Dive Brief:
- Kentucky Gov. Matt Bevin last week signed off on House Bill 135, also known as the Fair and Open Competition Act, which prohibits state and local government agencies from forcing bidders to sign on to project labor agreements (PLAs) for public works projects. The law does not prevent contractors from entering into voluntary PLAs, and prevents public agencies from prohibiting PLAs altogether.
- The law applies to taxpayer-funded projects and favors the 88% of Kentucky’s construction industry that is open-shop as opposed to union-affiliated, according to the Associated Builders and Contractors. Kentucky is the 25th U.S. state to enact a law prohibiting government-mandated PLAs.
- Proponents of the new regulation maintain that it will lower the costs of construction in Kentucky, but those against it, according to The Lane Report, argue that mandatory PLAs are not in use in the state and that 100% of the voluntary ones are with merit shop contractors.
Dive Insight:
The arguments for and against PLAs often break down along union and nonunion lines. Groups like ABC claim that the agreements discourage competition, but those in favor of PLAs say they ensure fair wages and benefits for both union and non-union workers and because of the union component, ensure a steady and qualified stream of labor to the project.
PLAs are a major focus area for the ABC. The organization’s Minnesota/North Dakota Chapter recently sued the Minneapolis Public Schools district for requiring that contractors enter into a labor agreement before submitting a bid. The district's PLA also requires construction firms to hire union workers, sometimes at the expense of its nonunion workers, and pay into fringe benefit programs that its employees will never be able to tap into. ABC and its co-plaintiff in the school suit say local merit shop contractors stand to lose out on $66 million of work because of this policy.
PLAs can also kick off disagreements between labor and management. Related Cos., developer of the $25 billion Hudson Yards project in Manhattan, filed a lawsuit against the Building and Construction Trades Council of Greater New York, which had insisted that the developer use certain unions for the second phase of the project. After their squabble escalated in both the courts and the press, the two finally called a truce earlier this month. Both agreed to drop all legal actions, refrain from making negative statements about each other in public and abide by the terms of a new PLA for Hudson Yards.
