The battle in Sacramento concerning Project Labor Agreements (“PLA”) for public projects rages on. A PLA is a pre-hire agreement that establishes the terms and conditions of employment for a specific construction project. They are completed before any workers are hired to determine the wage rates and benefits of all employees working on the project, and agree to prevent any strikes, lockouts, or other work stoppages for the length of the project.
The debate concerning PLAs is long-standing, with clear lines drawn in the sand. Building industry organizations oppose PLAs, claiming that PLAs unfairly favor unions, drive up costs of construction, and unnecessarily interfere with hiring practices and work rules. On the other side of the coin are labor organizations, touting the benefits of cost controls, labor certainty (i.e., no disruptions due to strikes), and a quality work force. Some local governments have also come out against the PLA, including San Diego County, Orange County and Stanislaus County. The City of San Diego has a ballot measure for the June 5, 2012 election that also proposes to limit PLAs. Charter cities Chula Vista and Oceanside already have measures affecting the use of PLAs.
In response to growing limitations on PLAs, SB 922 was introduced in 2011 for the purpose of authorizing public entities to “use, enter into, or require contractors to enter into project labor agreements” if specified “taxpayer protection provisions” are part of the PLA. SB 922 was signed by the Governor and became effective January 1, 2012. SB 922 is found at Public Contract Code sections 2500 to 2502.
One of the “taxpayer protection provisions” states that all qualified contractors are eligible for the work regardless if they are members of a collective bargaining agreement (i.e., whether union or not). The law provides that local agencies, except charter cities, may enter into PLAs with the taxpayer protection provisions on a project specific basis despite any provision, initiative or ordinance prohibiting PLAs.
California’s Constitution provides that charter cities (as opposed to “general law cities”) are allowed to maintain control over their municipal contracts. SB 922 implements an end-run on charter city sovereignty by stating that if a charter city is barred from considering PLAs with taxpayer protections, then the charter city cannot use any state funding for the project. This provision of the law goes into effect January 1, 2015.
On February 21, 2012, AB 1804 was introduced to repeal Public Contract Code sections 2500-2502 (SB 922) on the basis that state budget deficits are in crisis and PLAs threaten the long-term viability of business and local governments.
The Bill Analysis for AB 1804 indicates that the Associated General Contractors support AB 1804’s deletion of the SB 922 provisions, stating that the measure “infringe[s] on the right to direct democracy” and that “it is not appropriate for the legislature to punish the citizens of a local government for passing an initiative and enacting an ordinance to prohibit the use of PLA’s….”
The Bill Analysis for AB 1804 indicates that the California Professional Firefighters (among others) oppose AB 1804, stating “[t]his bill would repeal specified parameters relating to project labor agreements (PLAs) that are entered into by charter cities for publicly-funded construction projects. PLAs are valuable tools for creating local jobs, encouraging open and fair competition, and ensuring the efficient use of public funds. Ultimately, the taxpayer’s interests are best served when PLAs contain fundamental protections. Because AB 1804 would repeal those protections, we urge you to oppose this bill.”
Supporters of PLAs have now upped the ante with SB 829. Existing law (as stated above) denies state funding to any charter city construction project if the governing board is prohibited from considering PLAs with the taxpayer protection provisions. SB 829 takes that ban one step further, prohibiting the use of state funds for any construction project awarded by the city, not just the project at issue, if there is an ordinance prohibiting the ability to adopt PLAs. The legislation is pending.
PLAs have long been controversial, and the financial crisis that started in 2008 added fuel to the fire when local governments looked for ways to gain control over their budgets. Local governments identified PLAs as an area in need of addressing, but Sacramento responded with legislation promoting PLAs. Expect the uncertainty to continue in the courts regarding PLAs, including whether the state’s attempt for an outright state funding ban of any charter city construction project unconstitutionally infringes on charter city rights.
This document is intended to provide you with general information about construction law developments. The contents of this document are not intended to provide specific legal advice. This communication may be considered advertising in some jurisdictions.