On February 4, 2022, President Biden issued Executive Order 14063, requiring the use of Project Labor Agreements for federal construction projects over $35 million. The Executive Order will require that non-union construction companies abide by union requirements for wages and benefits. The Executive Order issued expanded on Executive Order 13502 issued by President Obama, which required federal agencies to consider mandating the use of Project Labor Agreements for federal construction projects of $25 million and above.
A Project Labor Agreement (PLA) is a collective bargaining agreement between trade unions and contractors. PLAs are used in private and public sector projects and the provisions are drafted to meet the needs of the specific project with which the PLA is associated. A key justification for PLAs is that the agreements avoid labor-related disruptions on projects by using processes to resolve worksite disputes and prohibit work stoppages, including strikes and lockouts. Proponents believe that PLAs secure the commitment of all stakeholders on a construction site that the project will proceed efficiently without unnecessary interruptions.
In contrast to the argued-for advantages, opponents of PLAs argue that such agreements create bargaining monopolies, as contractors are required to:
Grant unions all bargaining privileges over all workers
Use union hiring halls to hire project workers
Force workers to pay union dues to maintain jobs
Pay above the market prices.
Right-to-work advocates assert that PLAs eliminate a worker’s right to free choice and force unwanted union representation onto workers. Advocates note that although the majority of workers on PLA projects are unionized, the majority of construction workers in general on projects, an estimated 85%, are not unionized.
The Executive Order issued by President Biden asserts that PLAs will “improve timeliness, lower costs and increase the quality of federal construction projects.” Additionally, PLAs protect taxpayers by eliminating costly delays due to labor conflicts or shortages of skilled workers. Furthermore, PLAs will provide dispute resolution processes to resolve worksite disputes and will prohibit work stoppages such as strikes and lockouts. Thus, the Executive Order directs that in relation to:
“…awarding any contract in connection with a large-scale construction project, or obligating funds pursuant to such a contract, agencies shall require every contractor or subcontractor engaged in construction on the project to agree, for that project, to negotiate or become a party to a project labor agreement with one or more appropriate labor organizations.”
The Executive Order grants narrowly drawn exceptions to the PLA mandate. Under Section 5, a senior official within an agency may grant an exception for a specific contract by providing a written explanation of why at least one of the following circumstances exists:
The project would not advance the Federal Government’s interests in achieving economy and efficiency in Federal procurement
Based on an inclusive market analysis, requiring a PLA would substantially reduce the number of potential bidders so as to frustrate full and open competition
Requiring a PLA would otherwise be inconsistent with statutes, regulations, Executive Orders, or Presidential Memoranda
Under the Executive Order, non-union contractors wanting to work on large-scale government construction projects will need to be abreast of the PLA requirements. Furthermore, union and non-union contractors will need to stay abreast of the expected legal challenges to Executive Order 14603 and consider the ramifications of entering into a PLA to obtain a government construction project.
Our Firm has extensive experience counseling various design professionals, contractors and project owners in the construction industry with respect to Project Labor Agreements, construction contracts and other disputes as well as helping to prepare and implement applicable practices and policies. If you have any questions related to this Legal Briefing, please contact any member of our Firm at 585-730-4773. Please note that any embedded links to other documents may expire in the future.