Even with the best systems in place, contractors may occasionally fall out of compliance with the Inflation Reduction Act’s (IRA) apprenticeship requirements. The good news: there are clear steps you can take to correct issues and avoid penalties.
Common Areas of Noncompliance
Contractors typically run into issues in three areas:
Participation: Not employing a registered apprentice when crew size reaches 4 or more laborers/mechanics.
Ratio: Exceeding the 1:1 journeyman-to-apprentice ratio, causing apprentice hours not to count.
15% Labor Hours: Failing to meet the minimum apprentice labor-hour requirement across the project.
How to Correct Issues
1. Document Good Faith Efforts
If you attempted to hire apprentices but could not (e.g., due to lack of availability), maintain written records of:
Job postings and outreach efforts
Communication with unions, workforce boards, or sponsors
Any apprentices you offered positions to but who declined
These records can be used to claim the Good Faith Effort Exception, which may shield you from penalties.
2. Adjust Payroll and Wages
If apprentices worked without proper journeyman supervision (ratio not met), they must be paid at journeyman rates for those hours.
Those hours will not count toward the 15% requirement, but correcting payroll ensures wage compliance and avoids violations.
3. Add Apprentices Mid-Project
If you’re behind on apprentice hours, you can still:
Hire or convert more workers into registered apprentices
Allocate additional apprentice hours in future payroll periods
Use Apprentix to track progress toward catching up before project completion
4. Strengthen Documentation
Compliance auditors look for proof that you monitored and corrected issues. Always keep:
Certified payroll showing wages and ratios
Apprentix reports showing apprentice hours logged
Signed apprenticeship agreements and Davis-Bacon certificates
Why Corrections Matter
Failing to correct noncompliance can result in:
Loss of enhanced tax credits under the IRA
Financial penalties assessed by the IRS
Increased scrutiny in future audits
By addressing issues quickly and maintaining documentation, you can demonstrate good faith compliance and protect both your company and the project.