Agenda Item 8
October 7, 2014
Public Hearing
MEMORANDUM
October 3, 2014
TO:
FROM:
County Council
~
Robert
H.
Drummer, Senior Legislative Attome¥fYfii)
SUBJECT:
Public Hearing:
Bill 40-14, Contracts and Procurement - Prevailing Wage
Requirements - Apprenticeship Training
Prevailing Wage Requirements ­
Bill 40-14, Contracts and Procurement
Apprenticeship Training, sponsored by Councilmembers Riemer and Branson, was introduced on
September 9,2014. A Government Operations and Fiscal Policy Committee worksession will be
scheduled at a later date.
Bill 40-14 would require a contractor or subcontractor on County construction contracts
subject to the County Prevailing Wage Law to provide apprenticeship training directly or by
making payments to support apprenticeship training programs operated by other organizations,
including the Building and Construction Technology Program operated by Montgomery College.
The Bill would also permit required payments made by a contractor or s.ubcontractor for
apprenticeship training programs to be deducted from the applicable prevailing wage rate.
Background
Although the construction industry is an important source of middle class jobs, many
construction contractors report that they are having trouble finding qualified workers to fill key
positions. Apprenticeship training for construction craft workers is declining. Chapter 687 of
the 2009 Laws of Maryland established a State Apprenticeship Training Fund and required State
construction contractors to provide apprenticeship training or pay into the Fund. Bill 40-14
would provide a similar requirement for County construction contractors. Councilmember
Riemer explained the purpose of the Bill at ©13-16.
This packet contains:
Bill 40-14
Legislative Request Report
Council member Riemer Memorandum
Circle
#
1
12
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Bill No.
40-14
Conceming: Contracts and Procurement
- Prevailing Wage Requirements ­
Apprenticeship Training
Revised: September 1, 2014 Draft No.
§
Introduced:
September 9, 2014
Expires:
March 9, 2016
Enacted: _ _ _ _ _ _ _ _ __
Executive: _ _ _ _ _ _ _ __
Effective: _---:--:--_ _ _ _ _ __
Sunset Date:
~N=on:'.::e'_:____::__
_ _ __
Ch. _ _, Laws of Mont. Co. _ __
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
By: Councilmembers Riemer and Branson
AN
ACT to:
(1)
(2)
(3)
(4)
require a contractor or subcontractor on certain County financed construction
contracts to provide apprenticeship training directly or by making payments to
support apprenticeship training programs operated by other organizations;
provide that payments made by a contractor or subcontractor to the Building and
Construction Technology Program operated by Montgomery College satisfy the
obligation to provide apprenticeship training programs under the applicable
prevailing wage;
provide that certain payments made by a contractor or subcontractor for
apprenticeship training programs can
be
deducted from the applicable prevailing
wage rate; and
generally amend the prevailing wage law.
By amending
Montgomery County Code
Chapter 11 B. Contracts and Procurement
Section llB-33C
Boldface
Underlining
[Single boldface brackets]
Double underlining
[[Double boldface brackets]]
* * *
Heading or defined term
Added to existing law by original bill.
Deletedfrom existing law by original bill.
Added by amendment
Deletedfrom existing law or
the
bill by amendment.
Existing law unqfJected by bill.
The County Council for Montgomery County, Maryland approves the following Act:
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BILL No. 40-14
1
Sec. 1. Section IIB-33C is amended as follows:
IIB-33C. Prevailing Wage Requirements - Construction Contracts.
2
3
4
(a)
Definitions.
In this Section, the following words have the meanings
indicated:
Apprentice
means an individual who:
(1) is at least 16 years old;
(2) has signed an agreement with an employer or employer's agent,
an association of employers, an organization of employees, or a
joint committee, that includes a-statement of:
(A) the trade, craft, or occupation that the individual
learning; and
(B) the beginning and ending dates of the apprenticeship; and
(3) is registered in a program of a Council or Bureau of
Apprenticeship and Training of the United States Department
of Labor.
Apprenticeship training program
means an apprenticeship training
program that is registered with, and approved
~
IS
5
6
7
8
9
10
11
12
13
14
15
16
17
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19
the Maryland
Apprenticeship and Training Councilor the United States Department
of Labor.
20
21
Building and Construction
Technology
Program
~
means
the
apprenticeship-related instruction programs operated
Montgomery
22
23
College for building trades, including, carpentry, drywall, electricity,
heating, ventilating and air conditioning ffiYAC), plumbing, sprinkler
fitting, and steam fitting.
Construction
means work defined in Section IIB-I(c).
24
25
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BILL No. 40-14
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27
County financed construction contract
means a contract for
construction work that is awarded by the County or where County
funds are used to finance all or part of the cost of the contract.
28
29
30
31
32
33
County funds
means any:
(I)
(2)
funds directly appropriated by the County; or
grant funding for construction under Section 20-75 that
cumulatively exceeds $500,000.
Covered craff
means
~
classification of workers listed in the
34
prevailing wage determination applicable to the County financed
construction contract.
35
36
Employee
means a laborer, apprentice, journeyman, or mechanic
employed by a contractor or subcontractor on a County financed
construction contract.
37
38
39
Participates in an apprenticeship training program
means that
~
40
41
contractor or subcontractor makes regular financial contributions for
each covered craft to apprenticeship training programs for covered
crafts during the term of the County financed construction contract
that are at least equal to the hourly fringe benefit contribution rates
required for apprenticeship training
Qy
the applicable prevailing wage
determination
- -
contract.
for the
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50
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52
Prevailing wage
means the hourly wage rate set by the State
Commissioner of Labor and Industry for State-funded construction
contracts in the County.
(b)
Exclusions.
This Section does not apply to a County financed
construction contract:
(I)
(2)
of less than $500,000;
that is subject to a Federal or State prevailing wage law;
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BILL
No.
40-14
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(3)
(4)
(5)
awarded without competition under Section 11B-14;
with a public entity;
to the extent that the contractor is expressly precluded from
complying with this Section by the terms of any Federal or
State law, contract, or grant;
(6)
(7)
entered into as a bridge contract under Section 11B-42;
entered into as a cooperative procurement under Section 11B­
40;m
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(8)
which results from an emergency procurement under Section
11B-16.
(c)
Payment of prevailing wage.
Any contractor and subcontractor that
performs direct and measurable construction work on a County
financed construction contract
must~
ill
pay each employee at a rate equal to or more than the prevailing
wage in effect when the solicitation is published for the type of
work
performed~
and
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(
d)
ill
satisfy the apprenticeship training requirements established in
subsection
ill.
Prevailing wage.
72
73
(1)
Basic rate.
The prevailing wage rate is the prevailing wage rate
established annually by the Commissioner of Labor and
Industry for State financed construction work performed in the
County by an employee who performs direct and measurable
work.
74
75
76
77
(2)
Overtime rate.
A contractor or subcontractor must pay an
employee at a rate equal to or more than the prevailing wage
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BILL
No.
40-14
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rate for overtime for the type of work performed for each hour
that the employee performs direct and measurable work:
(A)
(B)
(C)
(3)
more than 10 hours in any single calendar day;
more than 40 hours in a workweek; or
on a Sunday or a legal holiday.
Deductions.
A contractor or subcontractor may only make fair
and reasonable deductions that are:
(A)
(B)
required by law;
authorized in a written agreement between an employee
and an employer signed at the beginning of employment
that:
(i)
concerns food, sleeping quarters, or similar items;
is submitted by the employer to the Chief
Administrative Officer or a designee; [or]
(ii)
(C)
required or allowed by a collective bargaining agreement
between a bona fide labor organization and a contractor
or
subcontractor~
or
(ill
payments made for apprenticeship training programs
required
Qy
subsection
ill.
(4)
Apprentices.
Each apprentice must be paid at least the rate that
the State's Apprenticeship and Training Council sets for an
apprentice in the trade involved, based on a percentage of the
prevailing wage rate in that trade.
(d)
Contract requirements.
Each contract covered by this Section must:
(l)
require the contractor and subcontractor to comply with this
Section; and
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BILL
No. 40-14
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(2)
specify that an aggrieved employee, as a third-party beneficiary,
may by civil action recover the difference between the
prevailing wage for the type of work performed and the amount
actually received, with interest and a reasonable attorney's fee.
(e)
Misclassification ofemployees.
110
(1)
A contractor or subcontractor must not split or subdivide a
contract, pay an employee through a third party, or treat an
employee as a subcontractor or independent contractor to avoid
any requirement of this Section.
III
112
113
114
(2)
A laborer may perform any work that is not ordinarily
performed by a mechanic or mechanic's apprentice, but must be
paid the prevailing wage rate for the work performed.
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(3)
A laborer receiving the prevailing wage rate for laborers must
not perform work ordinarily performed by a mechanic or
mechanic's helper.
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(4)
If a laborer performs work ordinarily performed by any
mechanic or mechanic's apprentice, the laborer must be paid for
the entire time of performance of that work at the prevailing
wage rate for a mechanic.
(f)
Helper and trainee restrictions.
A contractor or subcontractor must
not employ any individual classified as a helper or trainee to perform
direct and measurable work on a contract covered by this Section.
(g)
Posting requirements.
Each contractor and subcontractor must post a
127
128
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clearly legible statement of each prevailing wage rate in a prominent
and easily accessible place at the work site during the entire time work
is being performed in English and any other language that is primarily
spoken by the employees at the work site.
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BILL
No. 40-14
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(h)
Payroll records.
(1)
Each contractor and subcontractor must submit a complete copy
of its payroll records for construction work performed on a
contract covered by this Section to the Chief Administrative
Officer or a designee within
14
days after the end of each
payroll period.
(2)
The payroll records must contain a statement signed by the
contractor or subcontractor certifying that:
(A)
(B)
the payroll records are correct;
the wage rates paid are not less than those required by
this Section; and
(C)
the rate of pay and classification for each employee
accurately reflects the work the employee performed.
(3)
Each payroll record must include:
(A)
the name, address, and telephone number of the
contractor or subcontractor;
(B)
the name and location ofthe job; and
each employee's:
(i)
(ii)
(iii)
(iv)
(v)
name;
current address, unless previously reported;
specific work classification;
daily straight time and overtime hours;
total straight time and overtime hours for the
payroll period;
(vi)
rate of pay;
(C)
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(vii) fringe benefits by type and amount;
[and]
(viii) gross wages; and
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BILL
No. 40-14
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Ox)
(4)
apprenticeship training program payments made
under subsection
ill.
Each contractor or subcontractor must:
(A)
keep
payroll records
covering
construction
work
performed on a contract covered by this Section for not
less than 5 years after the work is completed; and
(B)
subject
to
reasonable
notice,
permit
the
Chief
Administrative Officer or a designee to inspect the
payroll records at any reasonable time and as often as
necessary.
(5)
The Chief Administrative Officer or a designee must make
payroll records obtained from contractors or subcontractors
under this Section available for public inspection during regular
business hours for 5 years after the Chief Administrative
Officer receives the records.
(i)
Apprenticeship training requirements.
ill
A contractor or subcontractor that performs direct and
measurable
construction
work
on
a
County
financed
construction contract must:
®
participate in an apprenticeship training program for each
covered craft in which it will employ persons for the
County financed construction contract;
®
!mY
to the Building and Construction Technology
Program the amount determined
Qy
the Secretary of
Labor, Licensing, and Regulation for payments to the
State Apprenticeship Training Fund established under
Section 17-602 of the State Finance and Procurement
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BILL
No.
40-14
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Article for State financed construction work performed in
the County; or
©
lli!Y
to
~
registered apprenticeship program or to an
organization that has
~
registered apprenticeship program
for the purpose of supporting these programs the amount
determined
Qy
the Secretary of Labor, Licensing, and
Regulation
for
State
financed construction
~
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work
perfonned in the County.
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ill
If a contractor or subcontractor
Construction
Technology
the Building and
subparagraph
Program
~
under
(n(1
)(B), the contractor or subcontractor must:
®
lli!Y
each employee in
covered craft in wages any
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amount of
hour; and
~
required fringe benefit contribution for
apprenticeship programs that is greater than 25 cents per
an
ill
(1)
lli!Y
monthly
to
the
Building
and
Construction
Technology Program.
Enforcement.
The Chief Administrative Officer or a designee may perform
random or regular audits and investigate any complaint. of a
violation of this Section. If the Director determines that a
provision of this Section has been violated, the Director must
issue a written decision, including appropriate sanctions, and
may withhold from payment due the contractor, pending a final
decision, an amount sufficient to:
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No.
40-14
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(i)
pay
each
employee
of the
contractor
or
subcontractor the full amount of wages due under
this Section; and
(ii)
satisfy a liability of a contractor for liquidated
damages as provide in this Section.
(2)
A contractor or subcontractor must not discharge or otherwise
retaliate against an employee for asserting any right under this
Section or for filing a complaint of a violation.
(3)
The
sanctions
of Section
IlB-33(b) which
apply
to
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noncompliance with nondiscrimination requirements apply with
equal force and scope to noncompliance with this Section.
(4)
Each contract subject to this Section may specify the payment
of liquidated damages to the County by the contractor for any
noncompliance with this Section.
(5)
Each
contractor
is
jointly
and
severally
liable
for
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noncompliance with this Section by a subcontractor.
(6)
If a contractor or subcontractor is late in submitting copies of
any payroll record required to be submitted under this Section,
the County may deem invoices unacceptable until the contractor
or subcontractor provides the required records, and may
postpone processing payments due under the contract or under
an agreement to fmance the contract.
(7)
A contractor may appeal a written decision of the Director that
the contractor violated a provision of this Section to the Chief
Administrative Officer within 10 working days after receiving a
copy of the decision. The Chief Administrative Officer must
designate a hearing officer to conduct a hearing under Chapter
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No.
40-14
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Approved:
2A upon receipt of a timely appeal. If the contractor does not
appeal a written decision within 10 working days after receipt,
the decision of the Director becomes final and binding.
[G)]
{k)
Report.
The Chief Administrative Officer must report annually
to the Council and Executive on the operation of and compliance with
this Section.
Craig
L.
Rice, President, County Council
Date
246
247
Approved:
Isiah Leggett, County Executive
Date
248
249
This is a correct copy ofCouncil action.
Linda M. Lauer, Clerk ofthe Council
Date
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LEGISLATIVE REQUEST REPORT
Bil140-14
Contracts and Procurement
-
Prevailing Wage Requirements
-
Apprenticeship Training
DESCRIPTION:
The Bill would require a contractor or subcontractor on certain
County financed construction contracts to provide apprenticeship
training directly or by making payments to support apprenticeship
training programs operated by other organizations, including the
Building and Construction Technology Program operated by
Montgomery College.
There is a shortage of trained workers for construction projects in the
County.
The goal is to increase the availability of trained workers for
construction projects in the County.
DGS, County Attorney
To be requested.
To be requested.
To be requested.
The State of Maryland recently enacted a similar law requiring its
construction contractors to provide funding for apprenticeship
training.
Robert H. Drummer, Senior Legislative Attorney
Not applicable.
PROBLEM:
GOALS AND
OBJECTIVES:
COORDINATION:
FISCAL IMPACT:
ECONOMIC
IMPACT:
EVALUATION:
EXPERIENCE
ELSEWHERE:
SOURCE OF
INFORMATION:
APPLICATION
WITHIN
MUNICIPALITIES:
PENALTIES:
Contractual remedies.
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MONTGOMERY COUNTY COUNCIL
Rockville, Maryland
Councilmember Hans Riemer
At Large
MEMORANDUM
To:
From:
Re:
Date:
Councilmembers
I \
Al~
Councilmember Hans Riemer
kJi~
Bill on Craft Training
September 2, 2014
Colleagues, I am writing to ask that you co-sponsor and support the attached bill I plan to
introduce to encourage craft training in the construction industry.
I
believe this bill is
necessary to ensure a continued supply of skilled labor on county construction projects as
well as to reinforce a vital part of our middle class. This bill modeled on a recent state law ­
HB 644 passed in 2009 - and requires that most construction firms that receive County
contracts either provide apprenticeship training directly or pay a fee to support the
Building and Construction Technology Program operated by Montgomery College.
The construction industry is critical to our economy. Trained construction workers are
necessary for completing all building and transportation projects, as well as renovations,
additions and rehabs. In Montgomery County, the construction industry directly employed
23,264 people in 2012
(5%
of total employment), but because of its nature in servicing other
sectors, the industry touches nearly all forms of economic activity.
The industry is also an important source of middle-class employment, especially for workers
who do not have bachelors' or graduate degrees. Following are the average hourly wages
earned by common construction occupations in the Washington-Arlington-Alexandria
Metropolitan Area.
Mean Hourly Wage,
Washington~Arlington-Alexandria
Metropolitan Area, May 2012
Source: U.S. Bureau of Labor Statistics
Occupation
Mean Hourly Wage
Plumbers/Pipefitters
$27.76
Electricians
27.10
Reinforcing Iron Workers
24.76
Sheet Metal Workers
23.81
Operating Engineers
23.11
Carpenters
21.93
@
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Structural Iron Workers
Brickmasons
Roofers
Cement Masons
Painters
Construction Laborers
21.65
20.71
20.26
18.80
18.19
15.23
The County Council recognized the importance of this industry when it passed the county's
prevailing wage law in 2008. That law requires that construction workers employed on
county projects be paid at least the prevailing rate of compensation in their trades. This
provides a fair floor for these workers and ensures that their construction contractors do
not win county work by low-balling worker pay.
But the prevailing wage law does not address an issue of critical importance for workers,
em ployers and the broader community: craft training.
The construction trades are demanding occupations. Workers in this industry must acquire
and maintain exacting skill sets to complete often-complicated projects. The traditional
model of construction training involves joint labor-management funds providing four or five
years of apprenticeship, combining both classroom instruction and on-the-job training.
Graduates from these programs go on to regular upgrade and safety training to keep their
skills contemporary and competitive. Because the training is provided by funds sustained by
large groups of contractors, employers could pay for training and have confidence that
those workers would not be hired by competitors who did not pay those costs.
This system has broken down badly in recent years. According to data from the U.S. Bureau
of Labor Statistics, the percentage of construction workers enrolled in building trades
unions has fallen from 40% in 1973 to 14% in 2013. That has reduced the ability of labor­
management funds to train the next generation of construction workers. The non-union
side of the industry has not filled the gap with a comparable training model.
Consider what has happened as a result.
1. In 2013 dollars, the average hourly wage in construction has fallen from $30.23 in 1972
to $24.22 last year, a decline of 20%. This injures the ability of the construction industry to
attract qualified applicants who are willing and capable of learning its demanding skills.
2. In September 2013, the Associated General Contractors of America (the industry's largest
general contractor association) reported that "seventy-four percent of construction firms
report having trouble finding qualified workers amid growing labor shortages." The AGC
commented:
Nearly three-fourths of construction firms across the country report they are having
trouble finding qualified craft workers to fill key spots amid concerns that labor
shortages will only get worse, according to the results of an industry-wide survey
released today by the Associated General Contractors of America. Association
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officials called for immigration and education reform measures to help avoid worker
shortages.
"Many construction firms are already having a hard time finding qualified workers
and expect construction labor shortages will only get worse," said Stephen E.
Sandherr, chief executive officer of the Associated General Contractors of America.
"We need to take short- and long-term steps to make sure there are enough
workers to meet future demand and avoid the costly construction delays that would
come with labor shortages."
Of the 74 percent of responding firms that are having a hard time finding qualified
craft workers, the most frequently reported difficulties are in filling such onsite
construction jobs as carpenters, equipment operators and laborers, Sandherr said.
Fifty-three percent are having a hard time filling professional positions - especially
project supervisors, estimators and engineers.
3. In September 2009, a report by the Governors Workforce Investment Board of Maryland
discussed construction labor shortages in our state. The report said:
With the industry poisedfor recovery and expansion, significant construction
workforce training and education challenges must be addressed. Currently there is
an inadequate pipeline of qualified workers within the state to fuel the future
growth of Maryland's construction industry. Prior to the downturn in the economy,
shortages of workers already existed, both in the skilled trades and in occupations
such as engineering, construction management and project management. An aging
workforce, and the predicted loss of workers through retirement or attrition, adds
to the problem.
Maryland companies have been struggling to attract, recruit and train sufficient
numbers of qualified construction employees from within Maryland to meet the
growing needs of the construction industry. In spite of excellent earnings potential,
including hourly wages that exceed the national average for nonpsupervisory
workers in private industry, sufficient numbers of young people and career changers
do not opt for a career in construction. Further, as the construction industry
becomes more technologically advanced, current employees may lack the necessary
technical and professional skills. With initiatives such as BRAC expected to bring
new high-tech buildings to Maryland, having sufficient numbers of construction and
building trades workers skilled in the latest technologies is critical.
4. The state's Department of Labor, Licensing and Regulation has informed me that the
state's registered apprentice programs had just 8,324 enrollees as of September 30, 2011.
According to the U.S. Bureau of Labor Statistics, the state had 146,009 construction
workers in that month, meaning that just 6% of them were in training.
The State of Maryland chose to remedy this problem with HB 644 (2009), which was set in
place with regulations last year. The law requires construction contractors on state projects
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to participate in a state-registered apprentice program or pay a fee to the state intended to
promote craft training. Contractors can no longer "free ride" by paying nothing for training
while their competitors bear the costs. My bill (attached) is modeled on the state's law and
institutes similar requirements for county projects. I have discussed it with representatives
of both the labor community and the business community. In my bill, any fees will be paid
to the Building and Construction Technology Program operated by Montgomery College,
helping to support this critical program.
This bill is good for construction workers. It's good for responsible construction contractors
who already pay to train their employees. It's good for the county as a construction owner
since it will contribute to our ability to build quality projects. And it's good for our local
economy since it encourages skill development in a vital section of our middle class.
I ask you to co-sponsor and support it.