The FAQs of PLAs in DC
Project Labor Agreements (PLAs) are sold on a pile of misinformation.
Get the facts about PLAs here.
Do PLAs result in higher wages in the District of Columbia?
No. The District of Columbia is covered by the federal Davis-Bacon Act. Therefore, the wages paid on District funded projects are set by the federal Davis-Bacon wage scale. PLAs do not increase - or have any impact whatsoever - on the wages paid for work District infrastructure projects.
What is PLA “wage theft?”
PLAs require contractors to deduct amounts required by union collective bargaining agreements from workers’ paychecks and pay them to union pension and benefit funds. The wage and benefit levels, however, are not different than the required Davis-Bacon wage scale. The issue is that the language below doesn’t change the level of wages and benefits, it changes the specific benefit fund from one where the worker keeps their contributions to the union’s multi-employer pension fund and healthcare plan for which the worker will not vest or receive benefits. Remember 89% of DC construction workers are not part of a labor union, so these contributions, which come from their paychecks, to union funds are of no additional benefit to them.
D.C. Soccer Stadium Project Labor Agreement
Further, most PLAs require workers to join a union and pay union dues while working on the project.
D.C. Soccer Stadium Project Labor Agreement
In practice, these provisions require all workers on the PLA project to contribute to union-run pension funds, union-run benefit plans, and to pay union dues. In most PLAs, these contributions are mandatory even if the worker is not part of the union. Workers do not recoup these stolen funds from the union when their time on the project is complete. These diverted wages are massive – up to 34% of a worker’s take home pay is effectively stolen from them.
The largest share of this wage theft comes in the form of mandatory contributions to union pension funds. This is particularly deceitful given that the worker will not vest in the pension fund during the course of their work on the project. In other words, money is taken directly from the worker and placed in a union pension fund, where it is kept and never returned to the worker. This is morally wrong.
How PLAs Steal the Take Home Wages of D.C. Construction Workers
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Nearly all multi-employer pensions have vesting and membership requirements that non-union workers have no chance of meeting. Furthermore, most multi-employer pension funds are severely underfunded, making them unlikely to be able to provide the benefits they promised to workers in any event.
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Many unions operate their own health and welfare – i.e., benefit – funds. These funds typically charge a “blended” premium to all workers, unlike most insurance plans which charge premiums based on whether a worker is single, married, or has children. An analysis of 13 union benefit plans shows that the average health insurance premium is 16% of a worker’s compensation. This compares to 7% of total compensation for market-based insurance. These union-operated funds appear to be gouging their members who are held captive to paying these exorbitant rates.
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Nearly all PLAs require workers to pay these funds even when they have no interest or desire to join the union.
For more information see: McGowan, John Ph.D. “Government-Mandated Project Labor Agreements Result in Lost and Stolen Wages for Employees and Excessive Costs and Liability Exposure for Employers.” October 2021.
Do PLAs result in fewer work disruptions or ensure labor peace?
No. This is a myth. No PLA can usurp a person’s First Amendment right to protest. In fact, the very terms of the PLAs acknowledge that work stoppages can occur. See Article 6, Section 4 of the PLA for the DC Soccer Stadium, which reads:
“Section 4. If there is a work stoppage or lockout dispute the parties agree to provide notice to an arbitrator from the panel, as described in Article VII below. Upon receipt of said notice, the arbitrator or his alternate shall sit and hold a hearing within twenty-four (24) hours if he believes that the work stoppage or lockout dispute still exists, but not sooner than twenty-four (24) hours after notice of such dispute is given to the Union.”
Work stoppages can and do occur on PLA projects. A few examples of work stoppages on PLA projects include:
Weill Cornell Medical Center (NYC)
Barclay’s Center (NYC)
San Francisco Airport
Trump Tower (Chicago)
Do PLAs ensure that District residents can work on DC-assisted projects?
No. In fact, the District’s First Source law and PLAs are directly incompatible. You cannot require or expect employers to meet First Source requirements when they do not get to select their own employees on a project. This is true even if the PLA includes a First Source requirement. They are just words on paper if the employer can’t select its own employees, which is the case in nearly all PLAs.
Explain pension withdrawal liability. Why don’t non-union companies work on PLAs?
PLAs require non-union companies to make contributions to multi-employer pension funds on behalf of their workers. But under ERISA law, the very act of making a contribution to a multiemployer pension fund obligates an employer for “withdrawal liability” when the requirement to make contributions (caused by the PLA) ends. Withdrawal liability is an employer’s share of any unfunded pension obligations, even though the employer has no role in managing the union pension funds and has made all the required contributions. The overwhelming majority of union multi-employer pension funds are mismanaged and severely underfunded meaning that withdrawal liability is a certainty.
Because this liability can be significant and is uncapped, non-union companies will not – indeed, cannot – work on PLA projects. Consider the case of J. Supor & Son Trucking Company, located in New Jersey. They agreed to work on a project covered by a PLA and made contributions to the Trucking Employees of North Jersey Pension Fund during their time on the project. It was a major mistake. Shortly after their work ended on the project, they were hit with a $700,000 demand from the pension fund for their share of “withdrawal liability.” This was more than the value of their contract on the project. This is not an isolated example. It’s illustrative of why PLAs block non-union construction firms from working on a project.
See: https://www.jdsupra.com/legalnews/third-circuit-joins-sister-circuits-in-9647788/
Haven’t non-union companies successfully worked on DC PLAs in the past?
The number of non-union companies that sign PLAs is small. Indeed, in the entire DC region, it can probably be counted on one hand. The overwhelming majority of non-union companies cannot work on a project if it requires signing a PLA.