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DATE: November 4, 2024
TO: Mayor and Members of City Council
VIA: Stefan Chatwin, City Manager
Marlene Subhashini, Assistant City Manager
FROM: Benjamin L. Stock, City Attorney
Andrew Brozyna, Public Works Director
DEPARTMENT: Public Works
SUBJECT: DISCUSS AND PROVIDE DIRECTION ON WHETHER CITY
COUNCIL DESIRES TO ADOPT A POLICY REQUIRING PROJECT
LABOR AGREEMENTS
RECOMMENDATION
It is recommended that the City Council receive and discuss the information provided in this report regarding Project Labor Agreements (PLA) and, by Minute Order, provide direction to staff on next steps.
EXECUTIVE SUMMARY
At the meeting on August 19, 2024, Councilmember Hindi requested, and a majority of the Council supported, a future agenda item to discuss union labor agreements (or PLAs) for large projects through an Ordinance rather than considering whether to consider such agreements on a project-by-project basis.
BACKGROUND
A PLA can take different forms but generally a PLA is a pre-hire collective bargaining agreement with one or more labor organizations that establishes terms and conditions of employment for a specific scope of construction project or projects as described in Title
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29, Section 158(f) of the United States Code1. PLAs are also known as project stabilization agreements, labor stabilization agreements, community workforce agreements, or may take another similar name.
Government-funded construction projects can involve various contractors and trades, have critical timelines for completion, and require a skilled and properly trained workforce to successfully complete the public works project in a proper and timely manner. Local Governments can require that recipients of government funding for a construction project use PLAs through an ordinance or adopted policy to help manage the uncertainty and delays that can come from having so many contractors and trades involved. If that local government requires PLAs, the local government entity can enter into an agreement with a union or group of unions, such as an area trade union council, before seeking bids from contractors to do the work. The PLA would then be included in the request for bids. That way, any contractor interested in submitting a bid knows the job will require union labor.
The terms of the PLA would apply to all contractors and subcontractors who successfully bid on a project, and supersede any existing collective bargaining agreement which would otherwise apply. A PLA will typically include provisions to prevent strikes, lockouts, or other work stoppages for the length of the construction project. The PLA will often require that employees hired for the project are from the unions that are part of the agreement, or are hired upon referral from the union hiring halls. Any nonunion workers who are hired on the project would have to pay union dues for the length of the project, and the contractor would have to follow union rules on, among other items, pensions, work conditions, and dispute resolutions.
In the San Francisco Bay Area, PLAs have been used successfully on numerous large public and private construction projects. Public entities such as the Bay Area Rapid Transit District, the San Mateo Union High School District, the San Mateo Community College District, Oakland Unified School District, the San Francisco Unified School District, the City of Berkeley, the City of Watsonville and others, maintain PLA ordinances and policies requiring the use of PLAs on certain publicly funded construction projects. 1 (f)Agreement covering employees in the building and construction industry It shall not be an unfair labor practice under subsections (a) and (b) of this section for an employer engaged primarily in the building and construction industry to make an agreement covering employees engaged (or who, upon their employment, will be engaged) in the building and construction industry with a labor organization of which building and construction employees are members (not established, maintained, or assisted by any action defined in subsection (a) as an unfair labor practice) because (1) the majority status of such labor organization has not been established under the provisions of section 159 of this title prior to the making of such agreement, or (2) such agreement requires as a condition of employment, membership in such labor organization after the seventh day following the beginning of such employment or the effective date of the agreement, whichever is later, or (3) such agreement requires the employer to notify such labor organization of opportunities for employment with such employer, or gives such labor organization an opportunity to refer qualified applicants for such employment, or (4) such agreement specifies minimum training or experience qualifications for employment or provides for priority in opportunities for employment based upon length of service with such employer, in the industry or in the particular geographical area: Provided, That nothing in this subsection shall set aside the final proviso to subsection (a)(3):
Provided further, That any agreement which would be invalid, but for clause (1) of this subsection, shall not be a bar to a petition filed pursuant to section 159(c) or 159(e) of this title. 3 7
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Some Councilmembers may also recall that the Wastewater Treatment Plant (WWTP) Upgrade and Expansion project utilized a PLA.
ANALYSIS
Some Examples of Ordinances/Policies Requiring PLAs
An ordinance or policy would generally establish the criteria for use of a PLA and may establish certain requirements for the PLA itself. For example, a PLA could be applied to certain crafts or portions of a project, but may exclude others or a PLA could be required for projects exceeding a certain dollar amount and/or for a certain number of years. (e.g.
Federal government requires them to be used on “large scale projects” exceeding $35 million).
The City of Berkeley utilizes Project Labor Agreements as well as "Community Workforce Agreement" (City of Berkeley City Council Resolution No. 70926: Link) to “support the efforts of the City to increase employment opportunities for Berkeley residents, including youth, through apprenticeship and pre-apprenticeship programs” and to help “provide for peaceful settlement of labor disputes and grievances without strikes or lockouts, thus promoting the public interest in assuring the timely and economical completion of the projects.” The City Manager for the City of Berkeley was recently authorized to execute a contract amendment with the Building Trades Council and twenty-two labor organizations regarding the provision of labor to construction projects in Berkeley with an estimated value in excess of $500,000 for a three-year term, to expire on June 30, 2026.
The City of Watsonville also requires PLAs through an ordinance (Ordinance No. 1295-13 (CM), codified in Chapter 17 of Title 7 of the Municipal Code: Link). The City of Watsonville requires PLAs for all competitively bid public works construction projects with a projected construction cost of $600,000 dollars or more and employing workers in three (3) or more crafts. As indicated in the City of Watsonville’s Ordinance, the City of Watsonville’s PLA policy was intended, in part, to increase the number of employed persons living in the City of Watsonville in an attempt to counteract the grave economic and social ills associated with the higher unemployment levels that existed within that City. The City of Watsonville’s Ordinance also provides certain required provisions for the PLA, such as that the PLA shall guarantee against work stoppages, unless the Council by majority vote waives any of the provisions.
Some Examples of Terms Included in a PLA
Whether the PLA is for a public or private project, they may have some primary common terms, including that the union agrees not to strike while applicable project(s) are being built. Another common term would be a high-speed grievance process (typically arbitration) to resolve any workplace disputes that arise. Other examples of typical terms include:
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•New employees, within a certain period of time, pay dues to the union for representing their interests before the employer;
•Contractors use a local, centralized union job referral system or “hiring hall”; •Nonunion workers pay union dues for the length of the project; •Management rights, including hiring, promotion, transfer, discipline or discharge of employees, and the right to reject any job applicant referred by a union; •Uniform workday, workweek, overtime, holiday and payday schedules; •Standardized work rules and regulations posted on the job site.
When entered into, a PLA will include a scope and detail the work covered by the PLA.
What the scope is will depend on the desires of the agency.
Potential Pros and Cons of PLAs
Below are some of the potential pros and cons of PLAs. This table is not meant to be a finite list and is provided in order to present the competing viewpoints as a way to help Council with their discussion of this topic and are not necessarily the opinion of City staff.
There may be alternatives not identified below and ultimately many factors will impact the overall effectiveness of any given PLA for any particular local entity.
Pros
1. Provide uniform wages, benefits, overtime pay, hours, working conditions, and work rules for work on major construction projects.
2. Will help to provide contractors with a reliable and uninterrupted supply of qualified workers at predictable costs.
3. Will ensure qualified labor and relative ease of project management because it will provide stable supply of laborers, predictable costs and dispute resolution provisions.
4. Ensure no labor strife by prohibiting strikes and lockouts and including binding procedures to resolve labor disputes.
5. May make large projects easier to manage by placing unions under one contract, the PLA, rather than dealing with several unions that may have different wage and benefit structures.
6. May include provisions to recruit and train workers by requiring contractors to participate in recruitment, apprenticeship, and training programs for women, minorities, veterans, and other under-represented groups (this is a common CWA provision).
7. May improve worker safety by requiring contractors and workers to comply with project safety rules.
Cons
1. Increase costs by mandating union wages and work rules and inhibiting competition.
2. May be anti-competitive because non-union contractors may choose not to bid because either their members would be required to join a union if the contractor wins the bid or the contractor would not be able to use its own workers if the PLA required hiring through the union hiring hall.
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3. Non-union contractors and non-union employees may object as the non-union employees are required to pay union dues during the construction under the PLA.
4. May cause delays if union unable to supply timely referrals, as contractor will have to wait specified time before contractor may seek employees elsewhere; plus additional workload, delays and costs associated with ensuring that PLA terms are met.
5. May hinder the use of non-union contractor training programs that may operate more efficiently and are job specific, instead of union apprenticeship programs of a fixed duration.
6. A PLA would complicate prequalification procedures that screen contractors that bid on public projects because the specific requirements of a PLA would need to be identified in the prequalification documents.
7. The benefits of entering into a PLA are minimized for government agencies already paying prevailing wages and adhering to other requirements of the state.
PLAs and Federally Funded Projects
Beginning on January 22, 2024, in compliance with President Biden’s February 4, 2022 Executive Order, 14603, federal construction projects with a total estimated cost of $35 million are now required to utilize a PLA unless the contracting agency grants an exception.
In determining whether to use a PLA, the Federal Government provides several factors a grantee may want to consider before deciding to utilize them, including, but not limited to the following:
•The size and complexity of the project
•The importance of the project and the need to adhere to a certain timeline •The risk of labor unrest on the project and the circumstances that are present that may lead to a heightened risk of labor disruption, such as the history of labor unrest in the area, the anticipated working conditions of the project relating to the environment or work schedules, and the expiration of one or more collective bargaining agreements that could lead to jurisdictional disputes •The impacts of a labor disruption to the users, the operation of the facility, and the region
•The costs of a delay should a labor disruption occur
•The available labor pool relative to the particular skills required to complete the project
Public Works Contracting Requirements
There are various existing requirements that may provide the same or similar benefits to PLAs. Such requirements include, but are not limited to:
•Apprenticeship programs
•California Skilled and Trained Workforce Requirement
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•Prevailing wages
Whether these requirements address all of the particular items which stem from a PLA, however, will depend on the many factors related to the project which it intends to govern.
CALIFORNIA ENVIRONMENTAL QUALITY ACT
This item for discussions is not subject to review under the California Environmental Quality Act (CEQA) pursuant to Public Resources Code Section 21000, et seq. and the CEQA Guidelines (14 Cal. Code Regs. §§ 15000 et. seq.), including without limitation, Public Resources Code section 21065 and California Code of Regulations 15378 as this is not a “project” that may cause a direct, or reasonably foreseeable indirect, physical change in the environment.
FISCAL IMPACT
There is no direct fiscal impact from this discussion.
CITY COUNCIL VISION, MISSION, AND VALUE/PRIORITY AREA
Facilities and Infrastructure and Social Equity
ATTACHMENTS:
None