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June, 2012
Project Labor Agreements - SB 829 and San Diego's Prop A

Project Labor Agreements (PLAs) for government projects are a growing concern for many CalGeo members. PLAs place the burden of union requirements upon non-union companies. This can include requiring prevailing wages for all employees and mandating that companies pay into a series of union trust funds even though their employees don't belong to the union. That often means non-union companies end up paying double for their employees' benefits at a time of declining union enrollment to shore up these trusts.

If you are a non-union company, this can add a significant cost above the normal wage and benefit costs. In some instances it can add an additional $16 to $19 per hour for some employees – none of which goes to benefit those workers. Since most non-union companies already have their own benefit packages for their employees, this would be an additional duplicative expense that reduces those companies' ability to be competitive in the marketplace without corresponding benefit to either those workers or the communities.

Prop. A

Prop. A was passed by San Diego voters June 5, outlawing the use of PLAs in the city's contracts, with a few minor exceptions. San Diego has never signed a PLA in the past, but there was a fear that it may in the future since they are employed by a number of municipalities across the region. The measure passed with 58 percent of the vote, which is a significant victory. It also adds San Diego to the growing list of municipalities that have taken similar steps against PLAs.

SB 829

SB 829 was passed into law in April as a means to discourage the passage of initiatives like Prop. A. It states that any jurisdiction that precludes the use of PLAs will not be eligible for state funding of those projects. It doesn't require the use of PLAs, but merely forbids banning them. The bill threatened to withhold state funding for several key San Diego infrastructure projects if Prop. A was passed – a threat that did not deter San Diego voters. Last year state funding involved over $100 million dollars for the San Diego area.

Implications

Prop. A is a preemptive anti-PLA measure that is a victory against PLAs, but its passage may be bittersweet. It protects against PLAs, but may eliminate or reduce state project funding in San Diego, at least short term until the courts sort it out.

There is an exception in the language of Prop. A that allows San Diego to use PLAs if it is required to receive funding, or if required by state or federal law. Does that loophole save the city's state funding? We're not sure. It depends on what the city, state and eventually the courts hang their hats on.

There is also some discussion whether the SB 829 funding preclusion is legally enforceable. If funding is withheld, lawsuits are sure to follow. Opinions are mixed as to how it would turn out. Some say it's unenforceable and unconstitutional. Others say the state has the right to condition funding in this manner. Politically, it is not likely to be reversed until it begins to negatively affect key constituents. SB 829 doesn't take effect until 2015.

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Noah Smith

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