BILL ANALYSIS                                                                                                                                                                                                    



                                                                  SB 922
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          Date of Hearing:   September 6, 2011

              ASSEMBLY COMMITTEE ON BUSINESS, PROFESSIONS AND CONSUMER 
                                     PROTECTION
                                 Mary Hayashi, Chair
               SB 922 (Negrete McLeod) - As Amended:  September 2, 2011

           SENATE VOTE  :   (vote not relevant)
           
          SUBJECT  :   Public works projects: project labor agreements

           SUMMARY  :   Establishes parameters for the use of project labor 
          agreements (PLAs) in public contracting, and prohibits state 
          funding or financial assistance from supporting specified 
          non-PLA projects.  Specifically,  this bill  :

          1)Authorizes public entities to use, enter into, or require 
            contractors to enter into a PLA for a construction project 
            only if the agreement includes all of the following taxpayer 
            protection provisions:

             a)   The agreement prohibits discrimination based on race, 
               national origin, religion, sex, sexual orientation, 
               political affiliation, or membership in a labor 
               organization in hiring and dispatching workers for the 
               project;

             b)   The agreement permits all qualified contractors and 
               subcontractors to bid for and be awarded work on the 
               project without regard to whether they are otherwise 
               parties to collective bargaining agreements;

             c)   The agreement contains an agreed-upon protocol 
               concerning drug testing for workers who will be employed on 
               the project;

             d)   The agreement contains guarantees against work 
               stoppages, strikes, lockouts, and similar disruptions of 
               the project; and,

             e)   The agreement provides that disputes arising from the 
               agreement shall be resolved by a neutral arbitrator.

          2)Provides that the members of the governing board of a local 
            public entity may choose by majority vote whether to use, 








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            enter into, or require contractors to enter into a PLA that 
            includes the provisions specified above and whether to 
            allocate funding to a project covered by such an agreement.  
            Provides that a charter provision, initiative, or ordinance 
            shall not prevent the governing board of a local public 
            entity, other than a charter city, from exercising this 
            authority on a project-specific basis.

          3)Provides that, if a charter provision, initiative, or 
            ordinance of a charter city prohibits the governing board's 
            consideration of a PLA that includes the provisions described 
            above or from allocating funds to a city-funded project 
            covered by such an agreement, state funding or financial 
            assistance shall not be used to support that project.  This 
            provision is not applicable until January 1, 2015, for charter 
            cities in which a charter provision, initiative, or ordinance 
            in effect prior to November 1, 2011, would disqualify a 
            project from receiving state funding or financial assistance.

          4)Provides the following definitions:

             a)   "PLA" means a prehire collective bargaining agreement 
               that establishes terms and conditions of employment for a 
               specific construction project or projects and is an 
               agreement described in the United States Code governing 
               unfair labor practices and allowable labor agreements in 
               the building and construction industry; and,

             b)   "Public Entity" means a state, county, city, city and 
               county, district, public authority, public agency, 
               municipal corporation, or any other political subdivision 
               or public corporation in the state.

           EXISTING LAW  

          1)Establishes the State Contract Act for the purpose of 
            governing contract practices between state agencies and 
            private contractors.

          2)Defines public works contracts as any construction, 
            alteration, demolition, installation or repair work done under 
            contract and paid for in whole or in part from public funds.

          3)Establishes the Local Agency Public Construction Act, which 
            sets forth the procedures local agencies are required to use 








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            when soliciting and evaluating bids or proposals for the 
            construction of a public work or improvement.

           FISCAL EFFECT  :   Unknown

           COMMENTS  :   

           Purpose of this bill  .  According to the author, the need for 
          this bill arises from recent campaigns to obtain blanket 
          prohibitions on PLAs through local charter amendments, 
          initiatives and ordinances.  These blanket prohibitions disable 
          local governing boards from choosing to use a PLA or from 
          funding a project that uses a PLA, even if the governing board 
          decides that a PLA would benefit taxpayers.  Several counties 
          (Stanislaus, Orange and San Diego) and Charter Cities (Chula 
          Vista and Oceanside) have banned PLAs based on intense lobbying 
          by non-union contractor organizations that do not want to bid on 
          projects governed by a PLA. 

          The author states, "PLAs can help projects meet deadlines by 
          guaranteeing a steady supply of highly skilled labor and by 
          reconciling the various work routines of the many trades.  PLAs 
          also help to assure timely completion by keeping projects free 
          from disruptions resulting from local labor disputes, 
          grievances, or jurisdictional issues.  Language in PLAs can be 
          written to advance important policy goals, such as improving 
          training and recruiting members of disadvantaged communities 
          into high-paying jobs in construction."

           Background  .  A PLA is a pre-hire agreement that establishes the 
          terms and conditions of employment for a specific construction 
          project.  They are completed before any workers are hired to 
          determine the wage rates and benefits of all employees working 
          on the project and to agree to prevent any strikes, lockouts, or 
          other work stoppages for the length of the project.  The terms 
          of the agreement apply to all contractors and subcontractors who 
          successfully bid on the project, union or non-union, and 
          supersede any existing collective bargaining agreements.

          PLAs are used on both public and private projects, and their 
          specific provisions are tailored by the contracting parties to 
          meet the needs of a particular project.  By governing and 
          establishing work rules, pay rates, and dispute resolution 
          processes for every worker on the project, PLAs can maximize 
          project stability, efficiency and productivity.  PLAs can also 








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          help minimize the risks and inconvenience to the public that can 
          accompany public work projects, helping ensure that projects are 
          completed on time and on or under budget.

          According to a 2001 California Research Bureau report, "PLAs are 
          arguably the most important change in labor management relations 
          in the construction industry in recent years.  They have become 
          a fairly common part of the organization of major construction 
          projects in California?Construction of Shasta Dam, which ran 
          from 1938 to 1944, was the first project involving a PLA in 
          California.  It was a remarkable success, at least in the sense 
          that the project was completed without a labor strike, at a time 
          when other projects in the western states were plagued with 
          strikes and other labor disturbances.  Other notable PLA 
          projects in California include the Bay Area Rapid Transit 
          (BART), San Francisco's Yerba Buena Project, Los Angeles' Blue 
          Line, the Los Angeles Convention Center, the San Joaquin Hills 
          Corridor toll road, the Eastside Reservoir Project (the 
          reservoir now known as Diamond Valley), the National Ignition 
          Facility at Lawrence Livermore Labs, San Francisco International 
          Airport's newest terminals, construction for several large 
          school districts, and others.

          "Perhaps surprisingly, private construction projects in 
          California are much more likely to use PLAs than are public 
          projects?nearly three-quarters (of the projects reviewed for the 
          report) were private sector agreements.  In addition, 22 out of 
          23 private cogeneration electricity plants recently built or 
          under construction in California used PLAs.

          "The legality of PLAs has been extensively tested in both 
          federal and state courts, and with respect to both private and 
          public construction projects.  Their validity has been upheld in 
          both federal and state cases?

          "PLAs involve some controversy, which fits within a 200 year-old 
          tradition of dispute about the role of trade unions in America.  
          In this case, the dispute comes especially from non-union 
          contractors, who object to PLA requirements that they get their 
          labor force from a union hiring hall and who argue that PLAs 
          increase construction costs.  Construction firms and owners who 
          use PLAs judge that the cost savings from avoidance of labor 
          disputes and strikes during a construction project outweigh any 
          costs of complying with the PLA.  They also value a PLA's role 
          in resolving disputes between the many kinds of unions involved 








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          in a complex project over which union members should be doing 
          particular tasks.  Dispute also occurs between construction 
          firms that use and value PLAs and those that do not."

          On February 6, 2009, U.S. President Barack Obama issued an 
          Executive Order requiring the use of PLAs on Federal projects of 
          $25 million or more.  According to the order, PLAs promote 
          efficient and timely completion of large-scale construction 
          projects and prevent many of the problems inherent in such 
          construction.

          PLAs are not mandated under California law.

           Charter Cities  .  The California Constitution gives cities the 
          power to become charter cities.  A charter city has the power to 
          regulate "municipal affairs," while a general law city is 
          subject to the general laws passed by the Legislature.  General 
          law cities are creatures of the Legislature and have only the 
          powers that the Legislature, through the general laws of the 
          state, gives them.  Charter cities, on the other hand, are 
          separate creatures under state law.  The charter adopted by a 
          city actually constitutes state law, with the force of 
          legislative enactment. 

          City charter and city charter amendment proposals can originate 
          in three ways:  a charter commission; the governing body of the 
          city; or, by a petition of the voters.  For a charter 
          commission, the proposed charter must be submitted to the voters 
          within specified time frames.  A governing body, on its own 
          motion, can propose, amend or repeal a charter and submit the 
          proposal to the voters within specified time frames.  Petitions 
          from voters are submitted to the city council for placement on 
          the ballot at an election on a date to be determined by the city 
          council.  These provisions also apply to general law cities.

           This bill  does not mandate the use of PLAs.  However, if a state 
          or local agency chooses to use a PLA for a public construction 
          project, this bill establishes minimum taxpayer-protection 
          criteria that the PLA must include.  According to the author, 
          these minimum criteria already are commonly incorporated into 
          PLAs for public projects.

          This bill allows the governing boards of local agencies 
          (counties, cities, school districts, utility districts, etc.) to 
          choose by majority vote whether or not to use a PLA that 








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          includes the taxpayer-protection criteria established by this 
          bill.  This bill also allows the governing boards of local 
          agencies to decide by majority vote whether or not to fund a 
          project that includes such a PLA.  Because of the home-rule 
          provision of the California Constitution, this provision does 
          not apply to charter cities.

          This bill prohibits local agencies, except charter cities, from 
          adopting blanket prohibitions against using PLAs, retaining 
          local governing boards' authority to decide on a case-by-case 
          basis whether to use PLAs.   

          This bill also provides that, if a charter city has banned PLAs 
          as described in this bill for a project to be awarded by the 
          city, state financial assistance must not be used for that 
          project.  This provision becomes operable beginning January 1, 
          2015, providing time for the repeal of blanket bans in effect 
          before November 1, 2011.

           REGISTERED SUPPORT / OPPOSITION  :

           Support 
           
          State Building and Construction Trades Council of California, 
          AFL-CIO (sponsor)
          California Association of Sheet Metal and Air Conditioning 
          Contractors National Association
          California Chapters of the National Electrical Contractors 
          Association
          California Labor Federation
          California Legislative Conference of the Plumbing, Heating and 
          Piping Industry
          Contra Costa Building and Construction Trades Council
           
            Opposition 
           
          Associated Builders and Contractors of California
          California Chapter of the American Fence Association
          California Fence Contractors Association
          Engineering Contractors Association
          Flasher Barricade Association
          Marin Builders Association
          Plumbing-Heating-Cooling Contractors Association of California
          Western Electrical Contractors Association









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           Analysis Prepared by  :    Angela Mapp / B.,P. & C.P. / (916) 
          319-3301