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Practical Explanation: What Is a Project Labor Agreement?

Project Labor Agreements in their modern form are rarely developed through a purely voluntary relationship between contractors and unions. Construction trade unions lobby politicians to require public works contractors to sign Project Labor Agreements. Unions also exploit environmental laws to coerce private developers into Project Labor Agreements.

Project Labor Agreements cut bid competition and increase costs of projects for the benefit of unions. These agreements typically require contractors to obtain their workers from unions, pay fringe benefits to union health and pension programs, and participate in union training programs. In addition, all workers must pay union dues and fees and accept union representation.

These requirements in Project Labor Agreements favor contractors that already operate under a unionized model. Usually Project Labor Agreements are 30-60 page documents included in the bid specifications and documents for a project.

Non-union contractors tend not to bid on contracts with Project Labor Agreements because they would have to fundamentally change how they do business. For example, non-union companies may have to abandon their permanent workforce and instead obtain unknown workers from a union dispatching system. And they may have to pay health and retirement benefits to multi-employer union-affiliated trust funds instead of paying employee benefits to their own established company plans.

By discouraging competition among general contractors and subcontractors, Project Labor Agreements tend to increase the cost of construction. Project Labor Agreements also seem to correlate with cost overruns, delays, and low participation by minority-owned and women-owned businesses.

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Technical Explanation: What Is a Project Labor Agreement?

Project Labor Agreements are binding contracts that establish terms and conditions of employment for construction trade workers on a specific construction project or specific group of projects. These contracts generally require construction companies to abide by union Master Labor Agreements (often referred to in Project Labor Agreements as “Schedule As”) but also contain additional provisions that supersede or supplement Master Labor Agreements.

Unlike a Master Labor Agreement, which business groups negotiate with unions for all work by contractors over a multi-year period, a Project Labor Agreement applies exclusively to contractors working on a specific project or group of projects. Other work performed by the contractor isn’t covered under the Project Labor Agreement. When the contractor is finished with work covered by the Project Labor Agreement, it is released from the agreement. (Note: there are circumstances in which a contractor can experience long-term complications from signing a Project Labor Agreement, even when the work is done.)

Project Labor Agreements refer extensively to union Master Labor Agreements, and these two types of labor agreement need to be considered together as a complete package of terms and conditions under which the contractor is bound. Project Labor Agreements also include provisions intended (in theory) to prevent strikes or work stoppages. (In fact, this is the legal justification in the National Labor Relations Act to use Project Labor Agreements.) Project Labor Agreements may contain other provisions on various matters that supersede the provisions in applicable Master Labor Agreements.

Obviously, Project Labor Agreements completely supersede any arrangements (such as a defined contribution plan, a profit-sharing program, or an employee handbook) that a contractor may have with its trade worker employees who are not represented by a union. This is why non-union contractors tend not to bid on contracts for which they are mandated to sign a Project Labor Agreement.

Controversial Provisions in Project Labor Agreements

Project Labor Agreements declare that all trade workers on the project or projects are represented by unions. In other words, the project becomes a “union job.” In most cases, Project Labor Agreements also contain the following requirements:

  • Contractors must utilize the union hiring hall dispatching process to obtain journeymen and apprentices. Often the agreement explicitly states that apprentices must come from programs managed by union officials with business groups. These are called Joint Apprenticeship Training Programs.
  • Contractors must pay employee fringe benefits (health insurance, pensions, vacation, training, etc.) into multi-employer trust funds managed by union officials with business groups.
  • Contractors must pay all wage rates and most or all employer payments indicated in the applicable Master Labor Agreement. (Note: in California, the
  • State-mandated prevailing wage rate for public projects or private projects receiving government assistance are already based on union Master Labor Agreements, so wage rates and fringe benefit payments assigned by Project Labor Agreements typically do not increase labor costs.)
  • Employees must outright join the union or pay dues and initiation fees that unions require for representation.
  • Contractors and employees must utilize specific grievance procedures and other mechanisms for employer-employee relations that involve union officials

One party to the Project Labor Agreement is always a construction trade union or group of construction trade unions. Often every construction trade is represented through a state or local Building Trades Council.

A second party is the construction entity that wins the overall contract for the project or projects. This can be a general contractor, construction manager, a construction manager at-risk, a lease-leaseback contractor, or job order contractor.

All subcontractors used by the construction entity must sign the Project Labor Agreement if their employees perform jobs that unions signatory to the Project Labor Agreement claim as within their jurisdiction. For example, if the International Brotherhood of Electrical Workers (IBEW) signed a Project Labor Agreement with a construction management firm, electrical work is covered and the electrical subcontractor must sign and abide by the terms and conditions of the agreement.

The Government-Mandated Project Labor Agreement - Using Government to Give Unions Control of Public Works

In the late 1980s, government entities in Boston began mandating their construction management firms to negotiate Project Labor Agreements directly with Building Trades Councils as a condition of winning the contract. The U.S. Supreme Court ruled in 1992 that governments could impose this requirement as a “market participant” in the construction industry. In 1999, the California Supreme Court also ruled that governments could mandate Project Labor Agreements on their construction contracts.

Union leaders realized that they could guarantee public works projects as “union jobs” by lobbying elected or appointed officials to require contractors to sign a Project Labor Agreement as a condition of work. In addition, union leaders

realized they could lobby elected or appointed officials to take on the role of negotiating a Project Labor Agreement from the “employer” side of the table.

This meant that unions and governments could determine the terms and conditions of employment on construction projects without any involvement of actual construction companies. A Project Labor Agreement would not only supersede the existing relationship between contractors and employees unaffiliated with a union, but it would also supersede the standard Master Labor Agreements negotiated between contractors and unions. Politicians would set the standard for the employer-employee relationship in the construction industry.

Some subcontractors signatory to Master Labor Agreements with unions are willing to sacrifice their position in employer-employee relationships in exchange for the benefit of eliminating potential competition from non-union contractors. But many union general contractors resent how governments undermine their existing negotiated labor relations.

The Coerced Project Labor Agreement on Private Construction, Using Environmental Laws as a Tool for “Greenmail”

The traditional Project Labor Agreement on private projects was once a voluntary arrangement between contractors and unions for very large multi-year construction projects such as dams and airports, used at a time when most construction workers in urban areas of America belonged to a union and labor disputes could shut down a project at tremendous cost for the owner.

Nowadays unions represent less than 15% of the American construction workforce and less than 20% of the California construction workforce. Even in places like San Francisco, non-union contractors and workers perform a significant amount of construction work, on-time and on-budget, without labor unrest. Few project owners or contractors are going to voluntarily choose to sign a Project Labor Agreement and surrender their construction management authority to union officials who might have other objectives besides the successful completion of a project.

So unions in the late 1980s developed “greenmail,” or environmental permit extortion. Unions hire a law firm to identify alleged problems with the legally-required environmental review of a public or private project under the California Environmental Quality Act (CEQA) or the less-stringent National Environmental Policy Act (NEPA) for federal projects or casinos.

The environmental objections can never be satisfied and will eventually result in expensive court battles and years of delays. But if the owner agrees to sign a

Project Labor Agreement, the unions agree to some minor mitigation and the project moves forward as a paragon of environmental responsibility.

Union officials and lobbyists brag about the number of large private projects built under Project Labor Agreements. They claim that project owners do this because they recognize the superiority of union construction. In reality, virtually all Project Labor Agreements on private projects in California are a response to union threats - implicit or explicit - to block approval of the project using environmental objections.

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