BILL ANALYSIS Ó
SB 922
Page 1
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