February 18, 2009
This Alert reviews President Obama’s Executive 13502 authorizing the use of project labor agreements (aka pre-hire contracts) on federal construction projects valued at $25 million or more. The Alert understandably refers to the use of this type of an agreement as “something of a political football passing back and forth on the national playing field with each shift in political power.” President Obama’s order overturns one forbidding the use of project labor agreements issued by President Bush, which in turn reversed a Clinton Administration order permitting them.
Project labor agreements are a type of collective bargaining agreement unique to the construction industry whereby management signs an agreement with one or more unions representing workers before those workers are even hired. This arrangement reflects the reality that many construction projects are short in nature and involve the hiring of a project-specific workforce, making it difficult for unions to organize employees and bargain a contract before a project is completed.
Pursuant to the order, federal agencies are authorized but not required to include project labor agreement provisions in all bid proposals, but the Alert leaves little doubt that there will be a “proliferation of project labor agreements” and that they will “have major implications for the labor costs and labor relations of construction contractors and subcontractors working on federal projects.” The Alert also notes that there may be an increase in project labor agreements in respect of nonfederal construction projects financed with federal funds, especially significant given the massive amounts of money budgeted for state and local construction projects in the Stimulus Bill.
Please see our Hot Topics for more on Project Labor Agreements.