Wisconsin Senate Levels the PLA-ing Field: Passes Bill to Minimize Cost of Public Works Construction Projects

By: Weld Riley Attorney Bryan Symes

Last week, the Wisconsin Senate, along strict party lines [a 19-13 vote], passed a controversial bill [Senate Bill 3] aimed at reducing the cost of public-works construction projects by prohibiting state and local governments from requiring the use of “project labor agreements,” or “PLAs,” in connection with such projects.

Weld Riley Attorney Bryan Symes

PLAs are a species of collective bargaining agreement between private-sector construction contractors and labor unions, which apply to a specific construction project only, and only for the duration of the specific construction project. PLAs are commonly referred to as “prehire” labor contracts, because the parties often enter into them: (1) without a union first being certified through an NLRB election or first being recognized after demonstrating majority support; and (2) even before the construction contractor hires any employees. PLAs are unique in another important respect too–at the termination of the project, the construction employer is not required to bargain with the union over a successor labor agreement.

For many within the management community [especially the free-market apologists and libertarians within the management community], PLAs are viewed as creating, or contributing to, unnecessarily high completion costs.  According to proponents of Senate Bill 3, PLAs drive up construction costs through the establishment of inflated, non-market wages and benefits [often anchored to “prevailing wage” standards].  For the defenders of PLAs, common justifications ostensibly include “local control” and efficiencies created by the use of skilled labor on construction projects.  Setting the politics aside, I have received a number of questions from clients about the legality of the proposed prohibition on the use of PLAs.  As explained briefly below, there is reason to believe that Senate Bill 3, if ultimately passed in the Assembly and signed into law, will withstand judicial scrutiny.

The NLRA expressly permits the use of PLAs.   To that end, state and local regulation of activities protected or prohibited by the NLRA [e.g., the use of PLAs] are generally preempted by federal law–meaning federal law trumps and nullifies the inconsistent state/local regulation that treads upon the “integrated scheme” embodied in federal law [for Constitutional junkies, we’re talking about the Supremacy Clause].  However, when a governmental unit acts in its capacity as market participant [a mere purchaser of goods and/or services, for example], as distinguished from its capacity as a regulator, preemption principles generally do not apply.   In the context of PLAs, the majority position appears to be that imposing laws prohibiting state and local units of government from requiring PLAs in connection with public construction projects is not regulatory in nature–but is instead one way a state may act as a market participant–meaning laws like Senate Bill 3 are not preempted by the NLRA.

Finally, whether Wisconsin’s right-to-work law prohibits the use of PLAs remains to be seen–but courts in other right-to-work states have allowed PLAs to stand, as long as the PLAs do not require union membership as a condition of employment in connection with the construction project.

The State Assembly is expected to pick this up sometime in March–so this is definitely something worth watching closely.