There is a common misconception that all Philadelphia Public Works projects must be performed pursuant to a project labor agreement with various members of the Building and Construction Trades Council. This common misconception is even shared by the current Mayoral administration, who I saw in a recent court filing testified under oath that “project labor agreements are required for all construction projects in Philadelphia with a value of at least five million dollars.” (As is discussed below this is flat out false.)
No one has yet to step forward to challenge Philadelphia’s project labor agreement scheme. However, if someone did, I think the challenge would be successful for three reasons. First, contrary to the Mayor’s representative’s statement, there is no requirement that all projects in excess of $5 million be subject to a project labor agreement. Second, Philadelphia’s project labor agreement excludes signatories to collective bargaining agreements with the United Steel Workers (USW) from participating,which violates public bid laws. Third, the exclusion of the USW, also gives rise to a challenge that federal labor law preempts the project labor agreement.
A. Background on the Philadelphia PLA.
Under a project labor agreement (PLA), a contractor wishing to perform work on a project agrees to be bound by the terms and conditions of employment established by the public owner and certain construction unions. Each PLA varies, but typically PLA’s will require a contractor’s employees to become members of a union – if they are already not members – in order to work on a project or will require a contractor to hire labor from a union hiring hall. PLA’s are controversial because they exclude non-union contractors from performing work on a project subject to a PLA, unless of course that contractor agrees to become “union” for purposes of that project. For reasons beyond this blog post, a merit shop contractor would be crazy to do that.
The “Philadelphia PLA” that Mayor Kenney believes is required for all public projects over $5 million was instituted by Mayor Nutter through a 2011 Executive Order (Executive Order No. 15-11, Public Works Project Labor Agreements).
B. The Language of the Philadelphia PLA.
Few people, including the current Administration, have apparently actually read the Executive Order. If they did, they would realize that not only does it not require PLA’s it expressly states that they are not required. This subject is made clear in Section 3(c) of the Executive Order:
What it does require are certain prerequisites before a public project is subject to a PLA. Prerequisites that the current Administration and the one before it have ignored.
According to the Executive Order before any project is subject to a PLA, it must be reviewed to determine if a PLA would be appropriate for that particular project. The review must be performed by the City Agency procuring the contract and a written finding concerning the appropriateness of a PLA must be forwarded to the Mayor’s Office.
My understanding is that these City Agency evaluations backed by a written finding have never been done for any project in Philadelphia subject to a PLA. (However, if anyone has seen such a finding, please forward it to me.)
Moreover, the written recommendation that the City Agency makes must go further than simply saying “we think a PLA is good.” The Executive Order requires the Agency to “describe how it will benefit and enhance the interests of the City on the basis of costs, efficiency, quality, safety, and/or timeliness” and “shall specifically address” a number of other factors, including, safety, costs, dispute resolution, the need to skilled labor, and “the opportunity to provide significant employment opportunities for qualified City residents, including minority males and women, and for women – and minority owned businesses.” Basically, the exact opposite of the demographics of the unions in Philadelphia.
Once an Agency makes this written determination, the Mayor’s Office is supposed to review it and consult with the Agency. The City is also required establish a PLA “Advisory Committee” which is supposed “monitor and evaluate” PLA’s and “make periodic evaluations to the Mayor regarding the use of [PLA’s].” To my knowledge this Advisory Committee does not exist.
C. Challenge Pursuant to Public Bid Laws.
Because Philadelphia is not following its own law before instituting PLA’s, any project that is advertised as being the subject of a PLA is susceptible to a challenge. If a provision in bidding specifications denies the public the benefit of a fair and just competitive process, a taxpayer may bring a challenge.
D. The USW Issue.
The model PLA which is attached to the Executive Order states that the collective bargaining agreements of members of the Philadelphia Building and Construction Trades Council (BCTC) shall govern, notwithstanding the provisions of Local or International Agreements which may differ. Not every union is a member of the BCTC. Notably, the USW is not. Despite the name, the USW does not only represent steelworkers. In fact, they represent construction workers of varying trades.
A contractor signed with the USW wishing to bid on a Philadelphia Public Works project, finds itself in an irreconcilable predicament. If it agrees to the PLA, it will be in violation of its collective bargaining agreement with the USW which already governs the terms and conditions of its employees’ employment. Therefore, it cannot agree to be bound to another union’s agreement. Thus, Philadelphia PLA has the effect of excluding contractors who have CBA’s with the USW.
Pennsylvania public bid laws state that a public agency cannot exclude bidders from bidding on a project by “imposing conditions on one prospective bidder, which are not imposed upon all.” Requiring a a signatory to the USW to breach its CBA with the USW imposes such a condition.
Excluding the USW posses another issue. Under the National Labor Relations Act, employees have the right to form or be represented by a union. Under the Act, if the union is properly designated as the employees representative, an employer must deal exclusively with the union. Therefore, the Philadelphia PLA is in conflict with federal labor law. Why? Because a USW member cannot work on a Philadelphia Public Works project and be represented by the union of its chose. Also, a USW contractor would be forced to ignore the USW as the bargaining agent of its employees in order to work on a Philadelphia project. If a state or local ordinance has this effect, the Supreme Court has held it is preempted by the National Labor Relations Act. The Philadelphia PLA appears to have that effect.
Wally Zimolong
Wally represents contractors (and subcontractors) and developers. His clients build and develop residential, commercial, and industrial properties nationwide. Wally enjoys working with the owners of the businesses he represents because they tend to be entrepreneurs and all around interesting people.
