Sheet Metal & Air Conditioning Contractors’ National Association

Trustee Advisor Blog

This blog educates industry trustees to aid them in better fund operations in order to control costs and provide quality benefits to fund participants.

New Guidance on Apprentice Skills Competitions

Jan 26, 2015

DSC00630x300The U.S. Department of Labor (DOL) recently issued guidance to the Employee Benefits Security Administration (EBSA) enforcement personnel on how to use plan assets from apprenticeship and training funds for skills competitions. Field Assistance Bulletin (FAB) 2014-02 expands the guidance provided in FAB 2012-01 that addressed expenditures on graduation ceremonies and advertising but left many unanswered questions on skills competition.

The FAB states that skills competitions may serve a legitimate goal by both directly providing training benefits to plan participants and by helping plan fiduciaries assess the effectiveness of the plan training program. Accordingly, the DOL finds that a plan may defray the cost of the skills competitions where the expenses are permitted under the terms of the plan, costs are reasonable, and the expenses are approved by a responsible plan fiduciary according to internal accounting, recordkeeping and administrative controls designed to prevent inappropriate, excessive or abusive expenditures.

The DOL specifically found that training funds could pay the following costs associated with skills competitions:

  • Reasonable expenses properly and actually incurred on behalf of participants. These include registration, transportation, lodging, meals or a reasonable per diem to cover the same. 
  • Prizes for the competition if consistent with the training purposes of the plan. Examples included credits to cover tuition expenses and tools and equipment used in the trade. Costs for prizes should be reasonable in light of the financial situation of the plan and the circumstance such as the size and level of the competition (e.g. local, regional, national or international competition).
  • Reasonable travel expenses of individuals other than apprentices (e.g. instructors) if they are necessary for the competition. This includes support staff for setting up and running the competitions, as well as judges.
  • Reasonable travel expenses for plan trustees and other officials to attend and observe the competitions for the purpose of assessing possible improvements to the training program. These individuals must have adequate experience to make an informed evaluation.
  • Expenses for organizing and conducting the competition where reasonable in light of the competition’s role in supporting the training program; approved according with the plan and internal accounting processes; and the amount is reasonable in proportion to the amount paid for the primary training program expenses.
  • Modest expenses for t-shirts or other apparel bearing the plan logo.
  • Promotional advertising to encourage participation by apprentices or support of employers.
  • Gifts of modest value (e.g. $25 gift cards) to those who assist in organizing or conducting the competition.
  • A celebratory meal. If apprentices are receiving a per diem, the per diem would need to be adjusted for that day to account for the meal being received at the celebratory dinner. For local competitions where no per diem was provided, the celebratory meal should conform to the guidance on graduation dinners set forth in FAB 2012-01.
  • Reimbursement for employers for wages paid to participants during the competitions if they are made pursuant to a clear agreement made in advance, cover only the compensation the employer paid to the apprentice during the competitions while absent from work, exclude any overhead or employer costs, and the employer has no separate legal obligation to pay the apprentice for that time.

The DOL states that the following costs are not permissible:

    • Travel expenses for plan officials or employers to observe the competition except as specifically provided above.
    • Expenses for contestants’ guests including family.
    • Hotel expenses or other travel costs for days outside the competition itself unless associated with necessary travel to and from the competition. This would include costs associated with the personal itinerary of the individual attending.
    • Costs to upgrade travel tickets or hotel accommodations.

    View FAB 2014-02 and FAB 2012-01 in their entirety on EBSA’s Web page. Before paying any expenses associated with a skills competition, JATC trustees should familiarize themselves with this guidance to ensure expenses paid for comply. Additionally, trustees may need to have their plan documents updated explicitly to allow for appropriate costs associated with skills competitions.