Last month a New Jersey contractor filed a lawsuit alleging that the requirement of a project labor agreement on the Scudder Falls Bridge cost the taxpayers of New Jersey and Pennsylvania over $70 million. If the contractor prevails, it could be a major blow to the use of PLAs by government entities.
Project labor agreements are often required on public works project to ensure that union contractors are selected for the project. They are, in essence, a pre-hire collective bargaining agreement with union contractors that allow the union contractors to set the wage rates and benefits for all employees working on the project. PLAs often require that all employees working on the project be hired through a union hall. A challenge to PLAs is that they limit the contractors that are eligible to bid on a project.
George Harms Construction Company filed the lawsuit, alleging that political contributions by various union contractors enabled the unions to sway members of the Scudder Falls Bridge Commission to require a PLA on the bridge replacement. Harms Construction points to communications between the politicians that the PLA was custom made for the members of the Philadelphia Building and Construction Trades Council at the expense of rival union and non-union contractors.
Harms Construction alleges that the PLA made it impossible to use his employees, or any other employees, who weren’t part of the Philadelphia Trade Council. Had Harms Construction been able to utilize its own employees, Harms Construction’s bid would have been within the range estimated by the engineer on the project. Instead, Harms Construction alleges, the bid accepted on the project was more than 20% above the engineer’s estimate.
Harms also alleges that the Bridge Commissioners had clear conflicts of interest because they represented union members and had an obligation to look out for the best interests of those that would ultimately pay the tolls to use the bridge. Instead of looking out for the toll payers, the Bridge Commissioners favored union members.
Take Away: While we don’t know how this lawsuit will play out, the allegations make clear the cost impact (increase) that PLAs can have on public projects. If you are looking at a project that is tied to a PLA, we recommend you discuss your options with an experienced construction attorney.