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January 20, 2019

Project Labor Agreements

A government-mandated project labor agreement (PLA) is an agreement that the public-owner has negotiated with organized labor and then imposes on contractors and subcontractors on a publicly-financed construction project.  PLAs typically restrict the majority of employment on the project to only those workers whom unions are willing to refer to the project.  The negative impact of PLAs falls on union contractors, non-union contractors, small companies, and disadvantaged businesses.  For instance, in 1998, US Congress heard testimony from women and minority-owned businesses that were excluded from contracting opportunities by PLAs.  But mostly, the taxpayer takes the brunt of the impact of a PLA.

PLAs typically require that all employees are referred through the union, designate the union as the sole representative of the employees, and require contractors to contribute to union fringe benefit funds.  PLAs effectively force open-shop contractors and their employees to unionize without regard to their preferences or an opportunity to vote.  Furthermore, PLAs force union contractors to work under different work rules and other contract terms that government bureaucrats have negotiated, rather than under the existing labor contracts that they or their agents have negotiated.

MBI has a long history of opposition to any public-sector measure that would give a preference to either open-shop or union contractors, or disrupt the collective bargaining process.  This includes any measure that would mandate PLA’s on publicly-assisted projects.  In fact, at MBI’s strong urging, Gov. Terry Branstad signed Executive Order 69 on January 14, 2011 which prohibits the use of PLA’s by the State of Iowa and other public works.  

Furthermore, Gov. Terry Branstad signed Senate File 438 on April 13, 2017, which codified in law Executive Order 69 and prohibits state and local governments from using PLA’s on construction projects.  MBI worked hard throughout the 2017 legislative session to educate legislators on the need for this language to be codified in law.  Senate File 438 also prohibits state and local governments from imposing any pre-qualification requirements that directly or indirectly restricts potential bidders from bidding.  This would include experience on similar projects, size of company, union membership, or any other criteria.

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