. Unless effective policy responses

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are developed to address this skills crisis, it is estimated there will be a national shortage of one

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million five hundred thousand (1,500,000) construction workers by 2022. Consider the following

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research studies: The Associated General Contractors of America, Eighty Percent of Contractors

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Report Difficulty Finding Qualified Craft Workers to Hire As Association Calls for Measures to

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Rebuild Workforce (August 29, 2018); Construction Labor Market Analyzer, Construction Users

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RoundTable, The Long-Term Outlook for Construction 6 (2017); Petrochemical Update, Heather

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Doyle, Craft Labor Shortage Seriously Affecting Mega Projects: Poll, (June 29, 2017). Given these

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circumstances, Rhode Island, like virtually all other states, has been struggling for several years

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with this skills gap and has been working to address the growing risks posed by this challenge.

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Building Futures, Gerard M. Waites, Ahead of the Curve: Increasing Apprentice Utilization in

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Rhode Island's Construction Industry, (March 2013); Building Futures, Beth Ashman-Collins,

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Phase 1 - Skills Gap Analysis, RI Construction Trades, (April 25, 2008).

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     (4) These construction labor shortages, which have been extensively documented in both

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national and local research reports, are already causing serious disruptions to project delivery in

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the form of negative effects on project cost, schedule, safety, and quality. Consider the following

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research studies: Virtual Builders Exchange, Adolfo Pesquera, Labor Shortages Spur Increased

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Pay/Benefits, Yet Construction Firms Bullish on 2019, (January 4, 2019); Associated Builders and

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Contractors, Inc., ABC Highlights Construction Worker Shortage During National Apprenticeship

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Week, (November 15, 2017); The Aspen Institute: Workforce Strategies Initiative, Maureen

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Conway and Allison Gerber, Construction Pre-Apprenticeship Programs: Results from a National

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Survey 6-7 (2009).

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     (5) Substantial research also shows that apprenticeship training programs are one of the

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most viable solutions for addressing these challenges because it has long been recognized as a

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matter of public policy and industry practice that using apprenticeship training programs effectively

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and reliably develops a skilled workforce to meet our nation's construction industry needs,

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including critical infrastructure programs, such as educational facilities. To this end, the U.S.

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Congress passed the National Apprenticeship Act, Pub. L. No. 75-308, 50 Stat. 664, in 1937 to

 

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promote the use of structured education and training in the skilled crafts and trades through formal

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apprenticeship training programs.

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     (6) The value, benefits, and utility of using apprenticeship training programs in the

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construction industry have been verified by numerous public and private research projects over the

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past several years. Consider the following research studies: Case Western Reserve University and

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U.S. Department of Commerce, The Benefits and Costs of Apprenticeship: A Business Perspective;

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The Council of Economic Advisors, Addressing America's Reskilling Challenge 7-8 (2018); The

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Workforce Training & Education Coordinating Board, a Washington state agency, Workforce

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Training Results (2015); U.S. Departments of Labor, Commerce, Education, and Health and

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Human Services, What Works in Job Training: A Synthesis of the Evidence 8 (2014); The Aspen

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Institute: Workforce Strategies Initiative, Matt Helmer and Dave Altstadt, Apprenticeship:

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Completion and Cancellation in the Building Trades 8-9 (2013); Mathematica Policy Research,

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Debbie Reed et. al, An Effectiveness Assessment and Cost-Benefit Analysis of Registered

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Apprenticeship in 10 States (2012); and Urban Institute, Robert Lerman et al., The Benefits and

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Challenges of Registered Apprenticeship: Sponsors' Perspective ii (2009).

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     (7) Given these factors, apprenticeship programs that are operated in accordance with

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federally established qualification standards under 29 C.F.R. § 29 have been relied upon for more

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than eighty (80) years as the most effective and reliable method for conducting skills training in

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construction, and such programs are broadly relied upon for addressing the industry's current skills

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crisis. Recognizing these benefits, numerous states have enacted legislation requiring contractors

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to participate in formal apprenticeship programs as a condition for performing public works

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projects. Rhode Island adopted such a policy for general public works projects in 2014 by enacting

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§ 37-13-3.1. Private sector construction organizations, such as the Construction Users Roundtable,

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support similar strategies and have recommended that those responsible for large capital projects

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require site contractors to participate in credible skills training programs as a condition of

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performing work on their projects. Consider the following research study: Construction Users

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Roundtable, Skilled Labor Shortage Risk Mitigation (January 2015).

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     (8) Requiring contractors and subcontractors on major school construction projects to

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participate in apprenticeship training programs will help ensure that craft labor personnel on such

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projects are properly trained by verifying that they are either apprentices currently enrolled in bona

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fide programs or graduates of such programs. These efforts will also promote needed workforce

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development efforts in construction that are critical for ensuring future projects are properly staffed

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with qualified construction craft personnel.

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     SECTION 2. Sections 37-13-3.1 and 37-13-14.1 of the General Laws in Chapter 37-13

 

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entitled "Labor and Payment of Debts by Contractors" are hereby amended to read as follows:

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     37-13-3.1. State public works contract apprenticeship requirements.

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     Notwithstanding any laws to the contrary, all general contractors and subcontractors who

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perform work on any public works contract awarded by the state after passage of this act and valued

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at one million dollars ($1,000,000) or more shall employ apprentices required for the performance

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of the awarded contract. The number of apprentices shall comply with the apprentice-to-

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journeyman ratio for each trade approved by the department of labor and training the apprenticeship

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council of the department of labor and training. To the extent that any of the provisions contained

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in this section conflict with the requirements for federal aid contracts, federal law and regulations

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shall control.

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     37-13-14.1. Enforcement -- Hearings.

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     (a) Before issuing an order or determination, the director of labor and training shall order

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a hearing thereon at a time and place to be specified, and shall give notice thereof, together with a

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copy of the complaint or the purpose thereof, or a statement of the facts disclosed upon

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investigation, which notice shall be served personally or by mail on any person, firm, or corporation

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affected thereby. The person, firm, or corporation shall have an opportunity to be heard in respect

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to the matters complained of at the time and place specified in the notice, which time shall be not

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less than five (5) days from the service of the notice personally or by mail. The hearing shall be

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held within ten (10) thirty (30) days from the order of hearing. The hearing shall be conducted by

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the director of labor and training or his or her designee. The hearing officer in the hearing shall be

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deemed to be acting in a judicial capacity and shall have the right to issue subpoenas, administer

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oaths, and examine witnesses. The enforcement of a subpoena issued under this section shall be

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regulated by Rhode Island civil practice law and rules. The hearing shall be expeditiously

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conducted, and upon such hearing, the hearing officer shall determine the issues raised thereon and

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shall make a determination and enter an order within ten (10) thirty (30) days of the close of the

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hearing, and forthwith serve a copy of the order, with a notice of the filing thereof, upon the parties

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to the proceeding, personally or by mail. The order shall dismiss the charges or direct payment of

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wages or supplements found to be due, including interest at the rate of twelve percentum (12%) per

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annum from the date of the underpayment to the date of payment, and may direct payment of

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reasonable attorney's fees and costs to the complaining party.

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     (b) In addition to directing payment of wages or supplements including interest found to

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be due, the order shall also require payment of a further sum as a civil penalty in an amount up to

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three times the total amount found to be due. Further, if the amount of salary owed to an employee

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pursuant to this chapter but not paid to the employee in violation of thereof exceeds five thousand

 

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dollars ($5,000), it shall constitute a misdemeanor and shall be referred to the office of the attorney

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general. The misdemeanor shall be punishable for a period of not more than one year in prison

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and/or fined not more than one thousand dollars ($1,000). In assessing the amount of the penalty,

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due consideration shall be given to the size of the employer's business, the good faith of the

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employer, the gravity of the violation, the history of previous violations, and the failure to comply

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with recordkeeping or other nonwage requirements. The surety of the person, firm, or corporation

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found to be in violation of the provisions of this chapter shall be bound to pay any penalties assessed

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on such person, firm, or corporation. The penalty shall be paid to the department of labor and

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training for deposit in the state treasury; provided, however, it is hereby provided that the general

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treasurer shall establish a dedicated "prevailing wages enforcement fund" for the purpose of

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depositing the penalties paid as provided herein. There is hereby appropriated to the annual budget

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of the department of labor and training the amount of the fund collected annually under this section,

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to be used at the direction of the director of labor and training for the sole purpose of enforcing

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prevailing wage rates as provided in this chapter.

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     (c) For the purposes of this chapter, each day or part thereof of violation of any provision

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of this chapter by a person, firm, or corporation, whether the violation is continuous or intermittent,

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shall constitute a separate and succeeding violation.

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     (d) In addition to the above, any person, firm, or corporation found in violation of any of

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the provisions of this chapter by the director of labor and training, an awarding authority, or the

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hearing officer, shall be ineligible to bid on, or be awarded work by, an awarding authority or

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perform any such work for a period of no less than eighteen (18) months and no more than thirty-

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six (36) months from the date of the order entered by the hearing officer. Once a person, firm, or

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corporation is found to be in violation of this chapter, all pending bids with any awarding authority

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shall be revoked, and any bid awarded by an awarding authority prior to the commencement of the

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work shall also be revoked.

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     (e) In addition to the above, any person, firm, or corporation found to have committed two

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(2) or more willful violations in any period of eighteen (18) months of any of the provisions of this

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chapter by the hearing officer, which violations are not arising from the same incident, shall be

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ineligible to bid on, or be awarded work by, an awarding authority or perform any work for a period

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of sixty (60) months from the date of the second violation.

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     (f) The order of the hearing officer shall remain in full force and effect unless stayed by

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order of the superior court.

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     (g) The director of labor and training, awarding authority, or hearing officer shall notify

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the bonding company of any person, firm, or corporation suspected of violating any section of this

 

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chapter. The notice shall be mailed certified mail and shall enumerate the alleged violations being

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investigated.

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     (h) In addition to the above, any person, firm, or corporation found to have willfully made

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a false or fraudulent representation on certified payroll records or in reporting their apprenticeship

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information to any governmental agency shall be referred to the office of the attorney general. A

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first violation of this section shall be considered a misdemeanor and shall be punishable for a period

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of not more than one year in prison and/or fined one thousand dollars ($1,000). A second or

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subsequent violation of this section shall be considered a felony and shall be punishable for a period

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of not more than three (3) years imprisonment, a fine of three thousand dollars ($3,000), or both.

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Further, any person, firm, or corporation found to have willfully made a false or fraudulent

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representation on certified payroll records or in reporting their apprenticeship information to any

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governmental agency shall be required to pay a civil penalty to the department of labor and training

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in an amount of no less than two thousand dollars ($2,000) and not greater than fifteen thousand

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dollars ($15,000) per representation.

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     SECTION 3. Chapter 37-13 of the General Laws entitled "Labor and Payment of Debts by

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Contractors" is hereby amended by adding thereto the following sections:

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     37-13-3.2. Definitions.

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     For purposes of this section:

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     (1) "Approved apprenticeship program" or "apprenticeship program" shall mean an

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apprenticeship program that has been approved by the U.S. Department of Labor, or by a

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recognized state apprenticeship agency, pursuant to 29 C.F.R. Parts 29 and 30; however, such

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programs shall not include those that have obtained only provisional approval status. The required

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apprenticeship programs may either be programs that have specifically allocated funding and are

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subject to the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq.

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("ERISA"), or non-ERISA programs financed by general funds of employers.

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     (2) "School construction contract" shall mean any construction contract for a school

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building or any school-related facility that is funded with public money.

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     (3) "User agency" shall mean the state, municipality, quasi-governmental agency, or other

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entity that is responsible for management of a school construction contract.

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     37-13-3.3. School construction contract apprenticeship requirements.

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     (a) Notwithstanding any laws to the contrary, all specifications in any invitations to bid on

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any school construction contract valued at five million dollars ($5,000,000) or more shall include

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a requirement that all bidders responding to an invitation to bid on a school construction contract

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shall have an approved apprenticeship program for all suitable crafts or trades as determined by the

 

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state department of labor and training that will be employed on the project at the time of bid. All

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bidders responding to such invitation to bid shall also provide proof in the bid package of the

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existence of an approved apprenticeship program for all suitable crafts or trades as determined by

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the state department of labor and training that will be employed on the project by all contractors

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and subcontractors needed for the project. All general contractors and subcontractors who perform

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work on any school construction contract valued at five million dollars ($5,000,000) or more that

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is awarded after passage of this section shall ensure that no less than ten percent (10%) of the labor

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hours worked on the project shall be performed by apprentices for all suitable crafts or trades as

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determined by the state department of labor and training that will be employed on the project. The

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provisions of this section shall only apply to contractors and subcontractors with five (5) or more

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employees.

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     (b) All bids for such school construction contracts valued at five million dollars

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($5,000,000) or more shall fully comply with the intent and purpose of existing state law provisions

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requiring the use of qualified, responsible bidders pursuant to § 45-55-5, including the criteria that

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invitation for such bids shall reference this section when enumerating the objective measurable

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criteria that will be used to make awards, as required by § 45-55-5(b).

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     (c) For the purposes of this section, the ten percent (10%) apprenticeship requirement shall

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be applied per month.

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     (d) Upon petition by a contractor in writing, a user agency may lower the ten percent (10%)

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apprenticeship requirement of this section for a specific project for one or more crafts or trades for

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the following reasons:

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     (1) The demonstrated lack of availability of apprentices in specific geographic areas; or

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     (2) Participating contractors have demonstrated a good faith effort to comply with the

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requirements of this section but have not been able to attain the ten percent (10%) requirement.

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     (e) Any determination by a user agency to lower the apprenticeship requirements according

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to this section shall be provided in writing, to the contractor and to the state department of labor

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and training.

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     (f) The state department of labor and training shall provide information and technical

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assistance to any affected user agencies and contractors awarded any school construction contracts

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relative to their obligations under this section.

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     (g) Any contractor or subcontractor awarded a school construction contract shall collect

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and submit the following data for each project covered by this section to the user agency on certified

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payroll forms, as required by § 37-13-13:

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     (1) The name and dollar value of the project being worked on;

 

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     (2) The name of each apprentice, categorized by trade or craft; each apprentice's

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registration number; the name and address of each apprentice's approved apprenticeship program;

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and the number of hours each apprentice has worked on the project for each month being reported;

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     (3) The name of each journey level worker, categorized by trade or craft, and the number

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of hours each has worked on the project for each month being reported; and

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     (4) If applicable, the number, type, and rationale for the exceptions granted.

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     (h) Upon receiving the data from any contractor or subcontractor awarded a school

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construction contract, the user agency shall provide the department of administration and the

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department of labor and training with said data. The department of administration shall develop

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procedures for using and comparing said data and shall annually publish a report with aggregate

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data related to apprenticeships.

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     (i) The user agency shall withhold the next scheduled payment to any contractor or

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subcontractor who does not submit the information required by the provisions of this section and

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shall also notify the director of labor and training of the contractor's noncompliance. The user

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agency shall withhold final payment until all of the information required by the provisions of this

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section has been provided.

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     (j) The department of labor and training may also impose a penalty of up to five hundred

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dollars ($500) for each calendar day that any contractor or subcontractor does not comply with the

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requirement to submit data pursuant to the provisions of this section, as determined by the director

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of labor and training. Such penalty shall be paid by the contractor or subcontractor to the department

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of labor and training. Mere errors or omissions shall not be grounds for imposing a penalty under

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this subsection. The severity of any penalties shall be based on the facts and circumstances involved

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in the violation, including whether there are repeat or multiple violations and/or willful conduct.

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     (k) Any penalties assessed pursuant to the provisions of this section shall be paid to the

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department of labor and training's dedicated "prevailing wages enforcement fund."

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     (l) Failure of the contractors and subcontractors required to utilize apprentices or be

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exempted shall be considered a material breach of their school construction contract, and they shall

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be subject to any and all applicable penalties under their contract with the user agency.

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     (m) Any contractor or subcontractor aggrieved by any action taken by the director of the

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state department of labor and training or his or her designated hearing officer, pursuant to the

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provisions of chapter 13 of title 37, may obtain a review thereof for the purpose of obtaining relief

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from the action or lack of action, pursuant to § 37-13-15.

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     (n) To the extent that any of the provisions contained in § 37-13-3.3 conflict with the

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requirements for federal aid contracts, federal law and regulations shall control.

 

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     SECTION 4. This act shall take effect on July 1, 2020, and shall be effective for all

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contracts entered into on and after July 1, 2020.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO PROPERTY AND WORKS - LABOR AND PAYMENT OF DEBTS BY

CONTRACTORS

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     This act would require that bidders on any school construction contract valued at five

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million dollars ($5,000,000) or more must have an apprenticeship program that complies with the

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provisions of this act. Further, this act would provide that any entity with an apprenticeship program

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shall truthfully report information regarding the program.

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     This act would take effect on July 1, 2020, and would be effective for all contracts entered

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into on and after July 1, 2020.

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