Associated Builders and Contractors - ABC - Empire State Chapter - New York - PLA Issues

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Project Labor Agreement Fact Sheet

What is a project labor agreement (PLA)?

A Project Labor Agreement, or PLA, is an agreement between organized labor and construction project owners. These agreements require project contractors to hire most, if not all, of their workers from union halls. Additionally, PLAs contain collective bargaining agreements and other provisions that are not normally required on public work. All contractors, even nonunion contractors, must sign these agreements before construction can begin.

PLAs seek to eliminate competitive bidding.

In the private sector, the purpose of project labor agreements has been to attract contractors from outside the area to bid on local projects. PLAs offer non-local contractors access to workers from local union halls and standardize work rules (even if they are inflationary) to give out-of-town bidders a competitive advantage over local contractors.

Decades ago, when unions dominated much of the construction industry, project owners believed that they could cut costs by attracting union specialty firms from outside the area. Today, however, the picture of the construction industry is much different. Over 80 percent of construction workers are nonunion. Even if union work rules are limited under a PLA, a PLA still imposes costly and unnecessary union requirements which would not otherwise be required - and which the NYS Legislature has refused to add to state prevailing wage laws. The state of Ohio recently became the third state to ban PLAs on public work. The purpose of a PLA on public work today is simple: to eliminate nonunion competition.

PLAs increase bid estimates by reducing the number of bidders.

PLAs used on the Roswell Park Cancer Institute project increased total project costs by 26% (Roswell Study). This waste of tax dollars was the result of a reduction in the number of bidders. Not wanting to relinquish control of their employees to the unions, many firms simply do not bid on PLA projects. Roswell bid packages requiring project labor agreements were 10% over budget, while bid items that did not require PLAs were 13% under budget. In areas anticipating PLAs, labor costs have increased as much as 30% to 90%.

Women and minorities are under-represented on almost all PLA projects. The problem is that PLAs require contractors to follow union rules. However, union rules, enforced by the Labor Department, eliminate job opportunities for women, minorities, and welfare recipients.

In the 1970s, when federal laws required minority hiring, union leaders lobbied state and federal labor department officials to remove “Helper” categories from union contracts. As a result, only high paid journey persons (averaging over $20/hour plus over $10/hour for fringe benefits in NYS) and a limited number of registered apprentices can work on a public project. Opposing “Helper” categories is a pretext for opposing opportunities for minorities, women, and the disadvantaged. Because contractors simply cannot afford to hire inexperienced workers at high rates, job opportunities for disadvantaged workers (who often live in the neighborhood) are eliminated. Furthermore, New York state courts have ruled that minority hiring cannot be used as a rationale to justify PLAs.

To even be considered on public work, the NYS Court of Appeals ruled that a PLA must advance two protected interests: (1) must obtain the best possible work at the lowest possible price, and (2) must guard against favoritism, improvidence, extravagance, fraud and corruption. NYS courts have ruled that social goals, funding deadlines, or an interest in avoiding labor unrest do NOT justify a PLA. A public owner must not only negotiate significant union concessions under a PLA, it must also prove specific and significant losses which would be incurred without a PLA.

PLAs generally result in more workers from outside the area - not fewer. Many workers are pirated from other firms, which inflates wages and drives labor costs skyward. According to state and federal labor statistics, 80 percent of upstate New York’s construction workers do not belong to unions. Consquently, most workers hired by area construction firms are nonunion. However, studies of recent PLAs show that union contractors “imported” more workers from outside the region than open shop contractors. The Fort Drum PLA brought in out-of-state workers, while local skilled workers were excluded. In any case, New York courts have ruled that preferences for local hiring are illegal, and cannot be used to justify a PLA.