Unless they are blocked, Project Labor Agreements (PLAs) could be used to undermine “Right to Work” laws and to force non-union shops into paying twice for worker benefits, construction industry officials have warned.
In a pre-emptive move aimed against contracts negotiated between employers and unions before workers are hired, Louisiana State Senator Danny Martiny, a Republican, has introduced Senate Bill 76. This legislation prevents state government officials from mandating Project Labor Agreements (PLAs) on publicly funded construction projects. Other state officials should follow his lead.
PLAs call for construction contractors, including those non-unionized, to require their employees to be represented by a union on government-funded construction projects. In practice, they lock out non-union construction shops from the bidding process, officials with the Associated Builders and Contractors (ABC), a private industry group, have argued. Although the National Labor Relations Act of 1935 generally prohibits pre-hire agreements, an exception in the law was created for the construction industry.
“Louisiana’s Right-to-Work Law allows employees within the state the right to join a union as well as the right to refrain from joining a union,” John Walters, the Director of Governmental Relations for the Louisiana Chapter of ABC said.
“Workers typically are permitted to choose whether to join a union through a federally supervised private ballot election,” he explained. “PLAs require unions to be the exclusive bargaining representative for workers during the life of the project. The decision to elect union representation is made by the employer rather than the employees. PLAs are called pre-hire agreements because they can be negotiated before the contractor hires any workers or employees vote on union representation.”
Union membership declined nationally from 17.5 percent of construction workers in 2000 to 15.6 percent in 2008, and then to 14.5 percent in 2009, the most recent figures from the Bureau of Labor Statistics show. This disparity between union and non-union workers is particularly acute in Louisiana where almost 96 percent of the construction workforce operates beyond orbit of organized labor, industry records show.
“PLAs are a sop to Big Labor,” Vinnie Vernuccio, a labor counsel with the Competitive Enterprise Institute (CEI) observed. “They unfairly discriminate against ‘merit shop’ – non union – contracting firms. Workers are also put at a disadvantage because they are forced to use the union or pay into the union fund mandated by the PLA.”
PLAs could also be used to coerce non-union employers who already provide their own benefits to pay into union benefit plans, Vernuccio points out.
“This can entail paying into underfunded union pension funds, which can impose huge liabilities on companies,” he said. “PLAs may also require contractors to employ workers from union hiring halls, acquire apprentices from union apprentice programs and require employees to pay union dues.”
In effect, this means private companies would be “double-paying” for worker benefits,” notes Walters, the government relations ABC official.
“If a non-union company signs a PLA for a particular project, they are required to pay for their workers’ health and welfare benefits to union trust funds even though the company is already providing these benefits to the workers individually,” he said. “To make matters worse, workers never see any of the benefits contributed on their behalf to the union trust fund unless they leave their non-union employer, join a union and remain with that union until vested.”
An executive order from President Obama encourages federal agencies to use PLAs on construction projects costing over $25 million. This reverses an earlier executive order from President Bush that banned PLAs. Organized labor now has angle into areas of the country that have remained largely non-union thanks to Obama’s new order. This could be costly to taxpayers.
Research from the Beacon Hill Institute shows that PLAs could raise construction costs by as much as 18 percent. If Obama’s executive order had been in effect in 2008, and all federal construction projects worth $25 million or more been subject to PLAs, the cost to federal taxpayers would have increased by $1.6 to $2.6 billion, according to the report.
