Published date: 09/19/2024

Project Labor Agreements (PLAs) are pre-hire collective bargaining agreements with labor organizations that set the terms and conditions of employment for specific construction projects. These agreements are typically negotiated between the project owner, often a governmental entity, and labor unions, and they cover a wide range of aspects including wages, work conditions, dispute resolution, and workforce diversity goals.

 PLAs are often implemented in large-scale public works projects, particularly those with federal funding. They create clear, upfront expectations for project owners, employers, and workers, promoting the efficient attainment of project goals. In exchange for favorable working conditions and wage standards, unions agree not to strike or engage in other disruptive activities during the project. While PLAs usually have similar objectives, they are not uniform and may be referred to by different names, such as community benefit agreements. However, PLA is the most used term and serves as a general descriptor.

Key Features of PLAs 

1. Pre-hire Agreement: PLAs are negotiated before hiring begins, meaning that contractors agree to the terms before they can bid on the project.
2. Standardized Wages and Benefits: PLAs provide consistent wage and benefit levels for all workers, which can stabilize labor costs.
3. Dispute Resolution: PLAs often include mechanisms for resolving disputes without work stoppages.
4. Local Hiring Requirements: PLAs may promote local hiring, requiring that a certain percentage of workers come from the local community and/or underrepresented groups.
5. Safety and Training Standards: PLAs typically incorporate strict safety protocols and often emphasize worker training programs.

Interaction of PLAs with Davis-Bacon Act and Prevailing Wage Laws

The Davis-Bacon Act (DBA) of 1931 is a federal law that mandates the payment of prevailing wages to laborers and mechanics on federally funded or assisted construction projects. Prevailing wage rates are determined by the U.S. Department of Labor and vary by location and type of work. The law aims to protect workers from being underpaid and to prevent contractors from using cheaper, lower-skilled labor from outside the project’s region – which can carry unnecessary risks and cause project delays.

In federal construction projects, PLAs have been encouraged or required through executive orders such as Executive Order 14063, which allows federal agencies to require PLAs for large-scale construction projects (those costing $25 million or more). The use of PLAs aims to help avoid labor disputes that could delay critical infrastructure or public projects.

PLAs and Davis-Bacon requirements often interact to make it so that workers are appropriately compensated on federal projects:

• Prevailing Wages in PLAs: PLAs often incorporate Davis-Bacon prevailing wage standards, ensuring that workers receive wages and benefits consistent with the local norms for their respective crafts and trades. This creates alignment between the collective bargaining agreements in PLAs and the wage protections provided by Davis-Bacon.
• Compliance and Monitoring: PLAs frequently establish detailed provisions for monitoring compliance with Davis-Bacon wage rates, further safeguarding against wage violations. Contractors working under PLAs are held accountable for adhering to prevailing wage laws, and failure to do so can result in penalties or exclusion from future government contracts.
• Project Efficiency: PLAs contribute to project stability by including no-strike clauses and dispute resolution mechanisms, which can prevent work stoppages and delays. This stability is beneficial for meeting Davis-Bacon compliance deadlines and maintaining consistent payroll reporting.
• Local Workforce Development: PLAs often include provisions for hiring local workers and supporting apprenticeship programs.  Likewise, the Davis-Bacon Act sees that wage rates prevailing in the local area of a project are used, in turn discouraging contractors from importing labor that might be compensated less elsewhere. They both contribute to similar objectives and together promote workforce development within the local community.

Benefits of Integrating PLAs and Davis-Bacon Requirements

No matter the part you play in the construction industry or how you feel about PLAs, it’s important to understand what outcomes PLAs and prevailing wage statutes aim to achieve. When you get down to brass tacks, it’s this:

1. Worker Protections: Both PLAs and Davis-Bacon contribute to protecting worker pay and working conditions. PLAs formalize many of the protections that Davis-Bacon enforces, ensuring standardized benefits and stronger labor rights.
2. Wage Stability: The combination of PLAs and Davis-Bacon provisions provide a stable labor force with predictable wages, reducing the risk of work stoppages due to wage disputes.
3. Community Impact: PLAs may include local hiring clauses that align with the Davis-Bacon Act’s aim to discourage bringing in workers from outside the project’s vicinity. By prioritizing local hires, these agreements help boost the local economy as workers’ earnings are spent and reinvested within the community.   

If you have a project or plan to work on a project with a PLA, its best to be prepared with a compliance solution that not only helps you remain compliant with Davis-Bacon and prevailing wage laws, but also track workforce metrics as well. If you would like to learn more about these types of solutions, check out https://lcptracker.com/solutions/lcptracker.

.

.

These materials are being issued with the understanding that LCPtracker is not engaged in rendering legal or other professional services and is providing these for informational purposes only. If legal, accounting, or tax expert assistance is required, the services of a competent legal, accounting or tax professional should be sought.

.