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By: Kendall Jones on June 7th, 2017

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Missouri Bans the Use of Project Labor Agreements

Industry News | Blog Posts

Last week, Missouri Governor Eric Greitens signed legislations effectively banning the use of project labor agreements (PLAs) on public construction projects. The new legislations basically extends the current ban on state agencies from requiring PLAs to also cover local governments. Previously, state and local agencies were barred from mandating the use of PLAs on projects where the state funded more than 50% of the construction costs.

As a penalty, any agency or local government that requires the use of a Project Labor Agreement on a construction project would be ineligible to receive any state funding or tax credits for two years.

Earlier this year, Governor Scott Walker of Wisconsin and Governor Terry Branstad of Iowa both signed legislation banning state-mandated project labor agreements. The Iowa bill reinforces an executive order signed by Governor Branstad back in 2011 and extends to local governments who fund their own projects.

They join a growing list of states that have barred the use of PLAs that include: Alabama, Arizona, Arkansas, Georgia, Idaho, Kansas, Louisiana, Michigan, Mississippi, Montana, Nevada, North Carolina, North Dakota, Oklahoma, South Carolina, South Dakota, Tennessee, Utah, Virginia and West Virginia. States with limited union representation or with right-to-work laws typically have laws barring the use of PLAs on public projects.

On the flipside, California, Connecticut, Hawaii, Illinois, New Jersey, New York, Washington and Illinois all have legislation or executive orders that authorize or encourage the use of PLAs.

A PLA is essentially a collective bargaining agreement establishing conditions and terms of employment for a construction project through local unions or labor organizations and project owners. The terms of a PLA set wage rates, benefits and working conditions for both union and nonunion workers. Provisions to prevent work stoppages due to strikes and lockouts are common in PLAs.

Opponents of PLAs claim they are anti-competitive and inflate construction costs. Because PLAs often rely on a union or unions to act as representatives for employees, nonunion contractors are less likely to bid on these projects. Contractors are not involved in negotiating PLAs like they are in traditional collective bargaining agreements.

Supporters of using PLAs argue that workers, both union and nonunion, are protected with pre-established wages and benefits. This is also supposed to level the playing field for contractors bidding the project because they can’t pay lower wages to workers in order to underbid the competition. PLAs are supposed to guarantee access to skilled labor and a trained workforce.

Legislation that would prevent government agencies from being able to mandate the use of PLAs on federally funded construction projects has again been introduced in both the House and Senate.

The Fair and Open Competition Act (H.R. 1552/S. 622) was introduced by the 115th Congress this year. The House version has been reported out of committee. Similar bills have been introduced during the past nine Congresses with none of them getting passed.

The website GovTrack.us, which tracks federal legislation, gives the House bill a 1% chance of being enacted. The Senate version fares slightly better with a 2% chance of being enacted.