Another Hidden PLA Problem: Apprentice Fringe Benefit Contributions

0 April 7, 2010  State & Local Construction, Uncategorized and ABC routinely field questions from contractors about the risks and dangers of signing project labor agreements (PLAs).

This summary of a recent case by labor attorney David P. Wolds of the Wolds Law Group of San Diego, CA is yet another example of how a contractor trying their best to comply with the rigged procurement process through typical PLAs can still get burned when attempting to follow Big Labor’s discriminatory and costly PLA rules.

The facts of this case are important because they discredit assertions made by PLA proponents that PLAs allow the use of nonunion apprentices on a PLA project.

In this case, a nonunion contractor signed a PLA that was part of the bid specifications for a project at the Los Angeles Unified School District (LAUSD). The contractor requested apprentices from the applicable International Brotherhood of Electrical Workers (IBEW) union program, as required by the PLA.  The IBEW program failed to dispatch apprentices, so the contractor requested apprentices from a nonunion program – a practice thought to be permissible under this particular PLA. The nonunion program provided 17 apprentices, who had received the appropriate training for the project.

Subsequently, the IBEW and its related trust funds sued the contractor in federal court, contending that the contractor should have paid journeymen wages and benefits to the apprentices because they were not dispatched from the applicable union apprenticeship program as specified in the PLA.

The lead negotiator for the Los Angeles and Orange Counties Building and Trades Council who participated in drafting the PLA was allowed to testify that the parties intended the term “apprentice” to mean only apprentices in union training programs. Earlier drafts of the PLA, which were entered into evidence, demonstrated that any broader definition of “apprentice” had been repeatedly rejected. The IBEW business manager also testified that a person cannot be an “apprentice” under the labor agreement unless the person signs an apprenticeship agreement with the IBEW.  Therefore, all apprentices must come form union programs, nonunion apprentices are not recognized and are actually journeyman, and the employer should have paid journeyman level benefits into union funds.

On November 3, 2009, a district court judge ruled that the PLA required apprentices to come from union programs. The judge awarded the union $272,738.63 in underpaid trust contributions, including interest of $55,940.34, along with liquidated damages of $55,940.34 and additional auditor fees of $7,177.50.

This contractor was given a rude lesson about signing agreements with construction unions to work for fiscally unaccountable and irresponsible local governments.

The court avoided ruling directly whether nonunion apprentices were permitted on the PLA project.  Instead they ruled that nonunion apprentices should have been paid journeyman wages and were therefore journeymen.

This case study undermines promises by PLA advocates that PLAs permit the use of nonunion apprentices on a PLA project. The IBEW witness testified that apprentices from nonunion programs were not welcome on this particular PLA project.

This case serves as an strong example of how PLAs discourage competition from nonunion contractors and their nonunion employees and apprentices.

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