The Project Labor Agreement is Back!

         The Project Labor Agreement is back.  A project labor agreement is a pre-hire agreement with a labor organization establishing the terms and conditions of employment for a specific construction project.  On February 6, 2009, President Obama signed Executive Order 13502 — “Use of Project Labor Agreements for Federal Construction Projects.”  The order encourages, but does not require, the use of project labor agreements on “large-scale construction projects” — defined as projects where the total cost to the federal government is $25 million or more.

         By way of background, in 1997, President Clinton issued a memorandum to executive agencies authorizing the use of project labor agreements on federal construction projects valued at $5 million or more.  Congress, controlled at that time by Republicans, countered by introducing legislation to ban federally mandated project labor agreements.  In 2001, President Bush resolved the debate for the duration of his administration by issuing an executive order prohibiting federal agencies from requiring bidders on construction projects to adhere to contracts with one or more unions.

         The Federal Acquisition Regulation Councils have not yet issued regulations implementing the newest executive order.  However, the construction industry should expect the use of project labor agreements on federal construction projects in the latter months of 2009.  Private and local government projects may also be impacted by the new federal policy encouraging project labor agreements.  Generally, such project agreements are neither totally prohibited nor absolutely permitted for state projects governed by competitive bidding requirements.  Often however, a finding has to be made to justify use of a project labor agreement (i.e. cost savings, prevent labor unrest, resolve trade disputes, importance of timely completion and need to avoid strikes, lock-outs, etc.).

         Many states have right to work laws.  Project labor agreements in right to work states cannot discriminate against non-union contractors and cannot require employees to join a union as a condition of employment.  Nonetheless, project labor agreements are valid, if properly designed, for projects in right to work states.  Traditional non-union contractors may be required to sign project labor agreements as a condition to performing work.

         For the non-union contractors, signing a project labor agreement means unions will be representing your employees and the terms and conditions of work will be determined by the agreement (or a referenced and incorporated collective bargaining agreement).  Most project labor agreements require the use of union hiring halls for the source of all project employees.  Finally, project labor agreements may require even non-union contractors to make contributions to the union benefit and pension funds for each employee.