Demystifying Sample Project Labor Agreements: A Detailed Handbook

Getting to Know Project Labor Agreements

A PLA, or Project Labor Agreement, is defined as an agreement between labor and management that establishes, for the duration of the project, the terms and conditions of employment for everyone who agrees to work on a particular construction or infrastructure project. PLAs can apply to both unionized and open shops. They are typically entered into on a project-specific basis, because they are intended to apply to a specific project, not a general pattern of pay, work rules, or dispute resolution procedures .
The concept behind a PLA is simple: construction and infrastructure projects have a relatively short duration, and often require a large number of workers for a short period of time. A PLA provides a predictable and seamless labor force for projects by providing certainty to contractors and subcontractors that its workers will be able to work on the local project, and certainty to workers that they will benefit from union hall dispatches, union wages, hours, and benefits. Because project owners will be under a heightened constructible budget with most of the labor market organized under the PLA, they will also be provided cost certainty in labor workers’ pay.

Essential Elements of a Sample Project Labor Agreement

A sample agreement starts with a list of preambles and identifies the parties (the building contractor and the appropriate union) who agree on the under listed premises. It then states the compulsory and optional coverage, the name of Signatory Unions, Project Hiring Hall conditions, job assignment provisions, term of the PLA, and how the execution of the agreement is done.
The next section lists the Wage Hours and other Economic Conditions. This part states the minimum wage or general wage decision and work hours and a list of work classifications. It also includes an agreement on the manner of payment of wages and the various fringe benefit trust funds as well as the method and timing for those payments. Then it follows up by stating those other advantages and conditions of its implementation.
Another important feature in the sample PLA is the Non-Discrimination clause, where it prohibits any discrimination based on race, color, religion, sex or age. It also covers the protection from personal attacks, intimidation and harassment from anybody for the purpose of the agreement.
Significance of the dispute resolution procedure is seen in its third section. This section explains and lays down the grievance procedure stating the mode of settlement through mutual agreement, mediation and arbitration. The section further prescribes the method for resolving jurisdictional disputes and clarifies the binding effect of either the Voluntary Labor Arbitration Rules or Labor-Management Relations Act, as applicable.
The forth section identifies the type of labor neutrality and matching funds agreement. It states that the agreement may either be a union security provision or a labor neutrality clause. This section reflects the type of neutrality it adopts.
The last part of a sample PLA addresses the scope of the create Employment and Project Completion Clause. This section reflects the nature of employment. It states that employment on the project is contingent upon the disqualification of the employer from it. It then states the effect of the failure in meeting its requirements when project completion fails.

Advantages of Adopting a Sample Project Labor Agreement

A Sample PLA is tremendously worthwhile because it can help to ensure labor harmony on the project and ultimately save time. A Sample Project Labor Agreement is the best way to avoid unnecessary and oftentimes time-consuming disputes on the project. If the success of a project is to be measured by having an efficient crew working in harmony with labor friendly subcontractors, then a Sample Project Labor Agreement is an easy way to help make this a reality. The most common pitfalls of any construction project are the potential for labor disputes that can arise from strikes, slowdowns, jurisdictional and contractual disputes. A Sample Project Labor Agreement helps avoid most of these pitfalls. Containing all of the rules and regulations governing the contract, a Sample Project Labor Agreement leaves little room for both personal and collective bargaining interpretation. A Sample Project Labor Agreement does it all right off the bat which in turn will save time and money for the project owner and other parties involved in the project.

Limitations of Project Labor Agreements

While there are many potential benefits associated with PLAs, they are not without drawbacks. A drawback that can flare up in the middle of a project is the problem of changing conditions on a project. A contractor that has signed a PLA and does not want to hire workers under a union agreement may encounter problems if the conditions simply do not allow it to follow the terms of the agreement. For example, a contractor might encounter bad weather, loss of its own subcontractors, or be underbid. In these cases, it may not be able to meet its PLA obligations of what employees to hire and the sequence in which to hire them.
Another drawback of a PLA is that it limits flexibility in dealing with changes. But this drawback may not be as significant in practice. Sometimes, the imposition of uniformity in hiring can prevent the "cutthroat competition" that may produce lower wages and poorer safety practices on the job site ("Saving Workers’ Lives with Project Labor Agreements") and may ultimately be a benefit.
One criticism of PLAs is that they can result in increased costs. But this is not uniformly supported by empirical studies ("Project Labor Agreements: The Result of Ideology Over Feasibility"). Some studies have actually shown a reduction in construction costs associated with the use of PLAs ("Project Labor Agreements: The Result of Ideology Over Feasibility"), generally due to the time saved from a reduction in work stoppages and the creation of a stable workforce from use of local contractors (also because PLAs require a union to take measures to prepare its members for upcoming construction). PLAs have also been shown to have a positive effect on the local economy due to the reported use of local business participating in a joint venture with a union signatory contractor. This increases the number of competitors and can keep prices down for construction projects in the area. Although sometimes cities pay for an increase in non-local use, in those cases the local economy may still benefit from the fact that all workers are union members with likely higher wages and benefits.
But the imposition of a PLA means that hiring and firing must be conducted according to the terms of the PLA. Many PLAs contain hiring hall provisions, which mean that the contractor cannot simply hire who it wants at any time it wants. These provisions can reduce flexibility in hiring and perhaps force contractors to hire a union member that it does not want, even if it would not force that contractor to hire perhaps one of its current employees because several applicants were chosen through the hiring hall process. Also, the requirement that all subcontractors be required to sign the PLA can make it difficult for a prime contractor to move quickly and substitute a subcontractor that is not performing well.
Increased competition can be a real drawback to some prime contractors. When everyone is forced to use the same labor pool, their costs become similar, meaning that they need to strengthen their other offerings if they hope to win a bid. The uniform toolbox makes it possible to focus on price and put pressure on contractors to offer more than just a high bid. Not only do PLAs force the exposure of a contractor’s "nitty gritty numbers," but they require the contractor to think outside the box to offer something unique to get the job.
Another problem is the uncertainty that can arise, particularly in government work when the terms of the PLA or its applicability may be challenged, or when the terms are challenged under federal law. In some cases, challenges can be time-consuming or even prevent construction from moving forward. One example was when the U.S. Department of Labor found that a PLA for the Port of Baltimore on a project to rehabilitate and upgrade part of the Howard Street Tunnel violated the Davis-Bacon Act and ordered the state of Maryland to withdraw its invitation for bids ("Construction on Port of Baltimore PLA Halted by DOL"). The contractors had bid on the project assuming the PLA would be part of the contract but were not pleased when they were ordered to use federal labor standards. They could not advance in the bidding process until they complied with that order, meaning it would be more than a year before the first earthmoving equipment would even be moving into place.

How to Create a Sample Project Labor Agreement

The drafting of a Sample Project Labor Agreement ("PLA") is critical to ensuring the success of the project, and failure to conduct a thorough process may lead to dissatisfaction among subcontractors and offerors, as well as line-item costs of the "wrong" decisions.
The process begins with an understanding of the requirements: The decision to use a PLA should be made with full consideration of the many ways a PLA can affect the project. Successful negotiation will rely on a clear picture of the work to be performed, the schedule, and a clear idea of the desired outcome of the project.
As an initial step, obtain a summary of the SCLT specifications, including the work to be performed, the expected schedule, types and numbers of craft workers on-site, job and trade classifications, and a rough idea of quality standards. For example, whether a PLA should be drafted on a long-term (i.e., project-specific) or short-term (i.e., individual trade-specific) basis can be determined by the scope of the work to be performed. A boiler room renovation project close to completion calls for a different PLA approach than a 130,000-square foot new start-up manufacturing facility .
In order to formulate the appropriate PLA template, it is critical to engage in open discussions with key stakeholders, including the prime contractors, general contractor, the union leadership, and the owner. PHAs and SCLTs should meet with representatives of the general contractor and union representatives at the earliest opportunities to discuss the nature and requirements of the project. PHAs and SCLTs should also engage union representatives in discussions of the nature and requirements of the project to determine the availability of qualified labor and/or the assistance offered by the union in recruiting qualified craft workers to come to the Project site.
The minimum schedule requirements for each PLA template should be outlined in the Drafting Guide’s Designated Craft Scale, which lists the start and completion dates for completion of each of the construction tasks to be performed on the project. This Scale is critical in determining the length of the PLA, including, among other things, the periods for (1) renewal of the PLA; (2) bidding of the work; (3) challenge periods; (4) completion of work required by the PLA; and (5) time to complete payment of claims.
Finally, based on the information gathered above, develop a sample PLA that reflects the appropriate approach to the Project. The draft PLA should address the following:

Case Examples of Successful PLA Usage

Case Study 1: The Minnesota 35W Bridge Project
The I-35W St. Anthony Falls Bridge in Minneapolis was a project which had received support from both the building and construction trades, as well as the Minnesota Department of Transportation. A PLA was signed for this major project on June 8, 2006, between the Minnesota Department of Transportation and the affiliated Building and Construction Trades Council of Minneapolis – St. Paul and Vicinity, the National Electrical Contractors Association, and the Association of General Contractors of Minnesota. The agreement was ratified by the executive committee of the Minnesota Department of Transportation and the Executive Board of the Building and Construction Trades Council on June 21, 2006.
The 35W bridge had been a long-awaited and much-needed project to span the Mississippi River, and the estimated cost was $220 million. The project attracted millions of dollars in federal funds, which included requirements that the contract be awarded as the result of competitive bidding and that union labor only be used if the project was built as a PLA. At the time, it was the largest project to be built under a PLA, which would include 75,000 to 100,000 craft work hours and an estimated 350 workers per day at its peak, with 60% of employment being represented by union workers.
A PLA agreement was especially important because over 40% of the work was expected to require skills in bridge construction and design, bridge maintenance, demolition, demolition clearance, and bridge CPTED (crime prevention through environmental design). These specialized skills were only available from the organized building and construction craft unions. The normal construction agreement would have called for a $5.00 per hour add-on (or local hire preference) for all work that was subcontracted to any non-union subs. A PLA eliminated this issue.
Case Study 2: Building a New Prison in Minneapolis
After several years of community discussion with neighbors, public officials, and criminal justice leaders, a new 468-bed juvenile facility was built to replace the old and overcrowded facility that was originally built in 1905. The new facility, located in Minneapolis, Minnesota, included many new innovations as well as a rooftop garden and a green roof. The new facility was approximately 125,000 square feet and housed 12 residential programs, which included student classrooms, a full-service kitchen, dining areas and a gymnasium, and an area for community-based services. Approximately 64% of the area where the facility was located was a designated brownfield site (an area previously contaminated from present or past commercial activities), and the design and construction for the building had to be fully capable of addressing existing groundwater and soil vapor contamination. The rough estimate for the cost of building the new facility was $33 million, and the City was going to fund a portion of its construction from the City’s general fund. In addition, the job impact from building a new facility was estimated to be in excess of 295 craft employees, with 162 – 295 crafts to be employed the first year and 253 – 303 crafts the second year for the project.

PLAs Across Various Fields

In addition to the use of PLAs by public entities on construction projects, they are applied in the private and utility sectors as a means to ensure a steady flow of labor for large-scale projects. Energy companies, transportation agencies, large technology firms and major manufacturers all find PLAs useful to ensure their needs for skilled craftsmen will be met. Some examples include the use of PLAs by Boston Edison for its Harbor Reliability Project in the late 1990s; the use of PLAs by Pacific Gas & Electric Company, Southern California Edison and San Diego Gas & Electric for their respective Power Purchase Agreements; the use of such agreements in California by Sierra Pacific, Nevada Power Company and Salt River Project on their State Transmission System Reinforcement Projects in the early 2000s; the use of PLAs on school construction in Duval County, Florida; and on transportation projects funded with Boston’s "Big Dig" financing. PLAs are also routinely used in vertical construction in the entertainment industry (Walt Disney, Universal Studios, MGM, Sony/Columbia).

The Next Developments in Project Labor Agreements

The future of PLAs will likely be influenced by ongoing changes in labor laws, increasing use of technology on job sites, and shifting expectations from stakeholders such as owners, contractors, and workers.
Labor Laws. Labor laws and regulations are always in flux, which can impact PLA agreements. For instance, proposed legislation may place additional restrictions or requirements on the use of PLAs, while new laws could relax some current regulations. An analysis of all relevant laws is essential to ensure compliance.
Technology in the Workforce. Technology has and will continue to have a significant impact on PLAs. As new technologies emerge in the construction industry, including automation and artificial intelligence, PLAs will need to evolve to address the training, reskilling , and transitioning of workers whose jobs are affected by these developments.
Stakeholder Expectations. The expectations of various stakeholders for the use of PLAs also continue to change. Owners and contractors may push for PLAs for reasons such as cost savings, project efficiencies, and labor certainty. They may also seek PLAs to enforce their community hiring requirements, as PLAs can be used to require priority hiring and training for workers from the relevant geographic area. On the other hand, opposition to PLAs is rising in certain communities, with anti-PLA advocacy groups arguing that PLAs limit competition and increase costs. The stated rationale for this opposition is that PLAs favor unionized workforces. However, while unions are major players in PLAs, non-union and open-shop contractors can also participate in the benefits provided by PLAs.