PLA Struck Down: New, Stricter Requirements Set for Future Use
On January 11, 2019, the Pennsylvania Commonwealth Court struck down a Project Labor Agreement (PLA) contained in a bid solicitation on a PennDOT project that required the use of union labor. The ruling also set stricter requirements for the use of PLAs on public projects in the Commonwealth and described certain factors that generally will invalidate the use of a PLA.
PLAs in Pennsylvania
PLAs are pre-hire collective bargaining agreements that establish the terms and conditions for labor on specific construction projects. When required by an owner (whether public or private), PLAs typically mandate that labor comes from union hiring halls, while prohibiting labor strikes, picketing, and lockouts during the project.
Advocates tout PLAs as effective for managing project costs and preventing project delays. Opponents have argued that PLAs are politically-driven and anti-competitive, thus increasing costs and discriminating against non-union contractors.
Although certain municipalities in Pennsylvania, like Philadelphia and Pittsburgh, have issued executive orders requiring the use of PLAs on projects that meet specific criteria, Pennsylvania itself has no law permitting, requiring, or prohibiting the use of PLAs on construction projects.
The Pennsylvania Commonwealth Court Addresses PLAs in 2019
In Allan Myers, L.P. v. the Pennsylvania Department of Transportation, the Pennsylvania Commonwealth Court struck down a PLA requirement in a bid solicitation for a highway construction project. The Project was a multi-phase project involving street improvements in Montgomery County, Pennsylvania. The first phase of the Project was completed on budget and a year ahead of schedule. When the second phase was let to bid, the solicitation included a requirement that all contractors sign a PLA, which required full use of local union labor and contained “no strike” provisions. Backlash prompted PennDOT to re-issue the solicitation with a carve-out: bidders affiliated with United Steelworkers were not subject to the PLA’s hiring requirements and could use their own workforces. PennDOT argued that it was justified in using the PLA because it needed to ensure timely performance.
A contractor–Myers–challenged the solicitation on the grounds that it discriminated against non-union contractors and violated the Pennsylvania Constitution. The Commonwealth Court agreed. The Court recognized that PLAs on public projects have been challenged and approved by Pennsylvania courts before, but those cases involved “extraordinary circumstances” (for example, the state would lose its funding if the project was not completed on time, there were labor shortages, a school needed to open by the start of the semester, a prison had safety concerns from a growing inmate population). In reaching its decision, the Court delineated some general requirements for implementing PLAs:
- “Extraordinary circumstances” are necessary
- Inconvenience to drivers generally will not constitute “extraordinary circumstance” on a highway project
- PLAs generally cannot force non-union contractors to use union labor exclusively
- Certain contractors cannot be given special treatment based on their union affiliation
This last point was not entirely new, but it stood out significantly in Myers due to PennDOT’s carve-out for United Steelworkers. The carve-out did not subject the United Steelworkers to the “no strike” provisions, and the Court reasoned that this undermined the argument that a PLA is necessary for timely completion. Last, the Court noted that it did not help PennDOT’s position that the first phase of the Project was completed one year ahead of schedule using a non-union contractor.
At this time, Myers is controlling law for the use of PLAs on public projects.
Use of PLAs on Public Projects: A More Rigorous Challenge
Myers did not invalidate PLAs but simply limited the circumstances in which they can be used. Public entities (and private owners) will certainly continue to use them on projects. Contractors, however, should be aware that where there are PLAs, they must meet specific requirements to be valid and that they may be challenged in court successfully. As a result, contractors looking to bid projects using PLAs should be aware of their ability to challenge, and that challenges posed by other contractors may delay the project and potentially invalidate bid solicitations.