Court Opinion

ID: 3037393
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:56:20.159841+00
Date Added: 2024-06-11T18:17:02.021005
License: Public Domain

FOR PUBLICATION
  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

OREGON COLUMBIA BRICK MASONS              
JOINT APPRENTICESHIP TRAINING
COMMITTEE; OREGON-COLUMBIA
CEMENT MASONS JOINT
APPRENTICESHIP TRAINING COMMITTEE,
                 Plaintiffs-Appellants,
                  v.
DAN GARDNER, in his capacity as                No. 03-35864
Oregon Labor Commissioner and
Oregon State Apprenticeship and                 D.C. No.
                                              CV-02-01711-JJ
Training Council Chairperson; JOHN
MOHLIS; VICKY L. BACON; KATHRYN                 OPINION
J. MATTIMORE; RONALD S. SHERMAN;
CONSTANCE ASHBROOK; ED J.
GORMLEY; CHET CARUTHERS; STEPHEN
SIMMS, Esq.; LARRY JONES, each in
their capacity as members of the
Oregon State Apprenticeship and
Training Council,
                Defendants-Appellees.     
        Appeal from the United States District Court
                 for the District of Oregon
         John Jelderks, Magistrate Judge, Presiding

                  Argued and Submitted
             March 7, 2005—Portland, Oregon

                     Filed May 22, 2006

     Before: Stephen Reinhardt, Marsha S. Berzon, and
               Jay S. Bybee, Circuit Judges.

                             5557
5558   OREGON COLUMBIA BRICK MASONS v. GARDNER
              Opinion by Judge Berzon
5560    OREGON COLUMBIA BRICK MASONS v. GARDNER

                       COUNSEL

John Spencer Stewart, Robert B. Coleman, & Matthew A.
Wand, Stewart Sokol & Gray LLC, Portland, Oregon, for the
plaintiffs-appellants.

Hardy Myers, Attorney General, Mary H. Williams, Solicitor
General, & Erika L. Hadlock, Assistant Attorney General,
Salem, Oregon, for the defendants-appellees.
             OREGON COLUMBIA BRICK MASONS v. GARDNER                   5561
                                OPINION

BERZON, Circuit Judge:

   We consider whether an Oregon prerequisite for state rec-
ognition of a proposed apprentice training committee — that
it be “necessary to serve the needs of the various apprentice-
able occupations,” OR. REV. STAT. § 660.135(1), a require-
ment known as the “needs” requirement — is preempted by
the Employee Retirement Income Security Act of 1974
(ERISA), 29 U.S.C. §§ 1001-1461.

                            BACKGROUND

   “Since the founding of the American republic, states have
regulated training programs for individuals seeking to enter
skilled crafts, in order to prevent their exploitation by employ-
ers.” Assoc. Builders & Contractors of S. Cal., Inc. v. Nunn,
356 F.3d 979, 982 (9th Cir. 2004). Oregon has since 1931
promoted apprentice training programs by establishing a reg-
istration system for programs that meet specified criteria. See
1931 OR. LAWS 138. Oregon does not, however, mandate that
employers hire only registered apprentices. Instead, “[f]or
building contractors, a major benefit of hiring registered
apprentices is that they can pay them a special rate for work
that they perform on public construction projects,” Nunn, 356
F.3d at 982, typically lower than the prevailing wage estab-
lished by Oregon law. See OR. REV. STAT. § 660.142(1).1 Con-
  1
   The statute provides, in relevant part:
         (1) No employer shall pay a registered apprentice at a rate
      less than that obtained by applying the schedule, set forth in the
      applicable standards, at the apprentice’s level of apprenticeship,
      to the journeyman hourly rate of wage currently in effect for jour-
      neymen in the occupation for which the apprentice is being
      trained, as determined by the appropriate local joint committee.
        (2) The journeyman hourly wage rate shall be the average
      hourly wage currently being paid by employers participating in
5562      OREGON COLUMBIA BRICK MASONS v. GARDNER
tractors may pay this lower rate only if they hire apprentices
from registered programs. Id. § 660.142(2).

   In Oregon, the registered programs are run by “local joint
committees,” id. § 660.135, in accordance with standards
approved by the Oregon State Apprenticeship and Training
Council (Council). Id. § 660.137. At the heart of this case is
the standard prescribing that, “[i]n each locality where
apprentices are employed, there shall be formed as many local
joint committees as are necessary to serve the needs of the
various apprenticeable occupations.” Id. § 660.135(1)
(emphasis added). This needs requirement limits the number
of State-recognized apprenticeship programs in a given geo-
graphic area.

   The “joint” aspect of the local joint committees is that they
“consist of an equal number of representatives of employers
and employees.” Id. § 660.135(2). Employee representatives
on “joint committees” need not be members of a labor organi-
zation or a collective bargaining unit. If there is no collective
bargaining agreement that “covers the trade or occupation that
is the subject of the apprenticeship or training program
administered by the local joint committee,” an “employee rep-
resentative must be, or have been, a skilled practitioner of the
particular trade or occupation that is the subject of the appren-
ticeship or training program administered by the local joint
committee.” Id. § 660.135(5).

   Rules issued by Oregon’s Bureau of Labor and Industries
further regulate joint apprenticeship committees. Relevant to
this case is one that explains the application of the needs
requirement as follows:

    a program to their skilled workers, that is, to those employees
    with demonstrated knowledge, experience and proficiency in that
    trade or occupation who are currently performing the type of
    work for which the apprentice is to be trained.
OR. REV. STAT. § 660.142.
           OREGON COLUMBIA BRICK MASONS v. GARDNER                     5563
      The Council will approve the creation of a new local
      joint committee, in an area already served by a com-
      mittee in the same trade or craft, only if the applicant
      for the new program can first demonstrate to the sat-
      isfaction of the Council by a preponderance of evi-
      dence that the existing program fails or refuses to
      address valid and legitimate needs of the applicant.

OR. ADMIN. R. 839-011-0084(3).2 Another pertinent regulation
requires that, “[a]ll employers and their apprenticeable
employees shall be afforded the opportunity to participate, on
a non-discriminatory basis, in existing programs.” OR. ADMIN.
R. 839-011-0084(2).

      FACTUAL AND PROCEDURAL BACKGROUND

   In this case, the Oregon Columbia Brick Masons Joint
Apprenticeship Training Committee and the Oregon Colum-
bia Cement Masons Joint Apprenticeship Training Commit-
tee, two apprenticeship training committees not registered by
the Council, seek a declaratory judgment that Oregon’s needs
requirement for the establishment of new registered appren-
ticeship training committees is preempted by ERISA. The two
committees initially sought approval by the Council in June
2000. The Council’s Standards Review Subcommittee recom-
mended against Council approval three times between then
and September 20, 2001, when the Council finally denied the
plaintiffs’ application.
  2
   This administrative rule was amended, effective August 23, 2005, to
replace the general requirement that an applicant demonstrate “that the
existing program fails or refuses to address valid and legitimate needs”
with a requirement that the application satisfy a number of set criteria. See
OR. ADMIN. R. 839-011-0084 (2005). Because the amended rule does not
apply retroactively, the relevant regulation is the one in force at the time
appellants submitted their application for new apprenticeship training
committees. All citations in this opinion to the administrative rule are to
the former version, unless otherwise noted.
5564     OREGON COLUMBIA BRICK MASONS v. GARDNER
   In reviewing the appellants’ application for new registered
apprenticeship training committees, a Council subcommittee
considered whether existing committees could meet the needs
identified by appellants for their proposed programs. The
existing registered apprenticeship committees represented that
they could address all of the identified needs by incorporating
some of the appellants’ proposed curriculum into their pro-
grams. They also offered appellants an opportunity to par-
ticipate in curriculum development. Ultimately, the subcom-
mittee recommended that the Council deny approval because
of perceived deficiencies in appellants’ proposed curriculum.
The subcommittee also doubted that the existing registered
apprenticeship committees could not or would not meet appel-
lants’ stated needs.

   Before the full Council there was extensive debate on the
appellants’ application, but the application was ultimately
rejected. Appellants argued, first, that they had an “unmet
need” related to “philosophical differences,” because the
existing registered apprenticeship training committees
included union members. The Council did not recognize this
“philosophical difference” as an “unmet need,” reasoning that
an Oregon administrative rule mandates non-discriminatory
access to existing programs, see OR. ADMIN. R. 839-011-
0084(2), and thus that it could not sanction a program prem-
ised on excluding union-affiliated participants.

  Second, appellants argued that “cost efficient training” was
a need unmet by the existing programs. The Council was not
persuaded by this position, as appellants “refused to fully doc-
ument costs or provide cost justifications for their training
cost claims, while at the same time acknowledging that all
known costs were not included in the original estimates pro-
vided to the Subcommittee and Division staff.”

  After the Council denied their application, the appellants
brought this declaratory action in federal court. The plaintiffs
sought a judgment declaring that Oregon Revised Statute
         OREGON COLUMBIA BRICK MASONS v. GARDNER             5565
§ 660.135(1), delineating the needs requirement, and Oregon
Administrative Rule 839-011-0084 are preempted by ERISA,
and also sought related injunctive relief. Both appellants and
appellees presented declarations concerning the factual back-
ground of appellants’ rejected application for registration as
apprenticeship training committees. In addition, appellees
offered undisputed evidence that Oregon’s registered appren-
ticeship training programs include both programs supported
by independent funds created exclusively for that purpose and
others supported by alternate arrangements not involving the
creation of a separate fund. According to an affidavit from
Stephen Simms, a member of the Council, at least sixty-eight
apprentice training committees maintain funds for the purpose
of financing their training programs, and at least sixty-one do
not. The unfunded committees “are supported either directly
by the participating employer or employers or have made con-
tractual arrangement for the operation of their programs.”

  On cross-motions for summary judgment, the magistrate
judge granted summary judgment to the appellees. This
appeal ensued.

                       DISCUSSION

  At the core of this case is ERISA’s “broadly worded pre-
emption provision.” Ingersoll-Rand Co. v. McClendon, 498
U.S. 133, 138 (1990). It provides:

    Except as provided in subsection (b) of this section,
    the provisions of this subchapter and subchapter III
    of this chapter shall supersede any and all State laws
    insofar as they may now or hereafter relate to any
    employee benefit plan described in section 1003(a)
    of this title and not exempt under section 1003(b) of
    this title.

29 U.S.C. § 1144(a) (emphasis added).
5566      OREGON COLUMBIA BRICK MASONS v. GARDNER
   [1] In California Division of Labor Standards Enforcement
v. Dillingham Construction, N.A., Inc., 519 U.S. 316 (1997),
the Supreme Court considered whether ERISA preempts a
California law, similar to the Oregon statute, requiring con-
tractors of state public works projects to pay the prevailing
wage unless the contractor hires apprentices from approved
programs. The Court used a two-part inquiry in “apply[ing]
the ‘unhelpful text’ of ERISA’s pre-emption provision,” id. at
324: First, does the law “refer to” ERISA plans? Second, if
not, does the law have an impermissible “connection with”
ERISA plans? Id. at 324-35; see also Nunn, 356 F.3d at 984-
86 (applying the Dillingham criteria).

   Appellants maintain that we should not apply the Dil-
lingham analysis afresh to this case, as we have already
decided, in Associated General Contractors v. Smith, 74 F.3d
926 (9th Cir. 1996), that a needs requirement for state regis-
tration of an apprenticeship program is preempted by ERISA.
Smith, however, relied substantially on our overturned deci-
sion in Dillingham Construction N.A., Inc. v. County of
Sonoma, 57 F.3d 712 (9th Cir. 1995), rev’d, 519 U.S. 316.
See Smith, 74 F.3d at 929-30. Furthermore, the Supreme
Court, in reversing our decision in Dillingham, substantially
altered the ERISA preemption analysis for apprenticeship
plans. Consequently, we cannot rely on Smith, but instead
must apply the ERISA preemption analysis developed by the
Supreme Court in Dillingham to the Oregon needs require-
ment. See Miller v. Gammie, 335 F.3d 889, 893 (9th Cir.
2003) (en banc) (holding that when intervening Supreme
Court case law is clearly irreconcilable with a prior circuit
decision, a panel of this court is “bound by the later and con-
trolling authority, and should reject the prior circuit opinion”).

I.   “REFER TO”

   Dillingham held, first, that California’s prevailing wage
law did not “refer to” ERISA plans because approved appren-
ticeship programs in California were “not necessarily . . .
           OREGON COLUMBIA BRICK MASONS v. GARDNER                   5567
ERISA plans.” 519 U.S. at 325. The Court identified as criti-
cal to its analysis the consideration that among California’s
approved programs were both joint apprenticeship commit-
tees, i.e., those “sponsored by the collective efforts of man-
agement and organized labor,”3 that must maintain ERISA
trust funds, and those “maintained by a single employer,
[whose] costs can be defrayed out of that employer’s general
assets.” Id. at 325-26. This “funded/unfunded distinction,” id.
at 327, was critical to Dillingham’s holding that California’s
approved apprenticeship programs do not “refer to” ERISA
plans.

   This “funded/unfunded distinction” first arose in Massa-
chusetts v. Morash, 490 U.S. 107 (1989). In Morash, the
Court, interpreting the term “employee welfare benefit plan”
in ERISA, see 29 U.S.C. § 1002(1), “recognized a distinction
between vacation benefits paid out of an accumulated fund
and those paid out of an employer’s general assets.” Dil-
lingham, 519 U.S. at 326. “[C]ompelled by ERISA’s object
and policy,” the Court concluded that “the policy at issue in
Morash, whereby vacation benefits were paid out of general
assets,” was not an ERISA “employee welfare benefit plan.”
Id.

   In considering California’s approval requirement for
apprenticeship training committees, Dillingham relied on the
factual record concerning whether California’s approved
apprenticeship programs maintained ERISA-governed trust
funds. Evidence indicated that “California had 175 joint
apprenticeship programs and 13 ‘unilateral’ ones.” Id. at 327
n.5. Although the record did not indicate whether “some of
the 13 unilateral programs [had] separate funds,” Dillingham
emphasized that “[n]o party . . . ha[d] established that all pro-
  3
    The Court’s definition of a “joint apprenticeship training program”
cited California law as recognizing only representatives of collective bar-
gaining units as employee representatives. See Dillingham, 519 U.S. at
325 (citing Cal. Lab. Code §§ 3075, 3076).
5568       OREGON COLUMBIA BRICK MASONS v. GARDNER
grams d[id].” Id. (first emphasis added). The Court concluded
on this basis that the prevailing wage law “function[ed] irre-
spective of . . . the existence of an ERISA plan.” Id. at 328
(citation and internal quotation marks omitted).

   Similarly, in Nunn, we considered whether a California reg-
ulation governing the compensation paid registered appren-
tices working on private construction projects refers to ERISA
plans. 356 F.3d at 984-86. We noted that there were twenty-
eight state-approved unilateral apprenticeship programs, id. at
983, and that “[i]n [the pertinent regulation] there is no spe-
cific provision that makes ERISA plans essential to its opera-
tion or that acts immediately or exclusively upon ERISA
plans.” Id. at 984. We concluded that the statute in question
“survives Associated Builders’ challenge under this ‘reference
to’ prong of ERISA preemption analysis.” Id.

   [2] The question that we must answer with reference to
Oregon’s needs requirement, then, is whether it “is indifferent
to the funding, and attendant ERISA coverage, of apprentice-
ship programs.”4 Dillingham, 519 U.S. at 328; see also Nunn,
356 F.3d at 984. Appellants argue that although many Oregon
apprenticeship programs do not in fact maintain trust funds,
they are legally required to do so, either by the Labor Man-
agement Relations Act (LMRA), 29 U.S.C. §§ 141-187, or by
ERISA itself. They maintain that if either argument is correct,
then the needs requirement “refers to” ERISA plans and is,
therefore, preempted. We disagree.
  4
    Following oral argument, appellants directed our attention to an admin-
istrative decision from the Department of Labor that held that California’s
needs requirements was inconsistent with a different federal law, namely
the National Apprenticeship Act of 1937, 29 U.S.C. § 50. See U.S. Dep’t
of Labor, Office of Apprenticeship Training, Employment, & Labor Servs.
v. Cal. Dep’t of Indus. Relations, Case No. 2002-CCP-00001 (Dep’t of
Labor Apr. 22, 2005), http://www.oalj.dol.gov/Decisions/ALJ/CCP/2002/
EMPLOYMENT_and_TRAIN_v_CALIFORNIA_DEPARTMEN_2002C
CP00001_(APR_22_2005)_082616_CADEC_SD.PDF. That decision,
however, did not concern whether a needs requirement is preempted by
ERISA and thus does not inform our decision here.
          OREGON COLUMBIA BRICK MASONS v. GARDNER                  5569
  A.    LMRA

  [3] Section 302(a) of the LMRA provides:

     It shall be unlawful for any employer or association
     of employers or any person who acts as a labor rela-
     tions expert, adviser, or consultant to an employer or
     who acts in the interest of an employer to pay, lend,
     or deliver, or agree to pay, lend, or deliver, any
     money or other thing of value —

          (1) to any representative of any of his
          employees who are employed in an industry
          affecting commerce; or

          (2) to any labor organization,[5] or any
          officer or employee thereof, which repre-
          sents, seeks to represent, or would admit to
          membership, any of the employees of such
          employer who are employed in an industry
          affecting commerce . . . .

29 U.S.C. § 186(a). This general prohibition is not applicable,
however, “with respect to money or other thing of value paid
by any employer to a trust fund established by such represen-
tative for the purpose of . . . defraying costs of apprenticeship
or other training programs.” Id. § 186(c)(6). Thus, while an
employer may not pay any money directly to a labor organiza-
tion or other employee representative, an employer may con-
  5
    A “labor organization” is defined by 29 U.S.C. § 152(5), which pro-
vides:
    The term “labor organization” means any organization of any
    kind, or any agency or employee representation committee or
    plan, in which employees participate and which exists for the
    purpose, in whole or in part, of dealing with employers concern-
    ing grievances, labor disputes, wages, rates of pay, hours of
    employment, or conditions of work.
5570      OREGON COLUMBIA BRICK MASONS v. GARDNER
tribute to an apprenticeship trust fund established by such an
organization or representative. If a trust fund is established to
comply with the LMRA, then ERISA governs the implemen-
tation and governance of that fund. See Dillingham, 519 U.S.
at 326.

   In general, the purpose of § 302(a) of the LMRA is to pre-
vent “corruption of collective bargaining through bribery of
employee representatives by employers, . . . extortion by
employee representatives, and . . . the possible abuse by union
officers of the power which they might achieve if welfare
funds were left to their sole control.” Arroyo v. United States,
359 U.S. 419, 425-26 (1959). Its coverage extends not just to
official bargaining representatives but to “any person autho-
rized by the employees to act for them in dealing with their
employers.” United States v. Ryan, 350 U.S. 299, 302 (1956).

   [4] The appellants maintain that to comply with the LMRA,
any approved Oregon apprenticeship training committee must
establish a trust fund to defray the costs of apprenticeship
training, even if its employee members are not members of
collective bargaining units or traditional labor organizations.
They point to no evidence, however, that any Oregon appren-
ticeship training committees not involving union representa-
tives have in fact established LMRA trust funds, and we know
from the record that at least sixty-one Oregon joint appren-
ticeships have not.

   We seriously doubt the viability of the appellants’ LMRA
argument. The LMRA’s core purpose is to prevent corruption
of employee representatives who are chosen by, and have a
statutory duty to represent the interests of, other employees.
Although the apprenticeship training committees that include
collective bargaining representatives clearly fall within the
definition of “labor organization” set forth in 29 U.S.C.
§ 152(5), those committees on which the employee represen-
tatives are not collective bargaining representatives do not.
Employee representatives on committees that do not involve
          OREGON COLUMBIA BRICK MASONS v. GARDNER                5571
a collective bargaining agreement must only “be or have been
a skilled practitioner in the particular trade or occupation that
is the subject of the apprenticeship or training program
administered by the local joint committee.” OR. REV. STAT.
§ 660.135(5) (emphasis added); see also OR. ADMIN. R. 839-
011-0074(1)(a)(B). Moreover, employee representatives need
not be employees, and are chosen by the Council, not the
employees themselves.6 See OR. ADMIN. R. 839-011-0074.
The local joint committees, consequently, are not necessarily
“organization[s] . . . in which employees participate,” 29
U.S.C. § 152(5), because none of its members need be “em-
ployees,” and employees do not “participate” in the sense that
they select the members of the committees. Further, such
committees do not raise the concern of corrupting the dis-
charge of duties by employee representatives selected under
the processes of the National Labor Relations Act, 29 U.S.C.
§ 158, that is at the core of LMRA § 302.

   [5] In sum, whether a government-mandated committee
composed of government appointed individuals is a “labor
organization” for purposes of the LMRA is at least highly
debatable. In any event, there is no reason in this ERISA pre-
emption case to decide an entirely hypothetical question con-
cerning a separate statute, the LMRA. If the operation of
some or all of the unfunded plans in Oregon is illegal under
the LMRA, that is a matter for LMRA enforcement. See 29
U.S.C. § 186(d)-(e) (providing for criminal penalties and
injunctive relief). Nothing in Dillingham suggests that its
approach to the preemption question depends on the validity
of funded or unfunded plans on independent legal grounds.
Instead, after observing in passing that § 302(c)(6) of the
LMRA requires a separate fund for joint apprenticeship com-
  6
   The employers may nominate individuals to the committees, see OR.
ADMIN. R. 839-011-0074(1)(a)(A), but the Council can disapprove nomi-
nees, see OR. ADMIN. R. 839-011-0074(1)(d). Also, if no individuals are
nominated, “the Apprenticeship Representatives for the area may recom-
mend members.” OR. ADMIN. R. 839-011-0074(3).
5572     OREGON COLUMBIA BRICK MASONS v. GARDNER
mittees, Dillingham went on to identify “[t]he existence of
that fund” — not whether the LMRA might be read to require
the existence of a fund that in actuality does not exist — as
the circumstance that “triggers ERISA coverage.” 519 U.S. at
326 (emphasis added). The Court in Dillingham stated with
emphasis that “an employee benefit program not funded
through a separate fund is not an ERISA plan,” once again
concerning itself with on-the-ground actualities, not with dis-
puted legalities. Id.

   As noted above, the record indicates that not all of Ore-
gon’s apprentice training committees maintain trust funds:
“[A]t least 68 [committees] are supported by a joint training
trust fund. . . . [A]t least 61 . . . [committees] do not use a
joint training trust fund, but are supported either directly by
the participating employer or employers or have made con-
tractual arrangement for the operation of their programs.” The
statute and regulations governing Oregon’s needs requirement
do not distinguish between funded and unfunded plans, but
apply to all apprenticeship programs presented for approval.
Thus, Oregon is “indifferent” to the outcome of the legal dis-
pute between the parties as to whether § 302 of the LMRA
does or does not require that the apprenticeship plans gov-
erned by the state-mandated local joint committees be funded.
Either way, the Oregon statutory requirements will be the
same.

   [6] Given the Oregon statutory and regulatory language and
the record in this case, the Oregon statutory scheme cannot be
said to “refer to” ERISA plans. Rather, as in Nunn, “there is
no specific provision that makes ERISA plans essential to its
operation or that acts immediately or exclusively upon ERISA
plans.” 356 F.3d at 984. And, as in Dillingham, the Oregon
statutes and regulations are “indifferent to the funding, and
attendant ERISA coverage, of apprenticeship programs.” 519
U.S. at 328.

   [7] We conclude that Oregon’s needs requirement does not
“refer to” ERISA plans.
             OREGON COLUMBIA BRICK MASONS v. GARDNER                   5573
  B.      ERISA

   Appellants’ argument with regard to ERISA is somewhat
similar. They ask us to hold that approved apprenticeship
training committees in Oregon are covered by ERISA itself
— without the LMRA trigger — because the committees
meet ERISA’s definition of an “employee welfare benefit
plan,” 29 U.S.C. § 1002(1). On that basis, they urge us to con-
clude that the Oregon statutes and regulations refer to ERISA
plans.

  ERISA’s coverage provision states, in relevant part:

       [T]his subchapter shall apply to any employee bene-
       fit plan if it is established or maintained — (1) by
       any employer engaged in commerce or in any indus-
       try or activity affecting commerce; or (2) by any
       employee organization or organizations representing
       employees engaged in commerce or in any industry
       or activity affecting commerce; or (3) by both.

29 U.S.C. § 1003(a) (emphasis added). ERISA defines an
“employee welfare benefit plan” as:

       any plan, fund, or program which was heretofore or
       is hereafter established or maintained by an
       employer or by an employee organization,[7] or by
  7
   An “employee organization” under ERISA means:
      any labor union or any organization of any kind, or any agency
      or employee representation committee, association, group, or
      plan, in which employees participate and which exists for the
      purpose, in whole or in part, of dealing with employers concern-
      ing an employee benefit plan, or other matters incidental to
      employment relationships; or any employees’ beneficiary associ-
      ation organized for the purpose in whole or in part, of establish-
      ing such a plan.
29 U.S.C. § 1002(4).
5574       OREGON COLUMBIA BRICK MASONS v. GARDNER
      both, to the extent that such plan, fund, or program
      was established or is maintained for the purpose of
      providing for its participants or their beneficiaries,
      through the purchase of insurance or otherwise, (A)
      medical, surgical, or hospital care or benefits, or
      benefits in the event of sickness, accident, disability,
      death or unemployment, or vacation benefits,
      apprenticeship or other training programs, or day
      care centers, scholarship funds, or prepaid legal ser-
      vices.

Id. § 1002(1).

   [8] Nothing in this statutory scheme mandates that
employee welfare benefit plans be funded.8 Conversely, as
Dillingham holds, “an employee benefit [apprenticeship] pro-
gram not funded through a separate fund is not an ERISA
plan.” 519 U.S. 326. Whether such an unfunded apprentice-
ship plan is established by an “employee organization” does
not matter to whether it is an employee welfare benefit plan,
just as it does not matter whether such an unfunded plan is
established by “an employer engaged in commerce.” 29
U.S.C. § 1003(a). Either way, only funded apprenticeship
plans are covered; the sponsor is irrelevant.

   [9] Some of Oregon’s approved apprenticeship training
committees are not funded apprenticeship plans, and
§ 1003(a) does not require that ERISA govern them. It fol-
lows, therefore, that the Oregon apprenticeship statutes and
regulations do not “refer to” ERISA plans for the same reason
earlier indicated — that the Oregon apprenticeship scheme,
like the one in California, “is indifferent to the funding, and
attendant ERISA coverage, of apprenticeship programs.” Dil-
lingham, 519 U.S. at 328.
  8
   Employee pension benefit plans do have to be funded. 29 U.S.C.
§§ 1081-82.
         OREGON COLUMBIA BRICK MASONS v. GARDNER          5575
  In sum, appellants’ arguments that Oregon’s needs require-
ment “refers to” ERISA plans fail. We turn, therefore, to
whether Oregon’s needs requirement has an impermissible
“connection with” ERISA plans.

II.   “CONNECTION WITH”

  [10] The second step of the ERISA pre-emption inquiry is
whether a challenged law has an impermissible “connection
with” ERISA plans. For essentially the same reasons that the
requisite “connection” was lacking in Dillingham and in
Nunn, it is lacking here.

   Dillingham observed that there is a “paucity of indication
in ERISA and its legislative history of any intent on the part
of Congress to pre-empt state apprenticeship training stan-
dards, or state prevailing wage laws that incorporate them.”
Id. at 331. Building on that observation, Nunn held that we
must apply the “connection with” test with the understanding
that “apprenticeship standards are a traditional area of state
concern [and] Congress has explicitly encouraged continued
state regulation of apprenticeship standards.” 356 F.3d at 986.

   [11] Nunn observed that “California does not prohibit
apprenticeship training programs from operating without state
approval, and employers are not required to hire apprentices
from state-approved programs or indeed to hire any appren-
tices at all.” Id. at 982. The same is true in Oregon. Only a
program that seeks recognition from Oregon’s State Appren-
ticeship and Training Council is subject to evaluation under
Oregon’s needs requirement. See OR. REV. STAT. § 660.135.
Oregon’s scheme does not require that all apprenticeship
training programs be registered nor does it govern the func-
tioning or internal organization of unregistered apprentice
training committees. Indeed, appellants have existed and
functioned in some fashion since 1986 without state approval.
That appellants would prefer to attain state recognition
because of the financial advantages state recognition offers
5576      OREGON COLUMBIA BRICK MASONS v. GARDNER
does not prevent them from training apprentices as they see
fit without that recognition.

   [12] The needs requirement does provide incentives for
employers seeking to provide apprenticeship training opportu-
nities to join existing programs. In this sense, it is quite simi-
lar to the state law at issue in New York State Conference of
Blue Cross & Blue Shield Plans v. Travelers Insurance Co.,
514 U.S. 645 (1995). In Travelers, the Supreme Court consid-
ered whether ERISA preempted a New York statute that “re-
quire[d] hospitals to collect surcharges from patients covered
by a commercial insurer but not from patients insured by a
Blue Cross/Blue Shield plan, and . . . subject[ed] certain
health maintenance organizations . . . to surcharges that var-
[ied] with the number of Medicaid recipients each enroll[ed].”
514 U.S. at 649. The Court concluded that “[a]lthough there
is no evidence that the surcharges will drive every health
insurance consumer to the Blues, they do make the Blues
more attractive (or less unattractive) as insurance alternatives
and thus have an indirect economic effect on choices made by
insurance buyers, including ERISA plans.” Id. at 659. This
“indirect economic effect,” basically a channeling mecha-
nism, was insufficient to trigger ERISA preemption in Travel-
ers. Oregon’s needs requirement functions quite similarly: It
makes participation in certain apprenticeship programs more
attractive, but does not require such participation.

   [13] In light of Dillingham, Nunn, and Travelers, we can
discern no impermissible connection between Oregon’s needs
requirement and ERISA.

                        CONCLUSION

   [14] Oregon’s needs requirement does not “relate to”
ERISA. It neither “refers to” nor has an impermissible “con-
nection with” ERISA plans. The needs requirement is there-
fore not preempted. The district court’s decision is
AFFIRMED.