Opinion ID: 2054068
Heading Depth: 1
Heading Rank: 3

Heading: What is a project-labor agreement?

Text: We do not intend this to be a treatise on economics or labor relations but merely general background for the issues as we understand them. For background information on collective bargaining in the construction industry, we draw on general reference materials, and primarily on an overview of the construction industry set forth in David B. Brenner, The Effect of ERISA Preemption on Prevailing Wages and Collective Bargaining in the Construction Industry, 1993 Det.C.L.Rev. 1123. In that article, Mr. Brenner explains the tremendous economic significance of the construction industry: The construction industry plays a strategic role in determining the health and vitality of the U.S. economy. Construction accounts for an estimated 7-15% of the nation's total economic activity. As of April 1993, Department of Commerce estimates for the total value of new construction at a seasonally adjusted annual rate was $444.4 billion. Public construction comprised $116.2 billion of that amount. Because of its large size, construction exerts its influence on other sectors of industry and impacts their labor relations. [ Id. at 1127 (footnotes omitted).] However, the author proceeds to observe that although the construction industry's economic significance may be national in scope, [t]here can be no replacement for the reality that, even if some of the individual components may change or are imported from outside a local labor market, the ultimate assembly of a bridge or a building remains a localized affair. Ibid. The pattern of employment in the construction industry is characterized by employee mobility. Workers are assembled for specific jobs. A general contractor often subcontracts portions of the job according to interest and ability. The subcontractors may also delegate various aspects of their work. As a result, the industry uses union hiring halls as a primary source of labor. (A hiring hall is a place where workers report and the union refers those workers to contractors for employment.) Obviously, to compete successfully in the market, a bidder must know the cost of labor for a job. What is known as a Little Davis Bacon Act or a Prevailing Wage Statute requires New Jersey contractors, as it does those in other states, to pay the prevailing-wage rate on public-bidding projects. N.J.S.A. 34:11-56.27. Because the construction industry is still substantially unionized, that requirement in effect means paying union wages on public jobs. Consequently, most public contractors have used union employees on public-works projects. Different unions, however, have different work practices. See supra at 16, 644 A. 2d at 80. Contractors also use prehire agreements to ensure labor-cost predictability. A pre-hire agreement is a contract agreed to by an employer and a union before the workers to be covered by the contract have been hired. International Ass'n of Bridge, Structural & Ornamental Iron Workers v. NLRB, 843 F. 2d 770, 773 (3d Cir.), cert. denied, 488 U.S. 889, 109 S.Ct. 222, 102 L.Ed. 2d 213 (1988). Initially, the National Labor Relations Board (NLRB) had determined that prehire agreements were illegal in that they designated an exclusive union representative for the employees before an election had been held. Recognizing the impact of that holding in the construction industry, Congress added section 8(f) to the NLRA in 1959. That section provides: It shall not be an unfair labor practice    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    because (1) the majority status of such labor organization has not been established    or (2) such agreement requires as a condition of employment, membership in such labor organization   . [29 U.S.C.A. § 158(f).] Thus, section 8(f) expressly authorizes negotiation, adoption, and implementation of collective-bargaining agreements in the construction industry without initial reference to the union's actual majority status and permits such agreements to contain union-security clauses. In that amendment, Congress specifically sanctioned established industry practices that the NLRB had previously found unlawful. However, although section 8(f) permits employers and unions in the construction industry to enter into prehire agreements that designate a union as the exclusive representative without a formal election, the employees, now union members, may vote to decertify the union as their exclusive representative, using the formal NLRA procedures. 29 U.S.C.A. § 159(e). Employees may belong to a local union of their craft that sends representatives to a council such as the BCTC. Among its other functions, a council may act as bargaining agent and it may conduct negotiations for its member unions. Generally, a council is financially supported by the local unions, which in turn pass on the cost to their members. Employers will often enter master agreements with councils such as BCTC to mitigate the effect of jurisdictional disputes among unions on the progress of construction projects. Such councils have been recognized as labor organizations for purposes of the NLRA. NLRB v. Metallic Bldg. Co., 204 F. 2d 826 (5th Cir.1953), cert. denied, 347 U.S. 911, 74 S.Ct. 473, 98 L.Ed. 1068 (1954); Southeast La. Bldg. & Constr. Trades Council v. Scheyd, Brennan, Inc., 334 F. Supp. 720 (E.D.La. 1971). A project-labor agreement is a form of master agreement limited to one project. Most such agreements require[] the contractors and subcontractors to recognize [a particular labor organization] as bargaining representative for all craft employees, to hire workers through the hiring halls of the [organization's] constituent unions, to require hired workers to join the relevant union within seven days, to follow specified dispute-resolution procedures, to apply the [organization's] wage, benefit, seniority, apprenticeship and other rules, and to make contributions to the    unions' benefit funds. In return for the [proprietor's] promise to insist that contractors sign the agreement, the [organization]    promise[s] the [proprietor] labor peace throughout the    life of the construction project. [ Associated Builders & Contractors, Inc. v. Massachusetts Water Resources Auth., 935 F. 2d 345, 360 (1st Cir.1991) (Breyer, C.J., dissenting), rev'd sub nom. Building & Constr. Trades Council v. Associates Builders & Contractors, Inc., ___ U.S. ___, 113 S.Ct. 1190, 122 L.Ed. 2d 565 (1993).] In this case, the TPA required contractors and subcontractors working on the Widening Project to enter into a project-labor agreement with the New Jersey BCTC, an AFL-CIO organization comprised of several different unions representing various crafts.