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  • Aug. 21, 2018

Sacramento City Council Warned: "A Project Labor Agreement Vote Today Risks a Lawsuit Tomorrow. Here is Why."


August 21, 2018

Sacramento City Council

915 I Street, 1st Floor

Sacramento, CA 95814

Re: Establishing Local Hire and Community Workforce Training Program and Local Business Involvement Pilot Program for Citywide Capital Improvement Projects

VIA ELECTRONIC MAIL

Dear Sacramento City Council:

Today you will consider rushing through, with no serious debate, a mandate for a Project Labor Agreement (aka “Community Workforce and Training Agreement”) to be included in bid specifications for “any City public works project where either the engineer’s estimate of the total construction cost of the project or the actual cumulative bid amounts submitted by the contractor or contractors awarded the Construction Contracts for the Project exceeds One Million Dollars ($1,000,000).”

The $1,000,000 amount is referred to in the Agreement as the “threshold.” Beyond this amount, construction managers, general contractors, and subcontractors are required to become bound to the Agreement that the City and signatory unions have negotiated.

The City of Sacramento will be vulnerable to a lawsuit if you vote for this policy and associated Agreement. The staff report, resolutions, and Project Labor Agreement fail to show how the policy and Agreement fulfill the purpose of the National Labor Relations Act, as required in court decisions that uphold Project Labor Agreements as legal under some strict guidelines. See Building & Constr. Trades Council v. Associated Builders & Contractors of Massachusetts/Rhode Island, Inc., 507 U.S. 218 (1993) and Associated Builders and Contractors, Inc. v. San Francisco Airport Commission, 21 Cal.4th 352 (1999).

Project Labor Agreements are a special type of labor agreement authorized under the National Labor Relations Act to fulfill the purpose of that Act. The City has a duty to provide evidence of an increased threat of “strikes and other forms of industrial strife or unrest, which have the intent or the necessary effect of burdening or obstructing commerce.”

Arbitrary thresholds for project total cost and number of core employees in the Agreement are not shown to be related to any internal or independent assessment of an increased threat of “strikes and other forms of industrial strife or unrest, which have the intent or the necessary effect of burdening or obstructing commerce.” The Coalition for Fair Employment in Construction recommends that the Sacramento City Council delay a vote on this policy and Agreement until you have a report prepared by an outside consultant clearly and thoroughly outlining and explaining the following:

1. How did the City of Sacramento determine $1,000,000 as the threshold of the Project Labor Agreement for “major projects,” “major construction projects,” and “major City public works projects,” as identified within the Project Labor Agreement?

The Agreement refers to “other public agencies and private entities on major construction projects in the region, including on the Golden 1 Center project.” A report dated January 4, 2017 from Merritt & Harris to the City of Sacramento Office of the City Treasurer indicates a project cost of $558,479,061 for the Golden 1 Center. This amount is more the 558 times the $1 million cost threshold set for “major projects” in this Agreement.

The $1 million threshold in the Agreement is arbitrary and excessively low.

2. The Introduction/Findings of this Agreement state that “Major projects subject to this Agreement will require multiple contractors and bargaining units to be on the job site at the same time over an extended period of time, increasing the potential for work disruption…”

How many “multiple contractors” are needed before there the number results in “potential increase for work disruption?” How was this number determined?

How long is an “extended period of time” at an active job site before the amount of time results in a “potential increase for work disruption?” How was this period of time determined?

Why does the Project Labor Agreement threshold only refer to total project cost and not the Findings that increase the potential for work disruption? The Introduction/Findings clearly indicate that primary variables that would allegedly make this Agreement in the “interests of the general public and taxpayers” include the “multiple” number of contractors and the “extended period of time” needed for work on the actual job site. Would a $1,000,001 contract awarded to one construction company with one bargaining unit (or no bargaining units) for a two-week project result in increased “potential for work disruption?”

4. For reasons not cited in the Introduction/Findings, the Project Labor Agreement incorporates the “estimate of the total construction cost of the Project or the actual cumulative bid amounts of the Project” into the threshold amount. If the purpose of the Project Labor Agreement (as indicated in the Introduction/Findings) is to prevent an increased “potential for work disruption” on a job site, why are costs included in the threshold that do not include actual work performed on the job site?

It is noteworthy that the Introduction/Findings of the Agreement do not indicate a potential increase for work disruption during design and engineering phases of a contract. Presumably this is because multiple contractors and bargaining units will not be involved in this phase of work.

5. Section 9.4 refers to a specific number of four (4) “core” employees permitted under the Agreement. How was this number determined?

The Introduction/Findings indicate a potential increase for work disruption as a result of “multiple contractors.” It does not refer to a specific number of core employees or cite a specific number of a “large numbers of workers of various skills” that would result in a “potential increase for work disruption.” There is no reason cited about why five or more core employees would result in a greater “potential increase for work disruption” than four core employees. Nor does the Agreement distinguish between the core employees performing work during the entire project and the core employees who are on the job site at one time.

Under the terms of the Agreement, there is no requirement to determine the “estimated number of craft workers required to perform the work” until after the Agreement is signed, In fact, an estimate of the number of craft workers does not to be made until as late as “twenty-one (21) calendar days prior to the commencement of any Covered Work under the Agreement.” The Project Labor Agreement could end up applying to a contractor that uses ONE craft worker on the Project. How does one craft worker have the potential for work disruption?

Furthermore the Golden 1 arena PLA that is used to somehow justify this PLA allowed for EIGHT core workers. Yet on a project the city puts put to bid that is $1 million a contractor that is union-free can use FOUR core workers. Again, this arbitrary “core workforce” provision is clearly not well thought out.

Section 9.4 does not require an estimate of the number of bargaining units, which is the actual variable related to employees that the Agreement cites in the Introduction/Findings as inciting a “potential increase for work disruption.”

6. What are the recent or anticipated labor disruptions that this policy would prevent? Neither the staff report, nor the resolution, nor the Agreement indicate controversies and parties that may result in a “potential increase for work disruption.” Presumably the potential work disruptions are identified in Section 4.1.1 of the Agreement: “strikes, sympathy strikes, work stoppages, picketing, handbilling or otherwise advising the public that a labor dispute exists, or slowdowns of any kind, for any reason, by the Unions or employees employed on the Project, at the job site of the Project or at any other facility of the City because of a dispute on the Project.”

Also, no examples are cited of construction craft workers outside of a “bargaining unit” in the Sacramento area who have recently or historically engaged in work disruptions. By requiring all of the craft workers on a project to become represented by a bargaining unit while establishing conditions to keep those bargaining units from disrupting work on the project, the Agreement puts the cart before the horse. There is no evidence provided to show there would be a “potential increase for work disruption” in the absence of bargaining units on a job site.


As noted on the August 22, 2018 agenda, this policy and Agreement is being approved under a two-thirds vote temporarily suspending the Council Rules of Procedure to allow the City Council to review and adopt an ordinance without the Law and Legislation Committee’s prior review. The Coalition for Fair Employment does not see how the Sacramento City Council can approve this policy and Agreement without a committee review necessary to ensure the Agreement conforms to the purpose of the National Labor Relations Act.

For more information, see the attached report entitled From Peace to Absurdity – The Emergence of Cost Thresholds and Multi-Project Coverage for Project Labor Agreements in California: Shifting the Purpose from Labor Peace to Cutting Merit Shop Competition. Please regard this email as Exhibit One and the linked report above as Exhibit Two for any future litigation.

Sincerely,

Eric Christen

Executive Director

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