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The EO on PLAs

By Alexander Cerbo, Esq.

 

Keeping his promise of being “the most union-friendly president in American history,” President Biden and his administration issued Executive Order (EO) 14063, which mandates project labor agreements (PLAs) on “large-scale construction projects.”

Alexander Cerbo

A project labor agreement is a collective bargaining agreement between a contractor and the building trade union. A large-scale construction project is one within the U.S. that has an estimated total cost of $35 million or more, and usually refers to construction, rehabilitation, alteration, conversion, extension, repair, or improvement of a ‘vertical public works’ project. Famous examples of large-scale construction projects that were governed by PLAs include Disney World, the Kennedy Space Center, and Yankee Stadium. The EO is estimated to impact more than 200,000 workers and $262 billion in federal funding. For those in the industry, you should become familiar with the PLA.

PLAs are negotiated before any workers are hired, and they establish the terms of employment on a project, including wages, hours, working conditions, and dispute-resolution methods, among other things. If a business is unionized, the PLA must coexist with the business’ existing collective bargaining agreement. Biden’s EO contains several additional requirements of PLAs going forward. For example, all contractors and subcontractors related to the project must be allowed to compete for work, unionized or not. In addition, these PLAs must contain mutually binding dispute-resolution provisions as well as provide alternative mechanisms for cooperation between labor and management.

But what does this mean for small businesses that are not unionized going forward? Maybe, not a whole lot of good. But that depends on your business model.

What is considered ‘small’ typically depends on what industry you are in, and could range from fewer than 500 employees or up to 2,500 employees, or even more. Essentially, you are a small business if you are a privately owned corporation, partnership, or sole proprietorship that has fewer employees and less annual revenue than a public corporation or regular-sized business. According to the Small Business Administration, the construction industry has one of the highest concentrations of small business participation, well over 80%. Some argue that PLAs put small non-union construction businesses at a disadvantage because they increase the cost of doing business. Considering the fact that most small businesses in the construction industry are non-union, PLAs put them at a great disadvantage.

“Some argue that PLAs put small non-union construction businesses at a disadvantage because they increase the cost of doing business. Considering the fact that most small businesses in the construction industry are non-union, PLAs put them at a great disadvantage.”

While PLAs are often applauded by many labor analysts for creating long-term project stability, opportunities to include minority contractors and small ‘mom-and-pop’ contractors, and better training for workers, PLAs also increase the cost of construction by requiring payment of union wages to non-union workers, something greatly detrimental to the financial interests of small businesses that wish to partake in these construction jobs.

In addition, PLAs generally require non-union contractors to pay employee benefits twice — once to their employees and once to the unions that oversee the project, often making it too costly for non-union businesses to compete for these jobs in the first place. Non-union contractors often must pay into underfunded and mismanaged union pension plans, of which their employees wouldn’t see the benefits unless they joined the union. A small business must look at these costs associated provisions, among other things, to assess the risks and costs of entering into this type of arrangement. All businesses at all levels should make sure to do the short-term and long-term math before deciding whether to get into one of these arrangements.

It is important to note that the Biden EO does not require construction companies to unionize and does not apply to construction projects controlled by local or state governments, even if they receive federal funding. Nevertheless, the PLA mandate could be catastrophic for many small businesses, often touted by many politicians as the backbone of the American economy.

 

Alexander Cerbo, Esq. is an attorney who specializes in labor and employment-law matters at the Royal Law Firm LLP, a woman-owned, women-managed corporate law firm that is certified as a women’s business enterprise with the Massachusetts Supplier Diversity Office, the National Assoc. of Minority and Women Owned Law Firms, and the Women’s Business Enterprise National Council; (413) 586-2288; [email protected]

Law Special Coverage

An Employment-law Roundup

By Marylou Fabbo, Esq. and John S. Gannon, Esq.

Here is a quick review of a noteworthy new employment law that was signed by President Biden earlier this month, along with a summary of two significant cases that impact businesses in Massachusetts and beyond.

 

Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act

On March 4, the president signed a new law that will prohibit agreements between employees and their employers that required them to settle sexual-harassment disputes by arbitration. For those who do not know, an arbitration agreement requires the people who signed the agreement to resolve any disputes by binding arbitration, rather than in court in front of a judge and jury. Employers often require employees to sign arbitration agreements at the beginning of their employment, but will no longer be able to enforce these agreements if an employee alleges they were sexually harassed.

Marylou Fabbo

Marylou Fabbo

John Gannon

John Gannon

“Forced arbitration silences survivors of sexual assault and harassment,” Vice President Kamala Harris said about the new law. “It shields predators instead of holding them accountable and gives corporations a powerful tool to hide abuse and misconduct.”

The law applies retroactively, meaning it applies to agreements signed before March 4. This means employers should revise old arbitration agreements to remove references to sexual-harassment claims. The new law does not impact cases that are already in arbitration, nor does it prohibit mandatory arbitration agreements in employment disputes that do not involve sexual-harassment allegations, such as race- or religious-discrimination claims, or disputes over payments of wages.

 

U.S. Supreme Court Decision Blocking Vaccine Directives

As many readers are likely aware, earlier this year, the U.S. Supreme Court ruled against the Biden administration in the back-and-forth legal battle over the OSHA ‘shot-or-test’ rule that required larger employers to put policies and procedures in place to ensure employees get vaccinated against COVID-19 or undergo weekly testing.

Does that mean employers do not have to worry about taking steps to protect workers against COVID? Absolutely not. Although OSHA announced it was withdrawing the shot-or-test rule in light of the Supreme Court’s decision, OSHA “strongly encourages vaccination of workers against the continuing dangers posed by COVID-19 in the workplace.” The agency also announced it will continue its COVID enforcement efforts through the “general duty clause,” which is a catch-all provision that allows OSHA to cite employers for failing to provide a work environment free from recognized hazards.

In order to protect against citations and fines from OSHA, employers should implement workplace-safety policies aimed at stopping the spread of COVID. This includes masking requirements consistent with CDC guidance and protocols that require employees to notify their employer immediately if they test positive for COVID. Finally, if employers want to mandate that employees get vaccinated and boosted, that is perfectly fine, as long as exceptions are made for employees who cannot get vaccinated for medical or religious reasons.

 

In Massachusetts, New Employee Protection Against Retaliation

Earlier this year, the Massachusetts Supreme Judicial Court (SJC) ruled that employees who contradict negative information in their personnel files may be protected against unlawful retaliation. The case stems from an employee who disagreed with his supervisor’s assessment of his performance issues, so he wrote a lengthy rebuttal to be included in his personnel file. The very same day, he was fired. The employee sued, claiming he was wrongfully discharged for writing a rebuttal to negative comments in his personnel file.

Like the employee in this case, most employees in Massachusetts are employed at will, which means they can be terminated for any reason (or no reason) as long as the reason does not violate a statute or other established rule of law, such as laws against discrimination. Prior to this recent case, the SJC had recognized a few narrow exceptions to this general rule based on certain public-policy interests, including the assertion of a legally guaranteed right. Under Massachusetts’ Personnel Records Law, employees have the legal right to respond in writing.

While the SJC has been reluctant to limit employment at will, it concluded that the right to rebut negative information in a personnel file is of considerable public importance. It relates not just to someone’s current employment, but also their ability to seek other employment. It assists potential employers in making informed hiring decisions, “thereby preventing terminated employees from becoming public charges.” In the SJC’s view, having a complete personnel file — reflecting both sides of an issue — also facilitates the evaluation of an employer’s compliance with the Commonwealth’s many other employment laws, including those that require timely payment of wages and forbid discrimination in the workplace.

This decision recognizes a new legal claim that a terminated employee can bring in court against their former employer. Obviously, this creates a new source of potential liability for employers. But it also creates a new source of protection for employees, and as a result, it may incentivize employees to exercise their right to file rebuttals more often, especially when their performance has been poor or they have other reasons to suspect that their employment is not secure. This makes it all the more important for employers to be diligent about performance management, as creating a documented record of performance problems (and efforts to address them) before pulling the trigger on termination is the best way to defend against any wrongful-termination claim.

 

Marylou Fabbo and John Gannon are attorneys at Skoler, Abbott & Presser, P.C. in Springfield; (413) 737-4753; [email protected][email protected]

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