Labor policy changes construction contractors should know about

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Recent developments in construction labor policy will change the labor practices of construction contractors who work on federal projects according to a posting on Finance & Commerce.com by John Hickey, an attorney for Jordan Schrader Ramis PC.  Although Congress is unlikely to enact new labor legislation anytime soon, federal agencies are changing labor policy by adopting new regulations and reinterpreting existing regulations.

Employee Free Choice Act

If enacted, the Employee Free Choice Act would make it easier for unions to organize employees (through “card check”), remove an employer’s right in most situations to negotiate a labor contract with a union, and increase the penalties for unfair labor practices committed by an employer. The card-check provision is the most prominent part of the EFCA because it would often eliminate the traditional secret-ballot election to determine whether employees support a union. Under the provision, if a union got a majority of bargaining unit employees to sign authorization cards and the National Labor Relations Board validated the cards (its card check), the union would be certified as the employees’ representative.

Although it was expected that some form of the EFCA would become law in 2009, setbacks kept that from happening. Throughout most of 2009, congressional focus was on health insurance reform. Also, a handful of Democratic senators announced their opposition to the EFCA.

But union leaders have not given up and have recently disclosed a new strategy of looking for an unrelated bill to which all or part of the EFCA could be attached. That, along with the recent appointment of a former union lawyer to the NLRB, means that the battle is not over.

New Disclosures

The Department of Labor recently issued a rule requiring contractors and subcontractors on federal projects to display posters informing employees of their right to join a union and engage in other activities protected by federal labor laws. The posters, which are published by the DOL, must be placed in conspicuous places in and around contractors’ work sites and offices. If a contractor posts notices to employees electronically (e.g., on a webpage), the contractor must also post the labor notice electronically. The rule applies to federal construction contracts entered into after June 21. Penalties for noncompliance include contract termination and debarment.

The DOL also has proposed amending its interpretation of disclosure rules that would require employers to provide workers with written disclosures about how their pay is calculated and their right to overtime pay. For exempt employees, the employer would have to perform a written exemption analysis, disclose the analysis to the employee, and keep a copy available for DOL enforcement agents. The DOL says that the rule will enhance transparency and help prevent the misclassification of employees as independent contractors to evade minimum wage and overtime requirements.

Project Labor Agreements

The Federal Acquisition Regulation Council recently issued a final rule that encourages the use of project labor agreements on federal construction projects of $25 million or more. PLAs are agreements between prime contractors and labor unions that are sometimes required by owners (in this case, federal agencies). PLAs usually require the prime contractor and all subcontractors to abide by the terms of a common labor agreement for the duration of the project. Nonunion contractors subject to PLAs are essentially converted to union contractors for projects on which PLAs are used.

The new rule allows federal agencies to mandate that prime contractors submit fully executed PLAs when bids are due, prior to award, or after award. The mandate will give unions significant leverage in negotiating the terms of the PLA because failure to provide a fully executed PLA when mandated will be a breach of contract by the prime contractor. Although the rule does not require the use of PLAs on every project, it is expected to significantly increase their use.

Contractors who do business with the federal government should be implementing practices to deal with the new labor policy changes. Waiting until after award of a contract to consider these issues could result in contract termination or worse. Contractors should consult with legal counsel for advice on their specific situations.

Click Here to view the Finance-Commerce.com posting.

John Hickey, a professional civil engineer and an attorney, is one of several dual-professionals of Jordan Schrader Ramis’ Dirt Law practice group.

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