REPORT TO THE CITY COUNCIL
DATE: Regular Meeting of November 14, 2023
TO: Mayor and Members of the City Council
SUBMITTED BY: Patrick Tang, City Attorney
Christina Lawrence, Associate Attorney
SUBJECT: Additional Information on Project Labor Agreements
RECOMMENDED ACTION
Review and discuss report; provide direction to City attorney and staff on the questions outlined in the report.
BACKGROUND:
At the Council meeting of August 8, 2023, the Council directed staff to schedule a discussion regarding project labor agreements for City construction projects. At a special meeting of the City Council on October 3, 2023, the City attorney and staff provided the Council with a general overview of project labor agreements and the Council requested further information on such agreements, including (1) the definition of a “project” subject to a project labor agreement, (2) information on the number of completed capital improvement projects of the City (over $1 million, in the last 5-10 years) performed by union versus non-union prime contractors; and (3) information on project labor agreements of nearby cities of a similar size. This report addresses each of those items and requests further direction from the Council on key questions.
DISCUSSION:
A project labor agreement or project stabilization agreement (collectively referred to herein as a “PLA”) is a pre-hire collective bargaining agreement with one or more labor organizations that establishes the terms and conditions of employment on a particular construction project or for certain construction projects.
Several public agencies around the country, state, and region have adopted policies pertaining to PLAs and/or agency-wide or single project PLAs. This report responds to Council’s request for additional information about PLAs and seeks further direction from the Council as to whether it would like to develop a policy pertaining to PLAs and/or to negotiate and enter into a PLA.
It is important to keep in mind that the specific terms of a PLA are negotiated by the parties (e.g., City, local Building and Construction Trades Council (“BTC”), and unions affiliated with the BTC). Thus, if the Council decides to develop a policy and/or negotiate a PLA, the City attorney and staff will need direction from the Council on its desired goals and parameters.
Follow Up Information on Project Labor Agreements
Projects Subject to a PLA
PLAs are specifically permitted for use in the “building and construction industry,” and thus, they are used to establish terms and conditions of employment on a construction project. A PLA can specify the construction project(s) that are subject to any such agreement, or it can specify parameters for application (e.g., dollar threshold, multi-craft, or multi-year project(s)).
The City may require the use of a PLA on City construction projects, such as capital improvement projects (i.e., projects contracted for by the City involving any public structure, building, road, or other public improvement). The City may also require the use of a PLA on public/private projects (e.g., where City sells property for development or leases property requiring rehabilitation and the use of a PLA is a condition of the sale or lease, or where a development is subject to a City development agreement).
Based on a comparison of four citywide PLAs in the region, it is much more common to see a citywide agreement apply to construction projects awarded by the city. All of the citywide PLAs reviewed by the City Attorney’s office apply to “Construction Contracts” awarded on a “Project.” A “Project” is often defined as “all construction projects awarded by the City that have an engineer’s estimate in excess of” a certain dollar threshold.
A “Construction Contract” is defined as “the public works or improvement contract(s)…awarded by the City that are necessary to complete a Project.” Of the citywide PLAs reviewed by the City Attorney’s Office, none of them define the term “construction.” One PLA policy reviewed by the City Attorney’s office applies to “public works construction projects” and defines that term as follows:
A “public works construction project” is defined to include “all site preparation, construction, alteration, demolition, installation, improvement, painting, repair or off-haul work as defined in Labor Code Section 1720.3, paid for in whole or in part by City funds with a projected construction cost of [$600,000] or more and employing workers in three or more crafts.” If the Council decides to move forward with a PLA policy or Citywide PLA and wants to clarify what constitutes a “construction project,” the City Attorney’s office and staff can negotiate with the local BTC on this point based on Council’s direction. For example, the Council may wish to model the definition of a “construction project” based on the definition of “public project” under the Uniform Public Construction Cost Accounting Act in the Public Contract Code or the definition of “public works” under the Labor Code. (For more information on these definitions, see Attachment 1.)
2. City’s Past Projects
Council has requested information regarding the City’s completed capital improvement projects (exceeding $1,000,000 from the last 10 years) performed by union contractors versus non-union contractors. Staff has identified the following capital improvement projects:
Bay Trail East (2016) - $7.0M
Bay Trail West (2019) - $1.3M
Path To Transit (2017) - $12.6M
Energy Conservation Measures - $4.0M
2021 Rehabilitation Project – Sycamore - $1.0M
2019 Pavement Repair Project - $1.2M
2018 Pavement Maintenance - $1.0M
2017 Pavement Maintenance - $1.0M
The City does not currently maintain information related to whether prime contractors on City projects are affiliated with union(s). However, based on the City attorney’s and staff’s independent research, it appears that at least five of the eight projects listed above may have been performed by union-affiliated prime contractors. These projects include the Bay Trail East Project, Path to Transit Project, 2021 Rehabilitation Project – Sycamore, 2019 Pavement Repair Project, and 2017 Pavement Maintenance Project.
3. Comparison of Other Local Agencies
The Council has requested information on how nearby local agencies of a similar size have handled project labor agreements. The City Attorney’s office has reviewed how the following cities have handled project labor agreements: Martinez, Watsonville, Richmond, El Cerrito, and American Canyon.
Policies
The Cities of Martinez and Watsonville adopted policies pertaining to project labor agreements. These policies identify: (1) the application of the project labor agreement policy (i.e., which projects are subject to a project labor agreement) and (2) required provisions for any such project labor agreement. Additionally, these policies are structured such that the successful bidder (i.e., the prime contractor) on a qualifying project is required to negotiate and enter into a project labor agreement as a condition of award of the construction contract. The City Attorney’s office has prepared the following chart comparing the policies of Martinez and Watsonville:
City of Martinez
City of Watsonville
Application
The PLA policy applies to “all City construction projects awarded by the City with a bid amount of more than $250,000.” Additionally, “at any time that the City Council is considering approval of the City’s capital improvement project (“CIP”) budget as part of the City’s overall budget, the City Council may identify specific projects included in that CIP budget which the City Council directs be awarded in accordance with and subject to [the] policy irrespective of the estimated cost of said project(s).” The PLA ordinance applies “to all public works construction projects unless the existence of a project labor agreement will jeopardize State, Federal or other public funding sources.” A “public works construction project” is defined to include “all site preparation, construction, alteration, demolition, installation, improvement, painting, repair or off-haul work as defined in Labor Code Section 1720.3, paid for in whole or in part by City funds with a projected construction cost of [$600,000] or more and employing workers in three or more crafts.” Implementation
For construction projects subject to the policy, as a condition of contract award, the successful bidder must negotiate and sign a PLA with the local BTC or other labor organization(s) or labor union(s) approved by the City, unless the Council determines otherwise. The PLA is subject to approval as to form by the City Council.
For projects subject to the policy, as a condition of award, the successful bidder must execute a master project labor agreement which will be filed with the City Clerk. The successful bidder and its contractors and subcontractors at all tiers must “sign an agreement to be bound and to enter into a project labor agreement.” Required Provisions
The policy includes provisions that a PLA generally must contain, but states that provisions for individual projects may vary due to special circumstances, requirements of the project’s funding source(s), or other reasons, as determined by the City Manager.
The ordinance includes provisions that a PLA must contain, unless the Council, by majority vote, determines otherwise.
The City of Martinez adopted its PLA policy in 2014. In 2019, it negotiated and entered into a citywide project labor agreement. The City’s policy served as a basis for negotiating the terms of the agreement, but the City ultimately decided to deviate from some of the policy requirements to reach a project labor agreement that was acceptable to all parties.
The policy approach may require less staff resources, given that the successful bidder is ultimately responsible for negotiating an agreement subject to City approval. However, this structure could conceivably complicate the contract award process if the successful bidder on a project is unable to reach an agreement with the relevant labor organization(s).
Additionally, given that the City of Martinez eventually opted to negotiate a citywide agreement, it is unclear whether the policy approach is effective. If the City would like to pursue the policy approach, it will be important to ensure that the policy requirements are reflective of terms that are acceptable to all parties, including local labor organizations. Otherwise, the City may find itself in a situation where a successful bidder on a qualifying project is unable to effectuate or comply with the PLA policy.
Citywide PLAs
The Cities of Martinez, Richmond, El Cerrito, and American Canyon have adopted citywide project labor or project stabilization agreements. In adopting a citywide agreement, each city has negotiated directly with the relevant BTC in the region and entered into an agreement that applies for a specific term. Under a citywide agreement, the successful bidder on a project subject to the PLA and its subcontractors of every tier must agree to be bound by the PLA.
Citywide PLAs in the region appear to be based on the template agreement attached as Attachment 2 and contain provisions similar, if not identical, to those therein. Based on the City attorney’s and staff’s research, this template was prepared by the Contra Costa Building and Construction Trades Council and served as a starting point for negotiations for the City of El Cerrito’s project stabilization agreement. A summary of each Article of the template agreement is set forth below.
Definitions: Article 1 includes definitions for terms that appear throughout the agreement, including the definition of a “project.” Scope of Agreement: Article 2 specifies the scope and application of the agreement, including what constitutes “covered work” under the agreement and what is “excluded” from application of the agreement. Common types of “covered work” under a PLA include, but are not limited to, all site preparation, surveying, construction, alteration, demolition, installation, improvement, remediation, retrofit, painting or repair of buildings, structures and other works, and related activities for the project that is within the craft jurisdiction of one of the unions and that is directly or indirectly part of the project. Some common exclusions include work performed by the City’s own employees as permitted by the Public Contract Code, work performed by non-construction craft employees, and work substantially funded by any federal, state, local or other public agency that prohibits the use of project labor agreements on projects receiving its funding. (See Sections 2.3 and 2.4 of Attachment 2 for a full breakdown of typical “covered work” and “exclusions.”) Effect of Agreement: Article 3 provides that all signatories to the agreement and all contractors and subcontractors performing work under a “construction contract” for a “project” agree to be bound by the terms of the PLA.
Work Stoppages, Strikes, Sympathy Strikes and Lockouts: Article 4 provides that there will be no work stoppages, strikes, sympathy strikes, lockouts, or other labor disruptions for the duration of the Project and includes expedited arbitration procedures if such a disruption arises.
Pre-Construction Conference: Article 5 includes terms relating to pre-construction conferences and review meetings for a project.
No Discrimination: Article 6 requires compliance with all anti-discrimination provisions of federal, state, and local law.
Union Security: Article 7 recognizes unions as the sole bargaining representative of all craft employees working within the scope of the PLA and requires all employees of a contractor working on a project to become members of the appropriate union.
Referral: Article 8 requires the use of union registration facilities and referral systems when filling craft job requirements, outlines the procedures applicable if union(s) are unable to fill a requisition, and includes a local hiring goal.
Wages and Benefits: Article 9 specifies terms relating to worker wages and benefits, including the application of terms and conditions of employment established by “master agreements” of the applicable unions on the project.
Apprentices: Article 10 requires the contractor to employ apprentices from a state-approved Joint Apprenticeship Training Program in ratios consistent with requirements of the Labor Code.
Helmets to Hardhats: Article 11 requires the contractor and unions to agree to use the services of the Center for Military Recruitment, Assessment and Veterans Employment and its “Helmets to Hardhats” program to facilitate veterans’ entry into the building and construction trades.
Compliance: Article 12 provides that the contractor and unions are responsible for investigating and monitoring compliance with the wage and benefit requirements of the PLA and that the public agency will monitor and enforce compliance with state prevailing wage requirements and the contractors’ compliance with the PLA.
Grievance Arbitration Procedure: Article 13 outlines the dispute resolution procedures applicable to the PLA.
Work Assignments and Jurisdictional Disputes: Article 14 acknowledges that the assignment of “covered work” is the sole responsibility of the contractor, provides that such assignments will be in accordance with the “Plan for the Settlement of Jurisdictional Disputes in the Construction Industry,” and sets forth dispute resolution procedures in the event of jurisdictional disputes.
Management Rights: Article 15 provides that the contractor will retain authority for the management of its operations.
Drug and Alcohol Testing: Article 16 prohibits the use, sale, transfer, purchase and/or possession of a controlled substance, alcohol, and/or firearms during the workday and provides that drug and alcohol testing will be conducted pursuant to specified policies.
Savings Clause: Article 17 specifies what happens if a provision of the PLA is determined to be void or illegal by a court of competent jurisdiction.
Term: Article 18 provides that the PLA has a five-year term and will automatically “roll over” for an additional five-year term in the absence of any changes to the agreement. Some cities have elected to eliminate the automatic roll over, such that the term will expire unless the parties agree to extend the term. Other cities have retained the automatic roll over, but include language to reflect the parties’ ability to terminate the agreement at any time.
Miscellaneous Provisions: Article 19 includes miscellaneous contractual provisions, such as authorizing execution of the agreement in counterparts, explaining the purpose of headings used throughout the agreement, and acknowledging that the agreement is the product of negotiations and has been reviewed by legal counsel.
The provisions that tend to vary among agencies include: the applicability of the agreement (e.g., definition of project); what constitutes “covered work” and “exclusions” thereto; and local hiring goals. The City Attorney’s office has prepared the following chart comparing some key provisions from the citywide agreements of Martinez, Richmond, El Cerrito, and American Canyon.
City of Martinez
City of Richmond
City of El Cerrito
City of American Canyon
Applicability & Definition of “Project”
PLA governs all “Construction Contracts” awarded on a Project.
Definitions:
“Construction Contract” means the public works or improvement contract(s) awarded by the City that are necessary to complete a Project. “Project” means “all construction projects awarded by the City that have an engineer’s estimate of or in excess of [$1,000,000]; however, if the engineer’s estimate is under [$1,000,000] but over [$750,000], the City shall include language in its bid solicitation indicating that if the bid awarded for the project is over [$1,000,000], including any addenda or alternates, the project shall be covered by this Agreement.” The city and the BTC may mutually agree to add additional projects.
PSA governs all “Construction Contracts” awarded on the “Project.” Definitions:
“Construction Contract” means the public works or improvement contract(s) awarded by the City that are necessary to complete the Project. “Project” means all construction projects paid for in whole or in part out of City funds, where the engineer’s estimate or bid amount exceeds $1,000,000.
The city and the BTC may mutually agree to add additional projects.
PSA governs all “Construction Contracts” that include “Covered Work” awarded on or after the effective date of the PSA for a “Project” until “Completion,” unless otherwise set forth in the PSA.
Definitions:
“Construction Contract” means the public works or improvement contract(s) awarded or entered into by the City that are necessary for Completion of a Project. “Project” means City projects funded in whole or in part with City funds, where either the engineer’s estimate of the total cost of the project or the cumulative bid amount(s) submitted by the contractor(s) awarded the “Construction Contract(s)” exceeds $1,000,000. All “Construction Contracts” required to complete an integrated Project are considered in determining whether the dollar threshold is met.
The city and the BTC may mutually agree to add additional projects.
PSA governs all “Construction Contracts” that include “Covered Work” awarded on or after the effective date of the PSA for a “Project” until “Completion,” unless otherwise set forth in the PSA.
Definitions:
“Construction Contract” means the public works or improvement contract(s) awarded and entered into by the City that are necessary for Completion of a Project. “Project” means all city construction projects where either the engineer’s estimate of the total cost of the project, or the cumulative bid amount(s) submitted by the contractor(s) awarded a Construction Contract(s) for the Project, exceeds the limit for awarding “informal bids” in accordance with the California Uniform Public Construction Cost Accounting Act, currently $200,000, but subject to change. All “Construction Contracts” required to complete an integrated Project are considered in determining whether the threshold is met.
The city and the BTC may mutually agree to add additional projects.
Local Hiring
Employment of Residents of the Local Area: “It is the objective of the parties that not less than [25%] of all hours worked on the Project, including apprentice hours, be worked by residents of the Local Area.” For this PLA, Local Area means the communities of the City of Martinez and Contra Costa County to be served by the Project.
Apprentices from the Local Area: “The objective of the parties is that at least [25%] of the apprentices employed on the Project will be from the “Local Area.” PLA provides that is the objective of the parties that not less than 35% of all hours worked on the Project be worked by residents of the “Local Area,” defined as the City of Richmond and specifies that the unions will work with RichmondBUILD to recruit skilled craft persons to fulfill the requirements of the Contractors. It also outlines a two-step process for the Contractor in an effort to employ Richmond Domiciled Residents.
PLA acknowledges that it is in the interest of the parties to facilitate employment of “Local Area” residents (i.e., residents of Contra Costa County) and provides that residents will be referred for work covered by the agreement, but does not specify a particular percentage goal.
N/A
Agreement Term
Effective for a five-year term and, unless extended by the parties, will terminate thereafter. During the fifth year, the city will meet with the BTC to discuss the potential extension of the agreement and any necessary changes thereto and (2) the City Manager will prepare a report for the City Council’s review assessing the effectiveness and efficiency of work performed under the agreement and assessing the effectiveness of the agreement in accomplishing the goals outlined therein.
Effective for a five-year term. Prior to each five-year anniversary of the effective date, the city and the BTC will meet to discuss proposed changes, if any. Absent changes, the PLA will roll over for an additional five years.
Effective for a five-year term. Prior to each five-year anniversary of the effective date, the city and BTC will meet to discuss proposed changes, if any. Absent changes or termination, the PLA will roll over for an additional five years.
Effective for a five-year term.
Prior to each five-year anniversary of the effective date, the city and BTC will meet to discuss proposed changes, if any.
City and BTC each retain the right to terminate the Agreement prior to the expiration of the Term, provided however that the terminating party provides at least 90 days’ notice to the other party.
Absent termination or negotiation of a modified agreement, the Agreement will continue for a successive five-year term.
B. Direction from Council
The City attorney and staff request direction from the Council on the following key questions:
If the Council decides to move forward, does it want to adopt a PLA policy and/or does it want to negotiate a PLA (either citywide or for specific project(s))? Options include, but are not limited to:
The Council may choose to adopt a policy, pursuant to which, individual PLAs are negotiated by the successful bidder for each project subject to the policy as a condition of award. The policy can specify which projects are subject to a PLA and the required provisions for any such PLA.
The Council may choose to negotiate a Citywide PLA that identifies which City projects are subject to the PLA, either by naming specific projects or by defining a “project” to reflect the Council’s desired parameters (e.g., dollar threshold, number of construction crafts involved, and/or anticipated project duration).
The Council may choose to negotiate a PLA for a specific City project.
If the Council decides to proceed, how does it want to define a “project” subject to a PLA policy or PLA? Options include, but are not limited to:
Define as all construction projects awarded by the City that have an engineer’s estimate or bid amount that exceeds $1,000,000.
Define as all City construction projects where either the engineer’s estimate of the total cost of the project, or the cumulative bid amount(s) submitted by the contractor(s) awarded a “Construction Contract(s)” for the Project, exceeds $1,000,000. For this option, all “Construction Contracts” required to complete an integrated project are considered in determining whether the dollar threshold is met. A “Construction Contract” is typically defined as the public works or improvement contract(s) awarded by the City that are necessary to complete the project.
Define based on one of the options above, but add additional parameters to capture projects that are complex (i.e., multi-craft) or of a long duration (i.e., multi-year). If Council pursues this option, the City attorney and staff will need direction on what the Council considers “complex” (e.g., the number of crafts/trades involved) or a “long duration” (e.g., 12 months, 24 months, etc.).
Define as construction projects selected by Council each year as part of the Capital Improvement Program (“CIP”).
Define as specific public works construction project(s) identified by the City (e.g., list of projects). The following is a sample list of future construction projects that staff anticipates will cost $1 million or more in the current CIP:
Street Repair Projects (Approx. $800K to $1.2M, typically yearly) Upper Sycamore Sewer Trunk Replacement (Approx. $4M, in 3-4 years) The Hercules Hub (Approx. $100M, dependent upon securing funding, complex, likely will be constructed in phases, but note that, if state or federal funding is involved, applicability of a PLA may depend on the funding source requirements.)
3. Key Terms. To the extent that the Council wants to pursue a PLA policy or PLA, the City attorney and staff will need direction from the Council on the Council’s goals and objectives, including input on the following questions:
a. Does the Council want to include local hire requirements? If so, what are the Council’s goals in this regard? How would it like to define the “Local Area”? b. Does the Council want to include terms regarding the “Helmets to Hardhats” program, similar to Attachment 2? c. If the City opts to pursue a Citywide PLA, what is Council’s desired term for the agreement? The template included as Attachment 2 specifies a term of five years and will automatically renew for a subsequent five-year term absent any changes to the agreement. One of the cities surveyed elected to eliminate the automatic renewal, such that the agreement will terminate at the end of the five-year term unless the parties affirmatively agree to extend it. Some of the other cities opted to include express language about the parties’ ability to terminate the agreement. d. Are the template terms acceptable to Council or does the Council want to direct staff to negotiate changes? e. Are there any other objectives of the Council for purposes of developing a PLA policy or PLA? CONCLUSION:
If Council wishes to develop a PLA policy or a PLA, the City attorney and staff request that the Council provide direction on the questions outlined above and authorize the City attorney and staff to coordinate with the local BTC to develop a draft policy or agreement for the Council’s review and approval.
FISCAL IMPACT:
There is no specific fiscal impact to this action. However, requiring the use of a PLA may have a fiscal impact on the construction projects subject to the PLA (e.g., potential for increased project costs resulting from potential reduction in competition during bidding process). Additionally, implementation and administration of a PLA will require additional staff time and resources. Several cities have reported needing to hire one full time employee to manage PLAs.
Attachments:
Sample Definitions
Contra Costa Building & Construction Trades Council “Project Stabilization Agreement” Template Report to the City Council from the October 3, 2023 Meeting