A Project Labor Agreement (PLA) is a contractual arrangement resulting from a pre-hire collective bargaining between a contractor and labor unions regarding a specific construction project.

The PLA outlines the rights and responsibilities of each party relating to a variety of operational interests during the course of the project, including worksite conditions and procedures for resolving work stoppage.

Before starting the project, the unions determine the wages and benefits to be provided to anyone who works on the project. This means that the agreement is applicable to employees hired by the contractor as well as those hired by the subcontractor. The contractor(s) will sign the PLA with the relevant union organizations before breaking ground on the project.

How are Project Labor Agreements Viewed in the Construction Industry?

Advocates argue that PLAs reduce the risk of construction and repair projects being awarded to unscrupulous contractors and eliminate the cost to taxpayers for overruns caused by labor disputes.

They explain that cities which use PLAs to award construction contracts are able to cut costs by reducing construction delays. They also claim PLAs help ensure project continuity by including provisions to  prevent work shortages and address labor disputes.

They also focus on the workforce goals of PLAs to increase constructions jobs for certain groups of people. Ultimately, proponents of the use of PLAs conclude that they provide a fair opportunity for unions to bid on projects by agreeing to the terms of the PLA.

Conversely, those who oppose PLAs argue that they limit competition by preferring union workers over non-union workers. This may result in the hiring of unskilled workers, which ultimately leads to increased construction costs.

Additionally, they contend that PLAs essentially force the creation of de facto unions, whereby project owners are required to follow union rules, including those regarding wages and benefits, representation and payment of union dues and fees.

Finally, PLAs prioritize community workforce goals (i.e. hiring of local workers, women and racial minorities, veterans, homeless and economically disadvantaged individuals), even when doing so reduces the pool of qualified workers.

How are Project Labor Agreements Being Challenged Legally?

In 2009 a federal executive order was issued to encourage federal agencies on a case-by-case basis to consider using PLAs on large scale construction projects. That order has been challenged by various organizations over the years.

Primarily, PLAs have been legally challenged on the basis that they are preempted under the National Labor Relations Act of 1935 (NLRA). The NLRA was enacted to protect the rights of employees and employers and to encourage collective bargaining.

More specifically, the NLRA makes it illegal for employers to discriminate against or threaten employees based on union activities and membership. It also protects employees who do not belong to unions, but who engage in other collective, protected activities (i.e. two or more employees discussing pay or work-related issues with their employer).

Legal challenges under the NLRA to public construction projects operating under a PLA have also have been asserted on the basis that the government awards these contracts exclusively to unionized construction firms.

The argument is that the NLRA gives construction contractors the right to unionize or not, and PLAs undermine that right by requiring unionization in order to successfully bid on a project. The PLA does this by including union collective bargaining provisions and, by signing the PLA, the contractor must agree to subject itself and its employees to union rules.

PLAs also have been challenged for violating state and local competitive bidding requirements. Whether PLAs have been successfully challenged has depended on the court’s evaluation on a case-by-case basis, considering such things as the project’s size, complexity, and completion schedule, and the state and local goals in requiring the use of PLAs.

Are there Disadvantages for Non-Unionized Entities to Utilize PLAs?

Again, non-unionized companies that enter into a PLA may be required to perform certain union objectives. Those might include requiring the non-unionized company to:

  • Seek referrals for new hires at union hiring halls;
  • Pay recommended union benefits and wages; and
  • Adhere to rules under the PLA regarding resolving disputes relating to the construction project.

Are there Advantages for Non-Unionized Entities to Utilize Plas?

A PLA can provide the following benefits for the construction owner or contractor:

  • Increased participation for otherwise underrepresented groups and local residents through apprenticeship programs;
  • Bargained-for-stability through anti-strike and lock-out provisions;
  • Added cost incentives for project owners; and
  • Maximized costs by establishing fixed rates and deadlines for project duration

Should I Seek an Attorney’s Advice Regarding a Project Labor Agreement?

Consider getting the assistance of a qualified labor and employment attorney before you enter into a PLA. An attorney will help you understand what your rights and responsibilities are under the PLA. They can also provide advice if you believe the owner of a construction project has violated the terms of a PLA into which you have entered.