Project Labor Agreements (PLAs) are used all over the country to help solidify the terms of a particular type of contract. In Jersey City, contractors and developers who want to take part in a tax abatement program that was started in 2007 must enter into a PLA that says that only local, union labor can be used in the project being discussed. This meant that non-union companies and companies from outside of Jersey City were not allowed to bid on these types of projects.
Back in the 1950s and 1960s when unions were in their heyday, PLA arrangements like the one in Jersey City were common. Non-union shops found it extremely difficult to get involved in larger projects because PLAs would exclude non-union shops. But in 2014, the New Jersey portion of the Associated Builders and Contractors (ABC) challenged the Jersey City tax abatement arrangement in court, and ABC’s win is seen as just the beginning of what could be the end for unions in the New York – New Jersey area.
Jersey City has been forced to open its privately funded projects to non-union shops.
The Jersey City PLA
The Jersey City PLA in question offers a five or 20-year tax abatement program to developers who use private funds to do projects over $25 million. It was a program that was passed in 2007, and it has been extremely effective at keeping non-union shops out of the larger projects being proposed throughout the Jersey City area.
In 2015, the ABC filed a lawsuit saying that the Jersey City tax abatement PLA violated the federal National Labor Relations Act (NLRA) and Employee Retirement Income Security Act (ERISA). The ABC contended that since Jersey City was only regulating the tax abatement part of a project and not actually investing funds into the project, that the city or state government had no authority to dictate whether labor or non-union labor would be used.
Initially, a lower New Jersey court sided with Jersey City and said that the ABC lawsuit had no merit. But the Appeals Court for the Third District in New Jersey overruled the lower court and said that the ABC lawsuit could move forward. Many legal experts think that the ABC lawsuit will be successful, which could be devastating to Jersey City unions.
Another Blow To Unions
If the ABC lawsuit is successful, it could set a precedent that will be used all over the country. Other cities and states have PLAs in place that exclude non-union shops, and a win for the ABC would mean a devastating blow to labor unions.
New York City labor unions maintain that they are still negotiating with developers to close the financial gap that is keeping union workers out of larger projects. While the unions say that they are not willing to lower wages, there are other areas of negotiation that can get results developers want. Developers such as Gilbane Construction have shown recently that hiring non-union workers for larger projects is something developers are willing to do to keep costs down.
Labor unions are fighting to stay relevant in an increasingly competitive construction industry.
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