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April 17, 2014

Déjà vu All Over Again: Michigan Meets Another Roadblock in Effort to Limit Project Labor Agreements

The State of Michigan has met another roadblock in its efforts to limit the use of Project Labor Agreements (PLAs). A federal judge in Detroit has enjoined the State’s second attempt to restrict the use of PLAs in construction in the state. Governor Rick Snyder has now taken two swipes at limiting the use of PLAs in the State and the second try was just swatted away in much the same fashion as the first. 

For the uninitiated, a PLA is pre-hire agreement in which a project owner, or a construction manager, or even a public entity negotiates an agreement with a union or unions which requires that any contractor or subcontractor working on the job must accept the terms and conditions of employment as set forth in that PLA for all individuals who work on the job site. Effectively, PLAs require either that union contractors do the work or that non-union contractors agree to be bound by the previously negotiated agreement which can have some lasting impact for those merit shop contractors. 

On July 19, 2011, the Governor signed the first attempt at limiting PLAs – The Michigan Fair and Open Competition in Government Construction Act.  But soon thereafter two union building trade councils filed suit challenging the legality of the statute.  In February 2012, Federal Judge Victoria Roberts enjoined enforcement of the statute determining that the Act was preempted by the National Labor Relations Act.  In her Opinion, Judge Roberts determined that the Michigan statute was regulatory and was, therefore, preempted.  In summary, she concluded that the statute effectively banned pre-hire labor agreements on all government construction projects and because the use of PLAs are protected concerted activity under Section 7 of the National Labor Relations Act, the statute interfered with protected federal rights. 

Judge Roberts entered a permanent injunction against enforcement of that statute.  Her decision remains on appeal to the United States Circuit Court of Appeals for the Sixth Circuit.   

Undeterred, the Governor in June, 2012 signed a new version of the anti-PLA bill.  The 2012 Act removed the statutory language prohibiting the use of PLAs by private actors.  However, it still effectively prohibited the use of PLAs by public entities.  

The operative language from the 2012 Act is:                                                                                                                                            

A governmental unit shall not enter into or expend funds under a contract for the construction, repair, remodeling, or demolition of a facility if the contract or subcontract under the contract contains any of the following: 

(a) A term that requires, prohibits, encourages, or discourages bidders, contractors or subcontractors from entering into or adhering to agreements with a collective bargaining organization relating to the construction project or other related construction projects. 

(b) A term that discriminates against bidders, contractors, or subcontractors based on the status as a party or non-party to, or the willingness or refusal to enter into, an agreement with a collective bargaining organization relating to the construction project or other related construction projects. 

When Snyder signed the 2012 Act into law, it brought praise from the president of the Associated Builders and Contractors of Michigan Chris Fisher, saying that the law prohibited discrimination in Michigan construction based on labor affiliation.   However, Judge Roberts was about to disagree again.  The Michigan Building and Construction Trades Council went back to Federal Court, filed a second lawsuit to enjoin the new Act, and Judge Roberts again permanently enjoined enforcement of the new Act.  Despite the changes made in the 2012 Act, Judge Roberts again concluded that the acrossthe-board ban on the use of PLAs by the government enters an area of the law that is preempted by the National Labor Relations Act. The trial court stayed enforcement of the Order and the State has appealed this decision as well to the Sixth Circuit. 

© 2014 BARNES & THORNBURG LLP

About the Author

Gerald Lutkus, Labor and Employment Attorney, Barnes Thornburg, Law Firm
Partner

Gerald F. (“Jerry”) Lutkus is a partner in the South Bend office of Barnes & Thornburg LLP where he is a member of the firm’s Labor and Employment Law and Litigation Departments. He practices in the areas of labor and employment law counseling and litigation, arbitration, collective bargaining, media law, including counseling of and defense litigation for media companies and commercial and business litigation.

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