Pros and cons of Project Labor Agreements

Project Labor Agreements (PLA) are a type of agreement between a project owner or developer and building trade unions, designed to govern the employer–employee relations of the general contractor and all subcontractors in connection with a particular construction project. PLAs are pre-hire collective bargaining agreements that may be tailored to fit the employment terms and conditions for a particular construction project. They typically address challenges commonly associated with complex construction projects, such as avoiding labor disruptions, while providing specific benefits by setting participation goals for residents and local businesses.

To use PLA in California, a public entity, pursuant to Public Contract Code 2500(a), must ensure that the agreement has certain taxpayer protection provisions, including the following:

  1. The agreement prohibits discrimination based on race, national origin, religion, sex, sexual orientation, political affiliation or membership in a labor organization in hiring and dispatching workers for the project.
  2. The agreement permits all qualified contractors and subcontractors to bid for and be awarded work on the project without regard to whether they are otherwise parties to collective bargaining agreements.
  3. The agreement contains an agreed-upon protocol concerning drug testing for workers who will be employed on the project.
  4. The agreement contains guarantees against work stoppages, strikes, lockouts and similar disruptions of the project.
  5. The agreement provides that disputes arising from the agreement shall be resolved by a neutral arbitrator.

Benefits of PLAs are believed to include the following:

  1. Long-term project stability – PLAs address labor issues, establish cost standards and help projects stay on schedule by preventing costly shutdowns caused by labor disputes.
  2. Union conflict resolution – PLAs provide the same agreements for all worker and prohibit discrimination by unions against non-union job applicants.
  3. Inclusion, diversity and safety – PLAs often establish goals or requirements for inclusion of small businesses, minority contractors and businesses that meet disability requirements, and sometimes encourage the hiring of targeted segments of the community such as veterans and minorities.
  4. Training and advancement – PLAs sometimes include provisions for training and apprenticeships that increase career opportunities for low-income communities and provides a structure of collaboration with local workforce entities.

In addition to the benefits that PLAs generally offer, a review of various PLAs involving school districts indicates that districts utilize PLAs, perhaps uniquely, as a tool to achieve their policy goals. Provisions typically inserted into such PLAs include those that set a goal for hiring members of the local community, career training for district students through apprenticeships, and participation of local small and minority businesses. This is true especially with regards to bond-funded construction projects.

The general criticism surrounding the use of PLAs is that they increase the cost of construction by requiring payment of union wages to non-union workers. However, in California, unless a higher wage is negotiated than the prevailing wage, it makes no difference since all school construction is covered by the prevailing wage laws. In its January 2021 policy brief, “Filling the Good Jobs Gap: Fresno’s Opportunity for a Citywide Project Labor Agreement,” which used the city of Fresno as a case study, the Community and Labor Center at the University of California, Merced found no empirical evidence to support the claims that PLAs reduce competition and raise construction costs. Rather, the center advocated a wider use of PLAs for public construction work in Fresno. The center highlighted additional benefits of PLAs, to include increased income for local construction laborers, thereby resulting in a boost to the local economy, and the development of a skilled labor force through the support of union-affiliated training programs.

Other criticisms of PLAs include non-union workers’ objection to having to pay union dues for the length of the project and non-union contractors’ objection to following union rules on pensions, work conditions and dispute resolution.

The number of school districts that have adopted this process for managing public construction projects has grown significantly in the last decade. Among them are Los Angeles Unified School District, San Francisco USD, Berkeley USD, Oakland USD, Martinez USD, Sacramento City USD, Mountainview USD, San Diego USD and Vista USD, to name a few. Vista USD’s board minutes from Sept. 12, 2019 illustrate the various issues usually raised as the board endeavors to make a decision on whether or not to use a PLA.

There has been a long and enduring debate over the use of PLAs, with studies that resulted in support for both sides. For example, the National University System Institute for Policy Research, in its study of the cost impact of PLAs on school construction in California between 1996 and 2008, concluded that PLAs add 13 percent to 15 percent to construction costs. On the other hand, Emma Waitzman and Peter Philips, in their study of the effects of using PLAs in the construction of community college projects in California, concluded that evidence does not support the contention of PLA critics that PLAs reduce the number of bidders or raise bid prices.

Ultimately, the decision to use a PLA should be made on a case-by-case basis. The decision maker(s) must evaluate the benefits itemized above in the light of their specific circumstances. As CSBA’s Construction Management Task Force stated in its 2007 Project Stabilization Agreements Fact Sheet, a decision whether or not to use a PLA should be made carefully with adequate time for thorough research, discussion, advice and counsel.

Resources:

Vista Unified School District – Board Minutes (Sept. 12, 2019)

Please note that the information provided here by CSBA is for informational purposes and is not legal advice. Please contact your district or county office of education’s legal counsel for legal questions related to this information.

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