|
| Project Labor Agreements |
|
|
| Greenmail |
|
|
| Open Competition Language |
|
|
|
|
|
 |
CFEC Key Points |
 |
|
How to Craft a Fair PLA
December 17, 2009
To: __________________ ( )
From: ___________
Re: Negotiating a “Fair” Project Labor Agreement for __________________________________________________________________
Dear Chancellor ________:
As you negotiate on behalf of the __________________ for a Project Labor Agreement (PLA) on future construction for ___________ work, we hope you consider incorporating elements of a “fair” Project Labor Agreement (PLA). A “fair” PLA could be palatable enough for some non-union general contractors and subcontractors to bid on the project, thus increasing competition and perhaps reducing the cost of the project for taxpayers. A “fair” PLA would also provide a more inviting environment for small businesses in the area – including minority and women-owned businesses – to bid on _________ projects.
Request to Participate in Negotiations
One of the unfair aspects of PLAs is that contractors are required to sign them to work on a project, but contractors are not allowed to participate in negotiations. All parties that sign these agreements should be invited to participate in the negotiations. The merit shop should have a representative participating in all negotiations for the PLA.
Labor Requirements Important to CFEC in PLA Negotiations
Although PLAs are replete with provisions that cut competition, there are four provisions of PLAs that are particularly objectionable to non-union companies:
PLAs require non-union companies to pay their workers' health and welfare benefits to union trust funds, even though these companies have their own benefit plans. Companies thus have to pay benefits twice: once to the union and once to the company plan. Workers never see any of their benefits sent to the unions unless they decide to leave their non-union employer and remain with the union until vested.
PLAs require non-union companies to obtain their workers from union hiring halls. This means that a non-union company has to send its workers to the union hiring hall and hope that the union sends the same workers back. In addition, this provides unions with the opportunity to dispatch “salts” (paid union organizers) with conflicts of interest in employment to non-union companies.
PLAs require non-union companies to obtain apprentices exclusively from union apprenticeship programs. Participants in state-approved non-union apprenticeship programs cannot work on a job covered by a PLA. This means that young people enrolled in non-union apprenticeship programs can find themselves excluded from work in their hometowns.
PLAs require non-union workers to pay union dues and fees or join a union.
There are solutions to each of these problems:
Fringe Benefits
CFEC suggests you use the language contained in the Ballpark Village PLA in San Diego that allows a contractor to pay health and pension employee benefits to its own plans. We recommend that the fair PLA does not contain the phrase in brackets below, as that phrase requires the contractor to make payments for collective bargaining agreement administrative fees and to union-affiliated programs categorized as “industry advancement.”
WAGE SCALES AND FRINGE BENEFITS
Wages, fringe benefits, and all Trust Fund contributions shall be determined by the applicable Schedule “A” agreements for those contractors signatory to an applicable Schedule “A.” Non-signatory Contractors shall also be required to pay wages, fringe benefits and Trust Fund contributions, which benefits and contributions accrue directly to the benefit of employees (e.g., health and welfare, vacation, holidays, pensions, apprenticeship, training funds), pursuant to the attached Schedule “A” agreements; however, any Contractor or Subcontractor, who for at least ninety (90) days prior to its execution of a contract to perform work on the Project has been a contributing member of a multi-employer pension plan or third-party administered pension plan covering employees performing work covered by this Agreement or has provided company paid health and welfare benefits at a level generally commensurate with the benefits provided by the applicable Union medical plan may, at the discretion of the Contractor or Subcontractor, continue to contribute to such pension and medical plans on behalf of its non-union Core Employees in lieu of payments to the Union’s medical and pension plans. In the event the Contractor’s contribution to a qualifying pension plan is lower than the pension contribution called for in the applicable Schedule “A,” the difference shall be paid to the employee in the employee’s regular weekly paycheck. [All other required benefit contributions and] all contributions on behalf of Union members and employees obtained through Union hiring halls shall be paid to the applicable Union Trust Funds pursuant to the provisions of the applicable Schedule “A.” Project contractor and the business agent of the Union having jurisdiction over the craft shall, upon giving at least seventy-two (72) hours written notice to a Contractor or Subcontractor, have the right to audit the Contractor or Subcontractor’s payroll records to ensure compliance with these provisions.
Use of Employees
Contractors should be allowed to retain a “core workforce” with a reasonable definition of a regular employee. Here is sample language:
Where a successful bidding Contractor is not a party to a current collective bargaining agreement with the signatory Union having jurisdiction over the affected work, the Contractor may request by name, and the local will honor, referral of core non-apprentice persons who have applied to the local Union for Project work and who demonstrate to the local Union dispatcher and provide proof of all the following qualifications:
1. Possess any and all license(s) and certification(s) required by state or federal law for the Project work to be performed;
2. Have worked a total of at least five thousand (5,000) hours in the appropriate construction craft;
3. Were on the Contractor's active payroll for at least ninety (90) out of the one hundred-twenty (120) calendar days prior to the award of the Contract;
4. Have the ability to perform safely the basic functions of the applicable trade.
When the Contractor requires employees for the Project in addition to his/her core workforce it shall utilize the Union referral system.
CFEC would oppose an alternating procedure in which a regular employee is assigned to the project and then another worker is obtained from the union hiring hall.
Also, the PLA should include language that guarantees that if a Contractor without an existing collective bargaining agreement with a union sends an employee who does not fall under the core workforce definition to the union, the union is required to dispatch the same worker back to the company. Such language is seen in Article IV, Section 5 of the PLA for the San Diego County Water Authority’s Emergency Storage Project:
The Local Unions shall not knowingly refer an employee currently employed by any Contractor working under this Agreement to any other Contractor.
Apprenticeship
The PLA should contain language that conforms to Section 1777.5 of the California Labor Code, which states the following:
When the contractor to whom the contract is awarded by the state or any political subdivision, in performing any of the work under the contract, employs workers in any apprentice able craft or trade, the contractor shall employ apprentices in at least the ratio set forth in this section and may apply to any apprenticeship program in the craft or trade that can provide apprentices to the site of the public work for a certificate approving the contractor under the apprenticeship standards for the employment and training of apprentices in the area or industry affected.
Language from the East Side Union High School District PLA, approved in August 2003, would be acceptable:
8.4 Each contractor or subcontractor performing work on the project shall, for each apprenticeable craft that it employs, employ on its regular workforce the ratio of apprentices as required by Labor Code Section 1777.5 who are enrolled and participating in a bona fide apprenticeship program. Prior to commencing work on the Project, each contractor or subcontractor must file with the District a certification of its compliance with this requirement and disclose the identity of the bona fide apprenticeship program from which it will obtain apprentices for work on this project.
The following language could also be included:
Any contractor performing work covered by this Agreement shall have the right to employ apprentices enrolled in any State-approved apprenticeship program, provided that the contractor has employed apprentices enrolled in the same program for a period of at least six months prior to either (1) this Agreement taking effect or (2) the contractor’s commencement of work covered by this Agreement. No apprentice may be required to pay membership dues or fees to any organization where such requirement did not pre-exist performance of work by such apprentice under this Agreement.
Or, the following language could be included:
Notwithstanding the provisions of this agreement or any labor agreement incorporated therein, any contractor performing work covered by this Agreement shall have the right to employ apprentices enrolled in any State-approved apprenticeship program for which the contractor is approved to train prior to the contractor’s commencement of work covered by this Agreement. No apprentice may be required to pay membership dues or fees to any organization where such apprentice has been dispatched to such a contractor under this agreement.
Union Dues and Fees
The PLA should specifically indicate the cash amount of dues and fees, such as initiation fees, that would be requested of a non-union employee. Non-union employees should have the option whether or not to pay union dues and various fees. Language from the East Side Union High School District PLA, approved in 2003, would be acceptable:
7.2 … The Contractor agrees to deduct initiation fees, union dues or representation fees from the pay of any employee who executes a voluntary authorization for such deductions …
Other Provisions of Concern in PLAs
Threshold
CFEC urges you to seek a project cost threshold of $10 million for the PLA.
Annual Review and Sunset Clause
CFEC urges you to seek a review clause allowing the RCCD to enter the PLA on a trial basis to see if economic projections are achieved. Such a clause was included in the 1999 PLA for Los Angeles Unified School District, which contracted with the independent accounting firm of PriceWaterhouseCoopers to conduct a financial evaluation of the PLA. The clause was included as follows:
Section 3.5
The parties recognize that the District has elected to enter into this Agreement in expectation of projected cost savings. As such, the District shall enter into this Agreement on a trial basis for the duration of the first identified set of projects undertaken. This Agreement shall expire at the end of one year unless the District and/or Council demonstrate that expected economic savings to the District have materialized at a level sufficient to justify continuing the Agreement. Such a termination shall render all provisions of this Agreement completely null and void for all purposes.
Simple Sunset Clause
CFEC urges you to seek a sunset clause allowing RCCD to terminate the PLA after a period of 2 years. One example of such a sunset clause comes from the Orange County PLA, which the Orange County Board of Supervisors voted to terminate at the end of 2005:
21.2 The Agreement shall continue in full force and effect until December 31, 2005. The Agreement will automatically renew for an additional five (5) years unless the parties, one and/or both, notify each other ninety (90) days prior to the original expiration date of the Agreement, of the intent to terminate or renegotiate the Agreement.
CFEC suggests that the sunset clause automatically terminate the PLA at the end of the period.
Competitive Bid Requirement
In order to protect the RCCD from a reduced number of bidders resulting from a PLA, the PLA should contain a provision requiring covered work to be rebid without a PLA requirement if you do not receive bona fide bids on that work on or before the deadline for receiving such bids from at least three (3) persons, firms, or corporations.
Employer Withdrawal Liability for Multiemployer Pension Plans
The Employment Retirement Income Security Act (ERISA) allows union multi-employer construction industry pension plans to make assessments against employers after they withdraw from those plans and no longer have an obligation to contribute. Employers who withdraw from a multiemployer pension plan, for example after ceasing work on a project covered by a PLA, can be required after the project ends to pay the plan an additional amount to cover part of the plan’s alleged “unfunded vested benefits.” Withdrawal liability could be incurred if the employer is no longer obligated to contribute to a plan, but continues the same type of work in the same area as was covered by the union that was signatory to the PLA. The PLA should include language exempting the contractor from employer withdrawal liability if the employer made all of the required contributions to the union pension fund during the period it was covered under a PLA. Here is sample language that has been used in some PLAs and other labor agreements:
To the extent that such are not contrary to the terms of this Agreement, the Contractor agrees to accept the terms of the Trust Agreement of the union’s fringe benefit funds as amended establishing the Trust Agreements and Funds of the said Union. The Contractor designates as its representatives and trustees of said Funds the trustees now serving or who may in the future serve as vacancies occur. In the event that any pension fund designated for contributions by the Union assesses withdrawal liability against the Contractor as a result of such contributions, the Union agrees to defend with competent counsel, indemnify and hold harmless the Contractor from such assessment of withdrawal liability and from any and all attorneys’ fees and costs related to or arising out of such agreement.
Or, the following language could be included:
In order to protect the Contractor from incurring any withdrawal liability based on the contributions made to such pension plans as a result of executing this Agreement, the parties stipulate that it is not intended that such Contractor shall have any withdrawal liability when such Contractor ceases to make contributions to such pension plans pursuant to this Agreement. Furthermore, the signatory Unions therefore agree not to collect or make any attempt to collect such a withdrawal liability and to indemnify and hold harmless any Contractor against any withdrawal liability resulting from a Contractor contributing to said pension funds as a result of executing this Agreement.
No-Strike Clause
The RCCD needs to be firm on this: if there is a strike or any other union slowdown, the PLA is void. The PLA should also ascertain in writing whether or not the Building Trades will ask their workers to cross picket lines set up by other unions in order to abide by the conditions of the PLA.
Assessing Financial Liability for Work Stoppages and Slowdowns
As the “no-strike clause” is a prominent feature of a PLA, the inclusion of a provision to assess financial liability for work stoppages and slowdowns can serve as an extra incentive to fulfill the conditions of the agreement. Here is sample language:
In the event a work stoppage or slowdown affects work covered by this Agreement and said stoppage or slowdown involves or is caused by a Union signatory to this Agreement, an affected signatory party may seek redress under the grievance procedure of this Agreement which shall include, but not be limited to, liquidated damages of $______ [depending on size/scope of project] per day and any other remedies available under applicable law.
Waiving Recourse to a Third-Party Lawsuit under the Grievance Procedure
Under applicable law, PLAs may provide recourse to grievance and arbitration procedures that eliminate costly and time-consuming court litigation. Accordingly, to expand upon this concept and keep disputes out of court, the following language is proposed. Alternative One addresses the basic concept, while Alternative Two specifically addresses the potential for assignment of claims by employees covered by the PLA to third parties not signatory to it, such as joint labor-management committees established pursuant to the federal Labor Management Cooperation Act of 1978 (Section 175a of Title 29 of the United States Code), which have independent rights of action which may not be directly affected by the language in Alternative One.
Alternative One:
All signatory parties, employers, unions, joint labor-management committees, trust funds, owners, agencies, shareholders, officers, directors, trustees, representatives of same, as well as any third-party which has any ownership, corporate, affiliate, partnership, legal, sponsor, and/or personal relationship shall be required to raise and resolve any and all disputes flowing from the performance of work and duties under this Agreement through the grievance-arbitration mechanisms of this Agreement unless otherwise specifically excluded by the terms of this Agreement.
Alternative Two:
This agreement and the rights set out in it are unique to the parties and may not be assigned to third parties to this agreement. In addition, all such rights are understood to arise in the context of and are subject to resolution through the grievance processes of this agreement. Accordingly, no party or third party to this agreement is herein accorded any rights of action in any venue, except such rights as exist in this agreement under the grievance process.
Most Favored Nations Clause for Signatory Contractors
A “Most Favored Nations” clause is a labor agreement provision which exists due to competitive challenges in a marketplace. It allows a signatory employer to level its playing field by adhering to terms of other labor agreements that a union has negotiated with other employers in the same industry. Here is sample language:
The parties to the Agreement recognize the need for cost-efficiency and competitive terms to complete the Project. The parties also recognize that within the marketplace different labor agreements may create inconsistent terms governing the same issues. Accordingly, to enhance cost-efficiency and fairness in the performance of work covered by this Agreement, any signatory employer is entitled, upon written request to a signatory union which claims jurisdiction over that employer’s scope of Project work, of a complete copy of any and all agreements entered into by said union providing terms for the performance of the same type of work in that union’s geographic jurisdiction. Thorough and complete responses shall be required within 7 days. Upon written notice to the union, the signatory employer may advise in writing and implement any terms of such agreements which are more advantageous for the completion of the contractor’s work under this Agreement. A signatory union’s failure to respond in timely fashion, or failure to respect the designation of another agreement’s more favorable terms, raises a grievable issue and shall subject that union to liability for the damages the signatory employer suffers as a result.
For purposes of this project labor agreement, this clause is deemed to include any and all project labor agreements executed by signatories to this agreement within the past two years within the jurisdictional area of the labor unions signatory hereto.
Union Security Provisions
Bid specifications for the projects should include the applicable crafts’ Schedule A Agreements as referenced in the Union Security section of the PLA.
Are non-union employees on this PLA subject to union disciplinary actions such as monetary fines if they ignore prohibitions in the union constitution and by-laws? Will non-union workers be fined if they leave the union once the job ends? Which petty rules do non-union workers have to follow on a PLA job? For example, are they required to boycott certain products and establishments? Perhaps the PLA should include a copy of the union constitution and by-laws so signatories will know the conditions that must be followed by their employees.
Audits
Will the union fund trustees have the right to audit non-union contractors’ financial records when working on a PLA?
Biased Arbitrators
A PLA nullifies the non-union company’s employee handbook. Who will choose the arbitrators for employee grievances in this PLA? Is it the unions?
Privacy of Workers
How much access will union officials and organizers have to non-union workers on the jobsite? Will union organizers have access to the names and addresses of non-union employees and use the information for marketing purposes, including home visits about joining the union?
Drug Testing
What are the rules concerning drug testing under this PLA? Will non-union companies have to abandon their drug testing program?
I hope these comments are useful as you negotiate the PLA for the RCCD. These comments should also shed a clearer light on why associations such as CFEC oppose PLAs in the format one has already been submitted to you in. You can contact me at (858) 431-6337 or at ericdchristen@gmail.com.
Eric Christen
Executive Director, CFEC
|
|
|
|
|
|
|
|
|
