April 7, 2025
From Confusion to Compliance: Mastering Apprenticeship Requirements
The Inflation Reduction Act (IRA) has brought new challenges to clean energy projects, particularly around Apprenticeship compliance. While the goal of creating high-paying jobs and building a skilled workforce is clear, the process of meeting these requirements is anything but straightforward.
One of the most misunderstood, poorly documented, and complex nuances of PWA compliance is the payment of Prevailing Wages to Apprentices.
From our real-world experience, we believe Good Faith Exceptions (a series of documentation requirements for establishing that Apprentices were not locally available for a project and work scope) will become best practice but rarely relied upon.
As companies rapidly grow apprenticeship programs, it will become harder to establish and maintain GFEs. As a result, we expect blanket GFEs (across a project) to be met with tremendous scrutiny and cure provision penalties.
Intersection of Prevailing Wage and Apprenticeship: Wage Progression Schedules
At the most basic level, Apprentices are paid a percentage of what a Journeyworker makes for the same job. As they gain more experience and work more hours, their pay goes up to match a higher percentage of the Journeyworker’s rate.
However, there is added complexity. Apprentice Wages are governed by a series of logic checks and formulas defined by local Prevailing Wage rates, ratio eligibility, applicable overtime, greater-of comparison, fringe overrides, and Wage Progression Schedule.
Here’s a Simplified Breakdown using this reference Pay Period Progression Schedule:
Progress-Based Increases: Apprentices receive pay increases as they complete a specified number of hours (e.g., after 1,000 hours).
Greater of Two Rates: If an apprentice works on a Prevailing Wage job, they must be paid the higher of two rates: their usual apprentice rate or half of the local Journeyworker rate. For example, if an apprentice with 2500 hours usually earns $22.43 per hour (50% of the $44.85 Journeyworker rate), but the local Prevailing Wage rate is $65 per hour, the apprentice should be paid $32.50 per hour (50% of $65) since it’s higher than their usual rate
Fringe Rate Considerations: If the Wage Progression Schedule does not specify a fringe rate, the apprentice must receive the full local Prevailing Wage fringe value. If a fringe rate is defined, it must be used consistently for all hours worked.
Maintaining Ratios: If a project does not meet the required Journeyworker to Apprentice Ratio (which varies by locality), apprentices must be paid the full Prevailing Wage rate, regardless of their pay period.
Apprenticeship Good Faith Exceptions (GFEs)
The IRA apprenticeship requirements include three key parts: ratio (Journeyworker to Apprentice), hours (percentage of total project hours by apprentices), and participation (hiring apprentices if a company has four or more workers on a project).
When apprentices are not available, companies can appeal for a GFE to show they made reasonable efforts to comply. However, securing a GFE is complex and involves detailed documentation. Contractors must attempt to hire apprentices and prove their efforts, while taxpayers/developers must ensure that all contractors' GFEs align with the overall project’s apprenticeship requirements.
A contractor’s GFE only covers their own participation requirement and does not absolve the overall project from meeting apprentice hour and ratio standards. Additionally, taxpayers must proactively reach out to apprenticeship programs at least every 120 days, while contractors must do so annually. If a program doesn’t respond within five days, a properly documented request can support a GFE.
Due to the complexity and the risk of penalties, relying on GFEs should be a last resort. Proper planning and proactive communication with local apprenticeship programs are essential to maintaining compliance.
Go Deeper with the Complete IRA Field Guide
Navigating IRA apprenticeship compliance is challenging, but being proactive can help you avoid costly penalties. Understanding how to properly pay apprentices according to RAPIDS Wage Progression Schedules, estimating recruiting targets, and managing Good Faith Exceptions are essential steps to ensure your project stays compliant.
Inside, you’ll find:
