Another union-backed legal challenge to a state law protecting fair and open competition for taxpayer-funded construction contracts has failed. It is another big win for free enterprise and builds on existing case law permitting states to restrict these crony contracting schemes.
A federal court in the Eastern District of Louisiana May 27 ruled that Louisiana’s law prohibiting government-mandated project labor agreements (PLAs) on public works projects was neither unconstitutional nor preempted by the National Labor Relations Act (NLRA). In Southeast Louisiana Building and Construction Trades Council v. State of Louisiana, 13-370 (E.D. La. May 27, 2015), a consortium of construction unions brought suit against the state after being informed by the City of New Orleans that it would not enter into a PLA from the construction of a hospital; they sought to enjoin enforcement of SB76, passed by the Louisiana legislature in 2011.
The plaintiffs argued that Section 8(f) of the NLRA specifically permitted the use of “prehire agreements”—i.e., agreements between a union and employer covering not-yet-hired employees—in the construction industry. The plaintiffs argued that because the NLRA permitted such arrangements, Louisiana’s ban on such agreements was preempted.
The district court rejected this argument, holding that the law intended to govern the purchase of construction services on public works contracts with state funds: “Act 134 evidences the State’s entry into the market, whether legislatively or through individual public entities’ contracting decisions.”
The law permits firms to voluntarily enter into PLAs, which will allow all firms to compete on a level playing field and help taxpayer get the best possible construction project for the best possible price.
Plaintiffs can file an appeal by early July in the Fifth Circuit.
Similarly, the U.S. District Court for the Southern District of Iowa upheld a pro-neutrality executive order issued by Iowa Gov. Terry Branstad (R) in 2011. In 2013, the U.S. Circuit Court of Appeals for the 6th Circuit overturned a lower court ruling and upheld Michigan’s right to ban government-mandated PLAs on taxpayer-funded construction projects. And in 2002, the U.S. Court of Appeals for the D.C. Circuit upheld Executive Orders 13202 and 13208 issued by President George W. Bush, which prohibited government-mandated PLAs on federal and federally assisted projects from 2001 to 2009. ABC filed supporting legal briefs in each of these cases.
The only remaining challenge to state anti-PLA laws remains in the U.S. Circuit Court of Appeals for the 9th Circuit, where unions have sought to overturn Idaho’s anti-PLA law. At the district court level, a federal judge found the NLRA preempts the government neutrality statute adopted in 2011 and amended in 2012 by the Idaho legislature. On appeal by the state, the U.S. Circuit Court of Appeals for the 9th Circuit sent the case back to the district court for procedural reasons. The case was sent back to the circuit court.
Numerous studies show PLAs discourage merit shop contractors and subcontractors from competing for public construction contracts, thereby increasing costs to taxpayers and discriminating against the 94 percent of Louisiana’s construction workforce that does not belong to a labor union. PLAs typically force contractors to hire most or all of their craft employees from union hiring halls; follow inefficient union work rules; hire apprentices exclusively from union apprenticeship programs; and pay into union benefit plans on behalf of employees, even if they have their own qualified benefits programs. PLAs force employees to pay union dues, accept unwanted union representation, and forfeit benefits earned during the life of a PLA project unless they join a union and become vested in union benefit plans.
West Virginia Gov. Earl Ray Tomblin (D) became the first Democratic governor to sign legislation banning PLA mandates on March 26, becoming the 22nd state to ban government-mandated PLAs. Additionally, the Arkansas state legislature voted with unanimous, bipartisan support to codify a long-standing executive order banning PLA mandates into state law earlier this year.