U.S. Circuit Court Upholds Michigan Ban on Project Labor Agreements

Opposition to PLA adFor some two decades, Project Labor Agreements, or PLAs, have enabled unions in various states to dictate hiring for large-scale, taxpayer-funded construction projects. In Michigan, at least, this labor monopoly has been thwarted. On September 6, the U.S. Court of Appeals for the Sixth Circuit upheld a Michigan law, Public Act 238, enacted last year to bar the use of government-mandated PLAs. The legislation was a response to a lower court ruling in favor of the Michigan Building and Construction Trades Council, an AFL-CIO affiliate. The latest ruling marks a second major victory this year for the open shop; New Jersey Republican Governor Chris Christie in April vetoed a bill that would have mandated PLAs for coastal-area reconstruction in the wake of Hurricane Sandy.

Project Labor Agreements, as Union Corruption Update explained in relation to the New Jersey situation, are a way for unions to reverse the decades-long decline in their share of the construction industry labor force. PLAs operate as pre-hire agreements that force open shop (or “merit shop”) contractors to hire union labor on many, if not all, aspects of public works projects such as highways, bridges, tunnels, power plants and schools. Though legal under the National Labor Relations Act, these exercises in union monopoly didn’t become mandatory until the U.S. Supreme Court in 1993 upheld the constitutionality of a Massachusetts master PLA that applied to the Boston Harbor cleanup. At the federal level, Presidents Clinton and Obama each have issued executive orders “encouraging” the use of PLAs on major federally-funded projects. The Obama minimum project threshold is $25 million, determined on a case-by-case basis.

In Michigan, the status of such agreements has been a see-saw match for the last couple of years. In 2011, the state legislature passed, and Republican Governor Rick Snyder signed, the Fair and Open Competition in Governmental Construction Act (Public Act 99), barring the use of Project Labor Agreements on state, local and publicly-funded projects. The Michigan Building and Construction Trades Council, along with council affiliates of Genesee, Lapeer and Shiawassee Counties, filed a suit in U.S. District Court for the Eastern District of Michigan to enjoin enforcement. The court in February 2012 ruled on behalf of the council. U.S. District Judge Victoria Roberts concluded the Michigan legislature had attempted to “impose its own definition on fairness in labor relations.” The GOP-majority legislature, in response, passed Public Act 238, which amended the Fair and Open Competition Act in ways that addressed the court’s concerns. Gov. Snyder signed the measure into law. Once again, the construction union council filed suit to block enforcement. And once again, a district court ruled in its favor. But this time, the Snyder administration appealed – and won. On September 6, a circuit court ruled that a PLA ban is a valid exercise of state authority to promote freedom in contracting.

The AFL-CIO hasn’t indicated yet whether it will appeal the case to the U.S. Supreme Court. For now, open shop contractors are savoring the moment. “This landmark decision ends union-based discrimination in the Michigan construction industry and ensures taxpayers get the fiscal accountability they deserve,” said Chris Fisher, president of the Michigan affiliate of Associated Builders and Contractors (ABC), an Arlington, Va.-based merit shop trade association. “This decision has national implications and makes crystal clear that Michigan and other states can pursue equal opportunity in public contracting regardless of labor affiliation.” Michigan is one of 18 states to ban the use of government-mandated PLAs and one of two in which a federal court has upheld a PLA ban; in September 2011, a U.S. District Court upheld an executive order issued in January of that year by Iowa Republican Governor Terry Branstad barring their mandatory usage.


Gov. Christie Vetoes New Jersey Project Labor Agreement Bill; Rebukes Unions

Unions Push Project Labor Agreements for New Jersey Rebuilding