On September 6, 2013 the U.S. Court of Appeals reinstated Michigan's law prohibiting the use of government-mandated project labor agreements (PLAs). Last year, the U.S. District Court had enjoined the law in response to a complaint filed by the Building and Construction Trades Council, AFL-CIO. The case next went to the U.S. Court of Appeals for the 6th Circuit, which on September 6, 2013 upheld the law. This ruling reverses the lower court and results in the immediate reinstatement of Michigan law making the use of university, state and local government-mandated PLAs illegal.

The purpose of this advisement is to assist you in better understanding Michigan Public Act 238 of 2012, prohibiting the use of certain construction agreements with labor organizations, including but not limited to, PLAs, Construction Unity Board (CUB) agreements, and Labor Harmony Agreements.

Because some public owners have either mandated or have been asked to mandate such agreements in the past, this information is to further advise that such contract terms are now illegal.

Under the Act, a public school, university, community college, governmental unit or instrumentality of a governmental unit, awarding a contract, for the construction, repair, remodeling, or demolition of a facility as well as a construction manager acting on behalf of a public owner, shall not, in any bid specifications, project agreements, or other controlling documents:

• Require or prohibit a bidder, offeror, contractor, or subcontractor from entering into or adhering to an agreement with 1 or more labor organizations in regard to that project or a related construction project.

• Otherwise discriminate against a bidder, offeror, contractor, or subcontractor for becoming or remaining or refusing to become or remain a signatory to, or for adhering or refusing to adhere to, an agreement with 1 or more labor organizations in regard to that project or a related construction project.

As such, a PLA along with any other government-mandated (including public school, community college and university) pre-hire collective bargaining agreement with one or more labor organizations that establishes the terms and conditions of employment for a specific construction project is no longer legal. Moreover, any discrimination on the basis of labor affiliation is explicitly prohibited by this new law.

To assist in complying with state law, ABC has issued a Public Advisement with answers to some frequently asked questions concerning this important law.

Although any legal questions you have may be best suited for your attorney, please do not hesitate to contact ABC of Michigan with questions.

Fallout From Major Circuit Court Win Continues

The fallout from last week's critical decision by the U.S. Circuit Court of Appeals for the 6th Circuit continues to make an impact.

The ruling is already changing the procurement of publicly funded construction projects. After a federal district court judge enjoined the second project labor agreement (PLA) reform law in November 2012, a number of communities in southeastern Lower Michigan re-adopted PLA requirements. As a result of the 6th Circuit Court's ruling, these requirements are now illegal and communities are removing them from bid solicitations.

Washtenaw County is one of the localities that reinstituted its PLA requirement. In order to perform work on county construction projects, contractors were required to agree to Construction Unity Board (CUB) agreements. This week, the county started notifying contractors that this requirement is no longer legal under state law.

In addition to removing the discriminatory requirements, this amendment to the bid solicitation underscores the argument of those urging states to adopt government neutrality laws. The amendment clearly states: "The CUB agreement is no longer required, although you are free to voluntarily enter into the CUB agreement should you choose."

Union leaders have frequently argued that government neutrality laws like the one adopted in Michigan and the 17 other states that have banned PLA mandates limit the ability of contractors and organized labor to exercise their federally protected right to enter into pre-hire agreements with each other. The reality is these laws simply eliminate the ability of government entities to prohibit or require contractors to enter into a pre-hire agreement with a labor union as a condition of performing work. This is a critical distinction that the U.S. Circuit Court of Appeals for the 6th Circuit recognized last week.

Additionally, on Sept. 9 The Washington Times published a powerful editorial on the Appeals Court ruling upholding the Michigan PLA reform law. Here are the highlights:

EDITORIAL: Big Labor Smackdown

Court upholds Michigan ban on project labor agreements

Labor unions are skilled labor at driving up costs. They use their cozy connections with politicians to legislate schemes giving government agencies no choice but to pay inflated union prices for certain types of projects through "project labor agreements." Those agreements may not be around much longer if a 6th U.S. Circuit Court of Appeals decision handed down Friday holds.

In a free market, contracts would be awarded to those willing to do the best work at the best price. That's not the union way, which is to divide up simple tasks so that the man who installs the plumbing can't touch the light switch, ensuring two get paid for doing the job one person could handle. The inefficiency typically drives costs up 20 percent or more. Such contracts are much like agreements that have traditionally been called feather-bedding, and the featherbeds are soft, comfortable and inviting, indeed.

When building a bridge or digging a tunnel can cost billions, that 20 percent adds up to big money. So the reform-minded Michigan Legislature decided in 2011 that it no longer makes sense to hand a hefty share of taxpayer resources to union bosses. It banned state and local project labor agreements, and the unions predictably cried foul, hoping a federal judge would restore their monopoly on providing public services.

Big Labor won the first round in court, the more or less expected result before a friendly district judge, but lost the second. Writing for the appellate panel in Cincinnati, Judge John M. Rogers ruled that it's legitimate for a legislature to save money. "Michigan's statute advances the proprietary interest of efficient use of resources," wrote Judge Rogers, "and is limited enough to advance only that interest." The law was tightly written, designed to withstand pressure.

One of the first things President Obama did after stepping into the Oval Office in 2009 was to reward his union benefactors by signing Executive Order No. 13502, requiring all federal construction projects to operate under "project labor agreements." Eighteen states ban project labor agreements, but Congress couldn't resist labor union pressure, with the Republican-controlled House failing in a 218 to 198 vote to bar labor from driving up military spending costs.

Qualified non-union contractors ought to have a chance to win the job on the merits without having to pay union bosses to stand around and "supervise" working men who often are more skilled than such "supervisors," and only want to get on with the job.

While the controversy surrounding government-mandated project labor agreements will continue, we are happy to report that all 18 states that adopted PLA reform statutes and executive orders now have legally enforceable laws in place to protect taxpayers and the vast majority of the construction workforce that chooses not to join a labor union. The two U.S. Circuit Courts of Appeals that have considered this issue both found that government neutrality laws that ban government-mandated PLAs are permitted under federal law. The legal ground supporting the PLA reform movement is getting firmer.