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The Impact of the Obama Administration: It's Only Just Begun
This year is shaping up to be crucial for open shop contractors. Having so far survived the poor economy and the Obama administration’s tilt toward organized labor, many open shop contractors will be disappointed to learn that tough new challenges lie ahead. Now is the time to review what happened in 2009, what has not yet happened and what may be about to happen in the field of construction labor law.
Many of the administration’s initiatives that favor organized labor have not yet begun or have not yet reached their potential. None of the president’s executive orders has been fully implemented, but they are likely to be this year. Meanwhile, to date, most administration appointments to the key labor enforcement agencies have not been confirmed. As a result, the administration has not even started to implement its pro-labor agenda. The most significant changes are likely to take place this year.
The PLA Executive Order
Of greatest concern to open shop contractors is the president’s executive order on project labor agreements (PLAs). Executive Order 13502 declared that executive agencies awarding contracts on “large scale construction projects” (costing the federal government $25 million or more) “may, on a project-by project basis, require the use of a project labor agreement” by a contractor (binding all subcontractors).
Prior to requiring a PLA, a federal agency must find that such an agreement will “advance the federal government’s interest in achieving economy and efficiency in federal procurement, producing labor-management stability, and ensuring compliance with laws and regulations governing safety and health, equal employment opportunity, labor and employment standards, and other matters, and be consistent with law.”
The order set forth a series of policy justifications for its provisions that were not supported by the record of the previous eight years, during which President Bush’s Executive Order 13202 banned PLAs from federal projects. Specifically, the Obama order claimed that PLAs were needed for contractors to “ensure a steady supply of labor” on federal contracts, to prevent “delays caused by labor disputes” and to ensure the “efficient and timely completion of construction on federal projects.” None of these adverse effects occurred on any federal projects prior to the executive order, as shown in a new study issued by the Beacon Hill Institute (available at www.thetruthaboutplas.com).
Though the Obama order went into effect immediately, it could not be fully implemented until the Federal Acquisition Regulatory (FAR) Council issued a new procurement rule. The federal rulemaking began in July 2009 and continued into January. During this lengthy period, only one federal agency—the U.S. Department of Labor (DOL)—attempted to mandate a PLA on a federal construction contract. A member of Associated Builders and Contractors challenged that attempt in New Hampshire, and the DOL was forced to back down and cancel the PLA.
However, there is no reason to think the administration’s push for PLAs has ended. Despite overwhelming evidence that government-mandated PLAs discriminate against 85 percent of the industry, thwart competition and increase costs to taxpayers, many more federal PLAs are expected in 2010. Only an effective legal challenge, combined with public pressure, can alter the administration’s course on this issue.
Other Executive Orders and the E-Verify Mandate
The administration is working to implement three other executive orders, all of which favor unions at the expense of taxpayers. These orders include the “Non Displacement of Qualified Workers Under Service Contracts Executive Order,” which requires government contractors to offer jobs to the qualified employees of a predecessor contractor when a government contract changes hands.
The “Economy in Government Contracting Executive Order” prohibits government contractors from being reimbursed for expenses incurred when seeking to inform or influence workers regarding whether to form unions or engage in collective bargaining.
The “Notification of Employee Rights Under Federal Labor Laws Executive Order” requires employers to post signs informing workers of their right to engage in collective bargaining under the National Labor Relations Act.
Again, the true impact of these orders will be felt in 2010, as none has been fully implemented.
Also, the E-Verify rule went into effect Sept. 8, 2009, requiring federal agencies to insert a new clause into most government contracts that compels government contractors to use the E-Verify system administered by the U.S. Citizenship and Immigration Service to confirm that their employees are lawfully authorized to work in the United States.
Finally, government contractors have yet to feel the impact of enforcement changes at the DOL. The American Recovery and Reinvestment Act of 2009 included expansion of Davis-Bacon prevailing wage requirements. New Secretary of Labor Hilda Solis was given more money in the federal budget to hire new wage and hour investigators and has vowed to “get tough” on contractors. Tougher enforcement of the Occupational Safety and Health Act and the affirmative action requirements of Executive Order 11246 also are anticipated, impacting government contractors in 2010 and beyond.
The New NLRB and the Employee Free Choice Act
As of this writing, the National Labor Relations Board (NLRB) has been operating for more than a year with only two of its allotted five members. The Supreme Court has granted certiorari in the case of New Process Steel v. NLRB to decide whether the board acted lawfully in rendering its decisions in the absence of at least three members. Meanwhile, various holds have been placed on President Obama’s nominations to the NLRB in the U.S. Senate.
It is widely anticipated that the new board members, once confirmed, will begin to overrule precedent of previous NLRB decisions, with a pronounced bias toward organized labor. In the construction industry, the greatest impact could be felt in the areas of salting and secondary union pressure tactics. Again, nothing significant happened at the NLRB in 2009 because the new board members were not seated; that will change in 2010.
Finally, action on the Employee Free Choice Act/“card check” legislation stalled in Congress in 2009. But the bill has not gone away, and it remains a great threat to open shop contractors, as well as every other type of employer. It is unclear when or if a “compromise” bill will gain enough votes in the Senate for passage. But if any of the provisions that have been demanded by organized labor actually succeed in becoming law, then union organizing will take on new and threatening dimensions in 2010.
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Wednesday, February 8, 2012