WASHINGTON — In a landmark ruling on the National Labor Relations Act and how it applies to the construction industry, the National Labor Relations Board has held that a labor union representing construction craft workers and the owner of an upcoming project cannot lawfully agree to require the owner’s construction contractor to sign a project labor agreement.
In the case, Glen Falls (N.Y.) Building and Construction Trades Council, 350 NLRB No. 42 (July 31, 2007), the project owner, Indeck Energy Services Inc., negotiated a project labor agreement with the local building trades council. Indeck develops, owns and operates cogeneration plants that sell electricity to industrial plants and back to the the local utility grid. The catch is that Indeck, as an owner, doesn’t employ members of the building trades and never had a collective bargaining agreement with any of them.
The unions and the owner had entered into an agreement providing that the owner would require its construction contractor to sign a project labor agreement. The NLRB found that the union “wanted a labor monopoly at a major construction site” and the owner’s primary “purpose was to remove the threat of union opposition to its efforts to secure regulatory approval of its cogeneration plants.”
Indeck, while it employed a lot of engineers, typically contracted with CRS Sirrine to act as its construction manager. In the Glen Falls case, Indeck wanted to negotiate the project labor agreement and then make CRS Sirrine follow it.
The case started in 1992. Over the years, two administrative law judges said it was OK for Indeck to negotiate a PLA, said John McNerney, general counsel for the Mechanical Contractors Association of America. McNerney said the case has been on hiatus for a number of years and the NLRB’s decision in July on the owner-versus-contractor issue could almost be considered a technicality.
It’s current practice for project labor agreements to be signed with a construction manager, general contractor or some other contractor that already has a bargaining agreement, McNerney said. He noted that as skilled labor is in shorter and shorter supply, PLAs may become more common as owners try to lock in a skilled workforce for the duration of their projects. It is MCAA’s preference, McNerney said, that all of the underlying terms and conditions of the collective bargaining agreements with the United Association locals be included in a PLA.
“This is extremely good news for both open shop and union contractors,” said Stephen E. Sandherr, chief executive officer of the Associated General Contractors of America. “The decision will reduce the top-down pressure on open shop contractors to change their labor policy, without regard to either their rights or their employees’ preferences. It will also protect the collective bargaining process, and the union contractors committed to that process, making it far more difficult for labor unions to bypass the companies actually employing their members, and to negotiate, instead, with project owners,” he added.