AGC Sues to Stop Biden’s New Labor Rule on Federal Construction Projects

A national construction contractors association is suing to stop the Biden Administration’s new mandate to require labor agreements on all federal infrastructure projects over $35 million.

The new rule would essentially require unions to be represented on all such projects prior to contract award. Current rules say federal agencies must “consider” requiring such agreements on projects over $25 million, but they are not mandated to do so.

The Associated General Contractors, along with its Louisiana chapter, filed the lawsuit, saying “Biden lacks the legal and constitutional authority to impose such sweeping labor policies that undermine current labor agreements for union firms and discriminate against open shop contractors.”

The mandated project labor agreements, or PLAs, require contractors, subcontractors and unions to negotiate terms such as pay and benefits on the large projects through collective bargaining, according to the Biden Administration.

The administration has said the rules could affect $262 billion in federal government construction contracting and nearly 200,000 workers.

Biden says requiring PLAs will make it easier to manage multi-million-dollar projects, including coordinating multiple contractors and subcontractors and their employees and preventing disputes between subs.

The PLAs will raise quality standards by weeding out contractors that pay low wages and have not properly trained their workers, he says. To be eligible for the project, such contractors would have to raise their standards.

Biden argues that the expansion of PLAs will save money on the projects and increase efficiency in federal procurement. He also says it will speed up projects by eliminating delays due to labor unrest and provide a steady supply of skilled workers on the projects. He adds that all contractors, including open shops, can bid on PLA-required projects.

AGC, however, argues that PLAs require contractors “to negotiate with unions – regardless of whether they have ongoing relationships with those unions – and gives the unions immense leverage to set the terms and conditions of agreements because the contractor is required to have an agreement as a condition of being awarded the project. This allows unions to impose more costly work rules and practices.”

The association says it conducted an analysis of federal procurement data since the Obama Administration’s PLA rule took effect in 2009 and determined that 99.4% of procurement officials on federal defense-related construction projects found no benefit to mandating PLAs.

The new regulation also contradicts existing contracting and labor laws by limiting competition for federal work and requiring union participation, and it would undermine existing collective bargaining agreements for union contractors and make the projects less efficient and more expensive, the association says.

AGC’s lawsuit asks the U.S. District Court for Western Louisiana to halt the PLA mandate. AGC says it does not oppose PLAs, but they should be voluntarily negotiated between contractors and unions, not required.

“This regulation punishes firms that have already entered into a collective bargaining agreement with construction unions, discriminates against open shop firms and their employees and deprives taxpayers of the benefits of open competition,” says the association’s CEO, Stephen Sandherr.

The Associated Builders and Contractors has also vowed to file legal action against the PLA mandate.

“The Biden administration’s burdensome, inflationary and anti-competitive PLA mandate rule will needlessly raise costs on taxpayer-funded construction projects and steer contracts to unionized contractors and workers,” says Ben Brubeck, ABC vice president of regulatory, labor and state affairs. “Absent a successful legal challenge, this executive overreach will reward powerful special interests with government construction contracts at the expense of taxpayers and the principles of free enterprise and fair and open competition in government procurement.”