Existing law establishes procedures for state agencies to enter into contracts for goods and services, including generally requiring that certain contracts by a state agency, including, but not limited to, contracts for the construction, alteration, improvement, repair, or maintenance of property, be approved by the Department of General Services.

Existing law authorizes a public entity to use, enter into, or require contractors to enter into, a project labor agreement, as defined, for a construction project, if the agreement includes specified taxpayer protection provisions.

This bill would require the Judicial Council and the California State University, by January 1, 2027, to identify and select a minimum of 3 major state construction projects that are required to be subject to the requirements of a project labor agreement, as specified, and would define various terms for these purposes. The bill would require the Judicial Council and the California State University, on or before January 1, 2027, to each submit a report to the Legislature regarding the selection of projects, as specified. The bill would also make a related statement of legislative findings and declarations.

Existing law establishes procedures for state agencies to enter into contracts for goods and services, including generally requiring that certain contracts by a state agency, including, but not limited to, contracts for the construction, alteration, improvement, repair, or maintenance of property, be approved by the Department of General Services.

Existing law authorizes a public entity to use, enter into, or require contractors to enter into, a project labor agreement, as defined, for a construction project, if the agreement includes specified taxpayer protection provisions.

This bill would require a state agency, the Judicial Council and the California State University, by January 1, 2027, to identify and select a minimum of 3 major state construction projects that are required to be governed by subject to the requirements of a project labor agreement, as specified, and would define various terms for these purposes. The bill would require the Department of General Services, commencing January 1, 2029, Judicial Council and the California State University, on or before January 1, 2027, to each submit a report to the Legislature about the use of project labor agreements, the advancement of community benefit goals, and apprenticeships, regarding the selection of projects, as specified. The bill would also make a related statement of legislative findings and declarations.

Existing law establishes procedures for state agencies to enter into contracts for goods and services, including generally requiring that certain contracts by a state agency, including, but not limited to, contracts for the construction, alteration, improvement, repair, or maintenance of property, be approved by the Department of General Services.

Existing law authorizes a public entity to use, enter into, or require contractors to enter into, a project labor agreement, as defined, for a construction project, if the agreement includes specified taxpayer protection provisions.

This bill would require a state agency, by January 1, 2027, to identify and select a minimum of 3 major state construction projects that are required to be governed by a project labor agreement, as specified, and would define various terms for these purposes. The bill would require the Department of General Services, commencing January 1, 2029, to report to the Legislature about the use of project labor agreements, the advancement of community benefit goals, and apprenticeships, as specified. The bill would also make a related statement of legislative findings and declarations.

Existing law establishes procedures for state agencies to enter into contracts for goods and services, including generally requiring that certain contracts by a state agency, including, but not limited to, contracts for the construction, alteration, improvement, repair, or maintenance of property, be approved by the Department of General Services.

Existing law authorizes a public entity to use, enter into, or require contractors to enter into, a project labor agreement, as defined, for a construction project, if the agreement includes specified taxpayer protection provisions.

This bill would require a state agency, by January 1, 2027, to identify and select a minimum of 3 major state construction projects that are required to be governed by a project labor agreement, as specified, and would define various terms for these purposes. The bill would require the Department of General Services, commencing January 1, 2029, to report to the Legislature about the use of project labor agreements, the advancement of community benefit goals, and apprenticeships, as specified. The bill would also make a related statement of legislative findings and declarations.

Existing law establishes procedures for state agencies to enter into contracts for goods and services, including generally requiring that certain contracts by a state agency, including, but not limited to, contracts for the construction, alteration, improvement, repair, or maintenance of property, be approved by the Department of General Services.

Existing law authorizes a public entity to use, enter into, or require contractors to enter into, a project labor agreement, as defined, for a construction project, if the agreement includes specified taxpayer protection provisions.

This bill would authorize a state agency to undertake a require a state agency, by January 1, 2027, to identify and select a minimum of 3 major state construction project only if that project is projects that are required to be governed by a project labor agreement and if that project labor agreement includes community benefit goals, agreement, as specified, and would define various terms for these purposes. The bill would authorize the Governor to waive this requirement if the state agency has attempted to comply with this requirement and the Governor makes a written determination that the application of this requirement would be impracticable. The bill would require the Department of General Services, commencing January 1, 2029, to report to the Legislature about the use of project labor agreements, the advancement of community benefit goals, and apprenticeships, as specified. The bill would also make a related statement of legislative findings and declarations.

Existing law establishes procedures for state agencies to enter into contracts for goods and services, including generally requiring that certain contracts by a state agency, including, but not limited to, contracts for the construction, alteration, improvement, repair, or maintenance of property, be approved by the Department of General Services.

Existing law authorizes a public entity to use, enter into, or require contractors to enter into, a project labor agreement, as defined, for a construction project, if the agreement includes specified taxpayer protection provisions.

This bill would authorize a state agency to undertake a major state construction project only if that project is governed by a project labor agreement and if that project labor agreement includes community benefit goals, as specified, and would define various terms for these purposes. The bill would authorize the Governor to waive this requirement if the state agency has attempted to comply with this requirement and the Governor makes a written determination that the application of this requirement would be impracticable. The bill would require the Department of General Services, commencing January 1, 2029, to report to the Legislature about the use of project labor agreements, the advancement of community benefit goals, and apprenticeships, as specified. The bill would also make a related statement of legislative findings and declarations.

Existing law establishes procedures for state agencies to enter into contracts for goods and services, including generally requiring that certain contracts by a state agency, including, but not limited to, contracts for the construction, alteration, improvement, repair, or maintenance of property, be approved by the Department of General Services.

Existing law authorizes a public entity to use, enter into, or require contractors to enter into, a project labor agreement, as defined, for a construction project, if the agreement includes specified taxpayer protection provisions.

This bill would authorize a state agency to undertake a major state construction project only if that project is governed by a project labor agreement and if that project labor agreement includes community benefit goals, as specified, and would define various terms for these purposes. The bill would authorize the Governor to waive this requirement if the state agency has attempted to comply with this requirement and the Governor makes a written determination that the application of this requirement would be impracticable. The bill would require the Department of General Services, commencing January 1, 2029, to report to the Legislature about the use of project labor agreements, the advancement of community benefit goals, and apprenticeships, as specified. The bill would also make a related statement of legislative findings and declarations.

 VETO  

Bill No: SB 984

Author: Wahab (D), et al.

Enrolled: 9/3/24

Vote: 27

SENATE GOVERNMENTAL ORG. COMMITTEE: 10-5, 4/23/24

AYES: Dodd, Wilk, Archuleta, Ashby, Bradford, Padilla, Portantino, Roth, Rubio, Smallwood-Cuevas

NOES: Glazer, Jones, Nguyen, Ochoa Bogh, Seyarto

NO VOTE RECORDED: Alvarado-Gil

SENATE LABOR, PUB. EMP. & RET. COMMITTEE: 5-0, 4/24/24

AYES: Smallwood-Cuevas, Wilk, Cortese, Durazo, Laird

SENATE APPROPRIATIONS COMMITTEE: 5-2, 5/16/24

AYES: Caballero, Ashby, Becker, Bradford, Wahab

NOES: Jones, Seyarto

SENATE FLOOR: 28-10, 5/21/24

AYES: Archuleta, Ashby, Atkins, Becker, Blakespear, Bradford, Caballero, Cortese, Dodd, Durazo, Gonzalez, Hurtado, Laird, Limón, McGuire, Menjivar, Min, Newman, Padilla, Portantino, Roth, Rubio, Skinner, Smallwood-Cuevas, Stern, Umberg, Wahab, Wilk

NOES: Alvarado-Gil, Dahle, Eggman, Glazer, Grove, Jones, Nguyen, Niello, Ochoa Bogh, Seyarto

NO VOTE RECORDED: Allen, Wiener

SENATE FLOOR: 31-8, 8/29/24

AYES: Allen, Archuleta, Ashby, Atkins, Becker, Blakespear, Bradford, Caballero, Cortese, Dodd, Durazo, Eggman, Gonzalez, Hurtado, Laird, Limón, McGuire, Menjivar, Min, Newman, Padilla, Portantino, Roth, Rubio, Skinner, Smallwood-Cuevas, Stern, Umberg, Wahab, Wiener, Wilk

NOES: Alvarado-Gil, Dahle, Glazer, Grove, Jones, Niello, Ochoa Bogh, Seyarto

NO VOTE RECORDED: Nguyen

ASSEMBLY FLOOR: 65-3, 8/28/24 - See last page for vote

SUBJECT: Public agencies: project labor agreements

SOURCE: State Building and Construction Trades Council of California

DIGEST:

This bill requires the Judicial Council and the California State University (CSU), by January 1, 2027, to identify and select a minimum of three major construction projects and subject those projects to a Project Labor Agreement (PLA), as specified.

ANALYSIS:

Existing law:

1. Establishes procedures for state agencies to enter into contracts for goods and services, including generally requiring that certain contracts by a state agency, including, but not limited to, contracts for the construction, alteration, improvement, repair, or maintenance of property, be approved by the Department of General Services (DGS).
2. Authorizes public entities to enter into, or require contractors to enter into, a PLA for a construction project only if the agreement includes specified taxpayer protection provisions.
3. Requires the inclusion of community benefits, as defined, in PLAs entered into by a state agency for projects of $35 million and above in construction costs.
4. Defines “community benefits” to mean high road construction careers programs, local hire goals, coordination with programs that assist veterans in transitioning to civilian employment, job fairs for construction partnership, or other methods agreed upon by the parties to promote employment and training opportunities for veterans and individuals who reside in economically disadvantaged areas.
5. Authorizes members of the governing board of a local public entity to choose by majority vote whether to use, or require contractors to enter into PLAs for specific projects or projects awarded by that entity and whether to allocate funding to a specific project covered by such an agreement.
6. Requires anyone working on a public works projects to be paid prevailing wages as determined by the Department of Industrial Relations.

This bill:

1. Requires the Judicial Council and the CSU, by January 1, 2027, to identify and select a minimum of three major construction projects and subject those projects to a PLA, as specified.
2. Provides that a PLA subject to the provisions of this bill shall comply with specified requirements, including that the decision of a labor organization not to participate in the negotiations of the agreement shall not invalidate the resulting agreement.
3. Defines a “state agency” to mean a superior court, court of appeal, the California Supreme Court, and the California State University (CSU).
4. Defines a “major construction project” to mean the erection, construction, alteration, repair, or improvement of any state structure, building, or other state improvement of any kind exceeding a total estimated cost of $35 million dollars.
5. Clarifies that nothing in this bill preclude the use of PLAs on any project not covered by the provisions of this bill.
6. Requires the Judicial Council and the CSU to, by January 1, 2027, submit a report to the Legislature regarding the selection of the projects as required by this bill.

Background

Author Statement. According to the author’s office, “California is a leader in the use of PLAs since Gov. Jerry Brown signed SB 922 into law. Project labor agreements have proven to be successful construction management tool for the efficient completion of public projects. Project labor agreements also can provide contractors on state projects with access to registered apprentices and protect employees on public construction projects without burdening the resources of the Division of Labor Standards Enforcement. SB 984 aims to ensure that agencies use effective tools like project labor agreements for especially complex large-scale construction projects while ensuring a baseline of protections and community benefit goals, such as hiring locals, women, formerly incarcerated people, and underrepresented and disadvantaged groups.”

Project Labor Agreements. Project labor agreements are pre-hire labor agreements negotiated between a project owner or developer and building trades unions that establish the terms and conditions of employment for a specific construction project. In California, state agencies are authorized to enter into PLAs but are not required to do so. If a state agency does enter into a PLA, the agreement is required to include all of the following taxpayer protection provisions:

1. The agreement prohibits discrimination based on race, national origin, religion, sex, sexual orientation, political affiliation, or membership in a labor organization in hiring and dispatching workers for the project.
2. The agreement permits all qualified contractors and subcontractors to bid for and be awarded work on the project without regard to whether they are otherwise parties to collective bargaining agreements.
3. The agreement contains an agreed-upon protocol concerning drug testing for workers who will be employed on the project.
4. The agreement contains guarantees against work stoppages, strikes, lockouts, and similar disruptions of the project.
5. The agreement provides that disputes arising from the agreement shall be resolved by a neutral arbitrator.

Last year, Governor Newsom signed SB 150 (Durazo, Chapter 61, Statutes of 2023) which, among other things, requires that if a state agency enters into, or requires contractors to enter into a PLA, for that PLA to include provisions to address community benefits. The bill defined community benefits to include high road construction careers programs, local hire goals, coordination with programs that assist veterans in transitioning to civilian employment, job fairs for construction partnerships, or other methods agreed upon by the parties to promote employment and training opportunities for veterans and individuals who reside in economically disadvantaged areas.

Supporters of PLAs argue that PLAs provide long-term project stability because PLAs address labor issues, establish cost standards and help projects stay on schedule by preventing costly shutdowns caused by labor disputes. Supporters also argue that PLAs often establish goals of inclusion of small businesses, minority contractors and businesses that meet disability requirements, and sometimes encourage the hiring of targeted segments of the community such as veterans and minorities. Finally, supporters of PLAs argue that PLAs increase training and advancements since some PLAs sometimes include provisions for training and apprenticeships that increase career opportunities.

Critics of PLAs argue that PLAs increase construction costs on public works by restricting the number of contractors willing to bid on these projects compared to comparable public projects without PLAs. Opponents argue that some nonunion contractors are unwilling to bid on projects requiring PLAs because these contractors do not wish to obtain a majority of their blue collar labor from the local union hall. Contractors might also be deterred from bidding if the PLA requires that they pay into collectively bargained health and retirement funds.

The debate on whether PLAs are good or bad has been an enduring debate. For example, the National University System Institute for Policy Research, in its study of the cost of PLAs on California construction between 1996 and 2008, found that PLAs added between 13-15 percent to constructions costs. The author’s office points to a study by Emma Waitzman and Peter Phillips, who in their study of the effects of using PLAs in the construction of community college construction projects in California, concluded that evidence does not support the argument that PLAs reduce the number of bidders or raise bid prices.

President Biden Executive Order. On February 4, 2022, President Biden signed an Executive Order (EO) on Use of Project Labor Agreements for Federal Construction Projects, which requires the federal government to require a PLA for a “large-construction contract,” defined in the EO as a contract for which the estimated cost is $35 million or more. It is estimated that the EO will affect an estimated $262 billion in federal construction contracting for nearly 200,000 workers.

The EO does not require construction companies to unionize, it only binds a federal construction contractor’s employees to the terms of a PLA. The EO requires every PLA to contain all of the following: (a) guarantees against strikes, lockouts, and similar job disruptions; (b) prompt, mutually binding procedures for resolving labor disputes; and (c) mechanisms for labor-management cooperation on “matters of mutual and concern, including productivity, quality of work, safety, and health.”

The EO included a number of exceptions to the PLA requirement. Specifically, the EO will not mandate a PLA if doing so would, among other things, substantially reduce potential bidders or result in inefficiency, such as projects of short duration and lacking complexity, only involving one craft or trade, or involving particularly specialized construction work. Furthermore, a PLA would not be required based on unusual and compelling needs, and other factors deemed acceptable by senior officials in federal agencies. Finally, the EO did not affect projects controlled by state and/or local governments, even if those projects receive federal funding.

It must also be noted that the EO could be terminated at any point. There is no guarantee that a new administration would continue the EO.

Related/Prior Legislation

SB 150 (Durazo, Chapter 61, Statutes of 2023) required, among other things, the inclusion of community benefits in PLAs entered into by a state agency for projects of $35 million and above in construction costs.

SB 574 (Wahab, 2023) would have prohibit a state agency from undertaking a major construction project, defined as a project that will exceed $35 million dollars, unless that project is governed by a PLA and if that PLA includes a community benefit goal, as defined. (Never Heard in the Senate Governmental Organization Committee)

SB 922 (Steinberg, Chapter 431, Statutes of 2011) required that all PLAs incorporate specified provisions, and prohibits state funding assistance, after January 1, 2015, on public works projects of charter cities having ordinances prohibiting the Use of PLAs.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

According to the Assembly Appropriations Committee, minor and absorbable costs to the Judicial Council, which oversees California's court system, to identify at least three major state construction projects to subject to a PLA. Judicial Council notes that its individual branch entities do not handle their own construction projects and interprets this bill to apply to a total of three court projects (not three court projects per branch). Judicial Council further notes it utilizes the design-build project delivery method, which encompasses certain PLA and apprenticeship requirements. Thus, Judicial Council has prior, current, and planned projects already subject to a PLA, such as the new Sacramento county courthouse.

Additionally, costs of an unknown, but potentially significant, amount to CSU if this bill impacts project costs or CSU's ability to complete projects, especially those projects supported by revenue bonds paid for by student fees (General Fund (GF) cost pressure). It is unclear how many CSU projects, if any, may meet the criteria for a major state construction project within the specified time period.

SUPPORT: (Verified 10/7/24)

State Building and Construction Trades Council of California (source)

Alameda County Democratic Party

California-Nevada Conference of Operating Engineers

California Labor Federation

California State Association of Electrical Workers

California State Council of Laborers

California State Pipe Trades Council

International Union of Operating Engineers

Western States Council of Sheet Metal Workers

OPPOSITION: (Verified 10/7/24)

Associated Builders and Contractors, Northern California Chapter

Associated General Contractors, California Chapters

Associated Roofing Contracts of the Bay Area Counties, Inc.

Burr Plumbing & Pumping, Inc.

California Chamber of Commerce

California Highway Construction Group, Inc.

Casey Construction, Inc.

Central Valley Business Federation

Construction Employers’ Association

Diede Construction, Inc.

Don Celillo Electric Company

Electrical Services Co.

Haggerty Construction

Housing Contractors of California

IMP Electrical & Automation Solutions

J.I. Garcia Construction, Inc.

Los Angeles County Business Federation

Modesto Executive Electric

Robert Colburn Electric, Inc.

Southern California Contractors Association

Stephens Construction Inc.

W.E. Lyons Construction Co.

Western Electrical Contractors Association

ARGUMENTS IN SUPPORT: According to the State Building and Construction Trades Council of California, “PLAs provide structure and stability to large-scale construction projects. These agreements help avoid labor-related disruptions, secure the commitment of all stakeholders on a construction site, and advance the interests of the project owners, contractors, and subcontractors, including small businesses. When the rules are in place from the start, workers will not be exploited, projects will be safer, and taxpayer investments will be protected. Without a PLA, this often leads to out-of-area contractors using out-of-area workers on projects, meaning most of the dollars earned by the construction workforce leave the community as soon as they are earned.”

ARGUMENTS IN OPPOSITION: According to the Associated General Contractors, “Our opposition lies with the PLA process where contractors are not engage in PLA negotiations. PLAs generally are negotiated between project owners and construction unions. This leaves out a key partner in delivering public works projects – general contractors. General contractors bid on and are responsible for delivering projects. Without contractors having a seat at the negotiation table, many important elements that will determine how a contractor can best deliver a project are already decided.”

GOVERNOR'S VETO MESSAGE:

This bill would require, beginning January 1, 2027, the Judicial Council and the California State University (CSU) to each identify and select a minimum of three major construction projects and subject those projects to a Project Labor Agreement (PLA).

While I am generally supportive of PLAs as an option for public works projects, the new requirements proposed in this bill could result in additional cost pressures that were not accounted for in this year's budget.

In partnership with the Legislature this year, my Administration has enacted a balanced budget that avoids deep program cuts to vital services and protected investments in education, health care, climate, public safety, housing, and social service programs that millions of Californians rely on. It is important to remain disciplined when considering bills with significant fiscal implications that are not included in the budget, such as this measure.

For these reasons, I cannot sign this bill.

ASSEMBLY FLOOR: 65-3, 8/28/24

AYES: Addis, Aguiar-Curry, Alanis, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Chen, Connolly, Davies, Flora, Mike Fong, Friedman, Gabriel, Garcia, Gipson, Grayson, Haney, Hart, Holden, Irwin, Jackson, Jones-Sawyer, Kalra, Lee, Low, Lowenthal, Maienschein, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Pacheco, Papan, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Rendon, Reyes, Luz Rivas, Rodriguez, Blanca Rubio, Santiago, Schiavo, Soria, Ting, Valencia, Villapudua, Wallis, Ward, Weber, Wicks, Wilson, Wood, Zbur, Robert Rivas

NOES: Megan Dahle, Essayli, Waldron

NO VOTE RECORDED: Cervantes, Dixon, Gallagher, Hoover, Lackey, Mathis, Ortega, Jim Patterson, Joe Patterson, Sanchez, Ta

Prepared by: Felipe Lopez / G.O. / (916) 651-1530

10/10/24 9:58:19

**** END ****

 UNFINISHED BUSINESS  

Bill No: SB 984

Author: Wahab (D), et al.

Amended: 8/19/24

Vote: 21

SENATE GOVERNMENTAL ORG. COMMITTEE: 10-5, 4/23/24

AYES: Dodd, Wilk, Archuleta, Ashby, Bradford, Padilla, Portantino, Roth, Rubio, Smallwood-Cuevas

NOES: Glazer, Jones, Nguyen, Ochoa Bogh, Seyarto

NO VOTE RECORDED: Alvarado-Gil

SENATE LABOR, PUB. EMP. & RET. COMMITTEE: 5-0, 4/24/24

AYES: Smallwood-Cuevas, Wilk, Cortese, Durazo, Laird

SENATE APPROPRIATIONS COMMITTEE: 5-2, 5/16/24

AYES: Caballero, Ashby, Becker, Bradford, Wahab

NOES: Jones, Seyarto

SENATE FLOOR: 28-10, 5/21/24

AYES: Archuleta, Ashby, Atkins, Becker, Blakespear, Bradford, Caballero, Cortese, Dodd, Durazo, Gonzalez, Hurtado, Laird, Limón, McGuire, Menjivar, Min, Newman, Padilla, Portantino, Roth, Rubio, Skinner, Smallwood-Cuevas, Stern, Umberg, Wahab, Wilk

NOES: Alvarado-Gil, Dahle, Eggman, Glazer, Grove, Jones, Nguyen, Niello, Ochoa Bogh, Seyarto

NO VOTE RECORDED: Allen, Wiener

ASSEMBLY FLOOR: 65-3, 8/28/24 - See last page for vote

SUBJECT: Public agencies: project labor agreements

SOURCE: State Building and Construction Trades Council of California

DIGEST:

This bill requires the Judicial Council and the California State University (CSU), by January 1, 2027, to identify and select a minimum of three major construction projects and subject those projects to a Project Labor Agreement (PLA), as specified.

Assembly Amendments

(1) delete the requirement that the Department of General Services must identify and select a minimum of three major construction projects that must be subject to a PLA, and, (2) add new requirements that provide that PLA subject to the provisions of this bill shall comply with specified requirements, including that the decision of a labor organization not to participate in the negotiations of the agreement shall not invalidate the resulting agreement.

ANALYSIS:

Existing law:

1. Establishes procedures for state agencies to enter into contracts for goods and services, including generally requiring that certain contracts by a state agency, including, but not limited to, contracts for the construction, alteration, improvement, repair, or maintenance of property, be approved by the Department of General Services (DGS).
2. Authorizes public entities to enter into, or require contractors to enter into, a PLA for a construction project only if the agreement includes specified taxpayer protection provisions.
3. Requires the inclusion of community benefits, as defined, in PLAs entered into by a state agency for projects of $35 million and above in construction costs.
4. Defines “community benefits” to mean high road construction careers programs, local hire goals, coordination with programs that assist veterans in transitioning to civilian employment, job fairs for construction partnership, or other methods agreed upon by the parties to promote employment and training opportunities for veterans and individuals who reside in economically disadvantaged areas.
5. Authorizes members of the governing board of a local public entity to choose by majority vote whether to use, or require contractors to enter into PLAs for specific projects or projects awarded by that entity and whether to allocate funding to a specific project covered by such an agreement.
6. Requires anyone working on a public works projects to be paid prevailing wages as determined by the Department of Industrial Relations.

This bill:

1. Requires the Judicial Council and the CSU, by January 1, 2027, to identify and select a minimum of three major construction projects and subject those projects to a PLA, as specified.
2. Provides that a PLA subject to the provisions of this bill shall comply with specified requirements, including that the decision of a labor organization not to participate in the negotiations of the agreement shall not invalidate the resulting agreement.
3. Defines a “state agency” to mean a superior court, court of appeal, the California Supreme Court, and the California State University (CSU).
4. Defines a “major construction project” to mean the erection, construction, alteration, repair, or improvement of any state structure, building, or other state improvement of any kind exceeding a total estimated cost of $35 million dollars.
5. Clarifies that nothing in this bill preclude the use of PLAs on any project not covered by the provisions of this bill.
6. Requires the Judicial Council and the CSU to, by January 1, 2027, submit a report to the Legislature regarding the selection of the projects as required by this bill.

Background

Author Statement. According to the author’s office, “California is a leader in the use of PLAs since Gov. Jerry Brown signed SB 922 into law. Project labor agreements have proven to be successful construction management tool for the efficient completion of public projects. Project labor agreements also can provide contractors on state projects with access to registered apprentices and protect employees on public construction projects without burdening the resources of the Division of Labor Standards Enforcement. SB 984 aims to ensure that agencies use effective tools like project labor agreements for especially complex large-scale construction projects while ensuring a baseline of protections and community benefit goals, such as hiring locals, women, formerly incarcerated people, and underrepresented and disadvantaged groups.”

Project Labor Agreements. Project labor agreements are pre-hire labor agreements negotiated between a project owner or developer and building trades unions that establish the terms and conditions of employment for a specific construction project. In California, state agencies are authorized to enter into PLAs but are not required to do so. If a state agency does enter into a PLA, the agreement is required to include all of the following taxpayer protection provisions:

1. The agreement prohibits discrimination based on race, national origin, religion, sex, sexual orientation, political affiliation, or membership in a labor organization in hiring and dispatching workers for the project.
2. The agreement permits all qualified contractors and subcontractors to bid for and be awarded work on the project without regard to whether they are otherwise parties to collective bargaining agreements.
3. The agreement contains an agreed-upon protocol concerning drug testing for workers who will be employed on the project.
4. The agreement contains guarantees against work stoppages, strikes, lockouts, and similar disruptions of the project.
5. The agreement provides that disputes arising from the agreement shall be resolved by a neutral arbitrator.

Last year, Governor Newsom signed SB 150 (Durazo, Chapter 61, Statutes of 2023) which, among other things, requires that if a state agency enters into, or requires contractors to enter into a PLA, for that PLA to include provisions to address community benefits. The bill defined community benefits to include high road construction careers programs, local hire goals, coordination with programs that assist veterans in transitioning to civilian employment, job fairs for construction partnerships, or other methods agreed upon by the parties to promote employment and training opportunities for veterans and individuals who reside in economically disadvantaged areas.

Supporters of PLAs argue that PLAs provide long-term project stability because PLAs address labor issues, establish cost standards and help projects stay on schedule by preventing costly shutdowns caused by labor disputes. Supporters also argue that PLAs often establish goals of inclusion of small businesses, minority contractors and businesses that meet disability requirements, and sometimes encourage the hiring of targeted segments of the community such as veterans and minorities. Finally, supporters of PLAs argue that PLAs increase training and advancements since some PLAs sometimes include provisions for training and apprenticeships that increase career opportunities.

Critics of PLAs argue that PLAs increase construction costs on public works by restricting the number of contractors willing to bid on these projects compared to comparable public projects without PLAs. Opponents argue that some nonunion contractors are unwilling to bid on projects requiring PLAs because these contractors do not wish to obtain a majority of their blue collar labor from the local union hall. Contractors might also be deterred from bidding if the PLA requires that they pay into collectively bargained health and retirement funds.

The debate on whether PLAs are good or bad has been an enduring debate. For example, the National University System Institute for Policy Research, in its study of the cost of PLAs on California construction between 1996 and 2008, found that PLAs added between 13-15 percent to constructions costs. The author’s office points to a study by Emma Waitzman and Peter Phillips, who in their study of the effects of using PLAs in the construction of community college construction projects in California, concluded that evidence does not support the argument that PLAs reduce the number of bidders or raise bid prices.

President Biden Executive Order. On February 4, 2022, President Biden signed an Executive Order (EO) on Use of Project Labor Agreements for Federal Construction Projects, which requires the federal government to require a PLA for a “large-construction contract,” defined in the EO as a contract for which the estimated cost is $35 million or more. It is estimated that the EO will affect an estimated $262 billion in federal construction contracting for nearly 200,000 workers.

The EO does not require construction companies to unionize, it only binds a federal construction contractor’s employees to the terms of a PLA. The EO requires every PLA to contain all of the following: (1) guarantees against strikes, lockouts, and similar job disruptions; (2) prompt, mutually binding procedures for resolving labor disputes; and (3) mechanisms for labor-management cooperation on “matters of mutual and concern, including productivity, quality of work, safety, and health.”

The EO included a number of exceptions to the PLA requirement. Specifically, the EO will not mandate a PLA if doing so would, among other things, substantially reduce potential bidders or result in inefficiency, such as projects of short duration and lacking complexity, only involving one craft or trade, or involving particularly specialized construction work. Furthermore, a PLA would not be required based on unusual and compelling needs, and other factors deemed acceptable by senior officials in federal agencies. Finally, the EO did not affect projects controlled by state and/or local governments, even if those projects receive federal funding.

It must also be noted that the EO could be terminated at any point. There is no guarantee that a new administration would continue the EO.

Related/Prior Legislation

SB 150 (Durazo, Chapter 61, Statutes of 2023) required, among other things, the inclusion of community benefits in PLAs entered into by a state agency for projects of $35 million and above in construction costs.

SB 574 (Wahab, 2023) would have prohibit a state agency from undertaking a major construction project, defined as a project that will exceed $35 million dollars, unless that project is governed by a PLA and if that PLA includes a community benefit goal, as defined. (Never Heard in the Senate Governmental Organization Committee)

SB 922 (Steinberg, Chapter 431, Statutes of 2011) required that all PLAs incorporate specified provisions, and prohibits state funding assistance, after January 1, 2015, on public works projects of charter cities having ordinances prohibiting the Use of PLAs.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

According to the Assembly Appropriations Committee, minor and absorbable costs to the Judicial Council, which oversees California's court system, to identify at least three major state construction projects to subject to a PLA. Judicial Council notes that its individual branch entities do not handle their own construction projects and interprets this bill to apply to a total of three court projects (not three court projects per branch). Judicial Council further notes it utilizes the design-build project delivery method, which encompasses certain PLA and apprenticeship requirements. Thus, Judicial Council has prior, current, and planned projects already subject to a PLA, such as the new Sacramento county courthouse.

Additionally, costs of an unknown, but potentially significant, amount to CSU if this bill impacts project costs or CSU's ability to complete projects, especially those projects supported by revenue bonds paid for by student fees (General Fund (GF) cost pressure). It is unclear how many CSU projects, if any, may meet the criteria for a major state construction project within the specified time period.

Finally, one-time Costs of an unknown, but potentially absorbable, amount to Judicial Council and CSU to report information about the selection of projects to the Legislature

SUPPORT: (Verified 8/19/24)

State Building and Construction Trades Council of California (source)

Alameda County Democratic Party

California-Nevada Conference of Operating Engineers

California Labor Federation

California State Association of Electrical Workers

California State Council of Laborers

California State Pipe Trades Council

International Union of Operating Engineers

Western States Council of Sheet Metal Workers

OPPOSITION: (Verified 8/19/24)

Associated Builders and Contractors, Northern California Chapter

Associated General Contractors, California Chapters

Associated Roofing Contracts of the Bay Area Counties, Inc.

Burr Plumbing & Pumping, Inc.

California Chamber of Commerce

California Highway Construction Group, Inc.

Casey Construction, Inc.

Central Valley Business Federation

Construction Employers’ Association

Diede Construction, Inc.

Don Celillo Electric Company

Electrical Services Co.

Haggerty Construction

Housing Contractors of California

IMP Electrical & Automation Solutions

J.I. Garcia Construction, Inc.

Los Angeles County Business Federation

Modesto Executive Electric

Robert Colburn Electric, Inc.

Southern California Contractors Association

Stephens Construction Inc.

W.E. Lyons Construction Co.

Western Electrical Contractors Association

ARGUMENTS IN SUPPORT: According to the State Building and Construction Trades Council of California, “PLAs provide structure and stability to large-scale construction projects. These agreements help avoid labor-related disruptions, secure the commitment of all stakeholders on a construction site, and advance the interests of the project owners, contractors, and subcontractors, including small businesses. When the rules are in place from the start, workers will not be exploited, projects will be safer, and taxpayer investments will be protected. Without a PLA, this often leads to out-of-area contractors using out-of-area workers on projects, meaning most of the dollars earned by the construction workforce leave the community as soon as they are earned.”

ARGUMENTS IN OPPOSITION: According to the Associated General Contractors, “Our opposition lies with the PLA process where contractors are not engage in PLA negotiations. PLAs generally are negotiated between project owners and construction unions. This leaves out a key partner in delivering public works projects – general contractors. General contractors bid on and are responsible for delivering projects. Without contractors having a seat at the negotiation table, many important elements that will determine how a contractor can best deliver a project are already decided.”

ASSEMBLY FLOOR: 65-3, 8/28/24

AYES: Addis, Aguiar-Curry, Alanis, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Chen, Connolly, Davies, Flora, Mike Fong, Friedman, Gabriel, Garcia, Gipson, Grayson, Haney, Hart, Holden, Irwin, Jackson, Jones-Sawyer, Kalra, Lee, Low, Lowenthal, Maienschein, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Pacheco, Papan, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Rendon, Reyes, Luz Rivas, Rodriguez, Blanca Rubio, Santiago, Schiavo, Soria, Ting, Valencia, Villapudua, Wallis, Ward, Weber, Wicks, Wilson, Wood, Zbur, Robert Rivas

NOES: Megan Dahle, Essayli, Waldron

NO VOTE RECORDED: Cervantes, Dixon, Gallagher, Hoover, Lackey, Mathis, Ortega, Jim Patterson, Joe Patterson, Sanchez, Ta

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Prepared by: Felipe Lopez / G.O. / (916) 651-1530

8/29/24 11:14:43

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 UNFINISHED BUSINESS  

Bill No: SB 984

Author: Wahab (D), et al.

Amended: 8/19/24

Vote: 21

SENATE GOVERNMENTAL ORG. COMMITTEE: 10-5, 4/23/24

AYES: Dodd, Wilk, Archuleta, Ashby, Bradford, Padilla, Portantino, Roth, Rubio, Smallwood-Cuevas

NOES: Glazer, Jones, Nguyen, Ochoa Bogh, Seyarto

NO VOTE RECORDED: Alvarado-Gil

SENATE LABOR, PUB. EMP. & RET. COMMITTEE: 5-0, 4/24/24

AYES: Smallwood-Cuevas, Wilk, Cortese, Durazo, Laird

SENATE APPROPRIATIONS COMMITTEE: 5-2, 5/16/24

AYES: Caballero, Ashby, Becker, Bradford, Wahab

NOES: Jones, Seyarto

SENATE FLOOR: 28-10, 5/21/24

AYES: Archuleta, Ashby, Atkins, Becker, Blakespear, Bradford, Caballero, Cortese, Dodd, Durazo, Gonzalez, Hurtado, Laird, Limón, McGuire, Menjivar, Min, Newman, Padilla, Portantino, Roth, Rubio, Skinner, Smallwood-Cuevas, Stern, Umberg, Wahab, Wilk

NOES: Alvarado-Gil, Dahle, Eggman, Glazer, Grove, Jones, Nguyen, Niello, Ochoa Bogh, Seyarto

NO VOTE RECORDED: Allen, Wiener

ASSEMBLY FLOOR: 53-3, 8/28/24 – Roll call vote not available

SUBJECT: Public agencies: project labor agreements

SOURCE: State Building and Construction Trades Council of California

DIGEST:

This bill requires the Judicial Council and the California State University (CSU), by January 1, 2027, to identify and select a minimum of three major construction projects and subject those projects to a Project Labor Agreement (PLA), as specified.

Assembly Amendments

(1) delete the requirement that the Department of General Services must identify and select a minimum of three major construction projects that must be subject to a PLA, and, (2) add new requirements that provide that PLA subject to the provisions of this bill shall comply with specified requirements, including that the decision of a labor organization not to participate in the negotiations of the agreement shall not invalidate the resulting agreement.

ANALYSIS:

Existing law:

1. Establishes procedures for state agencies to enter into contracts for goods and services, including generally requiring that certain contracts by a state agency, including, but not limited to, contracts for the construction, alteration, improvement, repair, or maintenance of property, be approved by the Department of General Services (DGS).
2. Authorizes public entities to enter into, or require contractors to enter into, a PLA for a construction project only if the agreement includes specified taxpayer protection provisions.
3. Requires the inclusion of community benefits, as defined, in PLAs entered into by a state agency for projects of $35 million and above in construction costs.
4. Defines “community benefits” to mean high road construction careers programs, local hire goals, coordination with programs that assist veterans in transitioning to civilian employment, job fairs for construction partnership, or other methods agreed upon by the parties to promote employment and training opportunities for veterans and individuals who reside in economically disadvantaged areas.
5. Authorizes members of the governing board of a local public entity to choose by majority vote whether to use, or require contractors to enter into PLAs for specific projects or projects awarded by that entity and whether to allocate funding to a specific project covered by such an agreement.
6. Requires anyone working on a public works projects to be paid prevailing wages as determined by the Department of Industrial Relations.

This bill:

1. Requires the Judicial Council and the CSU, by January 1, 2027, to identify and select a minimum of three major construction projects and subject those projects to a PLA, as specified.
2. Provides that a PLA subject to the provisions of this bill shall comply with specified requirements, including that the decision of a labor organization not to participate in the negotiations of the agreement shall not invalidate the resulting agreement.
3. Defines a “state agency” to mean a superior court, court of appeal, the California Supreme Court, and the California State University (CSU).
4. Defines a “major construction project” to mean the erection, construction, alteration, repair, or improvement of any state structure, building, or other state improvement of any kind exceeding a total estimated cost of $35 million dollars.
5. Clarifies that nothing in this bill preclude the use of PLAs on any project not covered by the provisions of this bill.
6. Requires the Judicial Council and the CSU to, by January 1, 2027, submit a report to the Legislature regarding the selection of the projects as required by this bill.

Background

Author Statement. According to the author’s office, “California is a leader in the use of PLAs since Gov. Jerry Brown signed SB 922 into law. Project labor agreements have proven to be successful construction management tool for the efficient completion of public projects. Project labor agreements also can provide contractors on state projects with access to registered apprentices and protect employees on public construction projects without burdening the resources of the Division of Labor Standards Enforcement. SB 984 aims to ensure that agencies use effective tools like project labor agreements for especially complex large-scale construction projects while ensuring a baseline of protections and community benefit goals, such as hiring locals, women, formerly incarcerated people, and underrepresented and disadvantaged groups.”

Project Labor Agreements. Project labor agreements are pre-hire labor agreements negotiated between a project owner or developer and building trades unions that establish the terms and conditions of employment for a specific construction project. In California, state agencies are authorized to enter into PLAs but are not required to do so. If a state agency does enter into a PLA, the agreement is required to include all of the following taxpayer protection provisions:

1. The agreement prohibits discrimination based on race, national origin, religion, sex, sexual orientation, political affiliation, or membership in a labor organization in hiring and dispatching workers for the project.
2. The agreement permits all qualified contractors and subcontractors to bid for and be awarded work on the project without regard to whether they are otherwise parties to collective bargaining agreements.
3. The agreement contains an agreed-upon protocol concerning drug testing for workers who will be employed on the project.
4. The agreement contains guarantees against work stoppages, strikes, lockouts, and similar disruptions of the project.
5. The agreement provides that disputes arising from the agreement shall be resolved by a neutral arbitrator.

Last year, Governor Newsom signed SB 150 (Durazo, Chapter 61, Statutes of 2023) which, among other things, requires that if a state agency enters into, or requires contractors to enter into a PLA, for that PLA to include provisions to address community benefits. The bill defined community benefits to include high road construction careers programs, local hire goals, coordination with programs that assist veterans in transitioning to civilian employment, job fairs for construction partnerships, or other methods agreed upon by the parties to promote employment and training opportunities for veterans and individuals who reside in economically disadvantaged areas.

Supporters of PLAs argue that PLAs provide long-term project stability because PLAs address labor issues, establish cost standards and help projects stay on schedule by preventing costly shutdowns caused by labor disputes. Supporters also argue that PLAs often establish goals of inclusion of small businesses, minority contractors and businesses that meet disability requirements, and sometimes encourage the hiring of targeted segments of the community such as veterans and minorities. Finally, supporters of PLAs argue that PLAs increase training and advancements since some PLAs sometimes include provisions for training and apprenticeships that increase career opportunities.

Critics of PLAs argue that PLAs increase construction costs on public works by restricting the number of contractors willing to bid on these projects compared to comparable public projects without PLAs. Opponents argue that some nonunion contractors are unwilling to bid on projects requiring PLAs because these contractors do not wish to obtain a majority of their blue collar labor from the local union hall. Contractors might also be deterred from bidding if the PLA requires that they pay into collectively bargained health and retirement funds.

The debate on whether PLAs are good or bad has been an enduring debate. For example, the National University System Institute for Policy Research, in its study of the cost of PLAs on California construction between 1996 and 2008, found that PLAs added between 13-15 percent to constructions costs. The author’s office points to a study by Emma Waitzman and Peter Phillips, who in their study of the effects of using PLAs in the construction of community college construction projects in California, concluded that evidence does not support the argument that PLAs reduce the number of bidders or raise bid prices.

President Biden Executive Order. On February 4, 2022, President Biden signed an Executive Order (EO) on Use of Project Labor Agreements for Federal Construction Projects, which requires the federal government to require a PLA for a “large-construction contract,” defined in the EO as a contract for which the estimated cost is $35 million or more. It is estimated that the EO will affect an estimated $262 billion in federal construction contracting for nearly 200,000 workers.

The EO does not require construction companies to unionize, it only binds a federal construction contractor’s employees to the terms of a PLA. The EO requires every PLA to contain all of the following: (1) guarantees against strikes, lockouts, and similar job disruptions; (2) prompt, mutually binding procedures for resolving labor disputes; and (3) mechanisms for labor-management cooperation on “matters of mutual and concern, including productivity, quality of work, safety, and health.”

The EO included a number of exceptions to the PLA requirement. Specifically, the EO will not mandate a PLA if doing so would, among other things, substantially reduce potential bidders or result in inefficiency, such as projects of short duration and lacking complexity, only involving one craft or trade, or involving particularly specialized construction work. Furthermore, a PLA would not be required based on unusual and compelling needs, and other factors deemed acceptable by senior officials in federal agencies. Finally, the EO did not affect projects controlled by state and/or local governments, even if those projects receive federal funding.

It must also be noted that the EO could be terminated at any point. There is no guarantee that a new administration would continue the EO.

Related/Prior Legislation

SB 150 (Durazo, Chapter 61, Statutes of 2023) required, among other things, the inclusion of community benefits in PLAs entered into by a state agency for projects of $35 million and above in construction costs.

SB 574 (Wahab, 2023) would have prohibit a state agency from undertaking a major construction project, defined as a project that will exceed $35 million dollars, unless that project is governed by a PLA and if that PLA includes a community benefit goal, as defined. (Never Heard in the Senate Governmental Organization Committee)

SB 922 (Steinberg, Chapter 431, Statutes of 2011) required that all PLAs incorporate specified provisions, and prohibits state funding assistance, after January 1, 2015, on public works projects of charter cities having ordinances prohibiting the Use of PLAs.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

According to the Assembly Appropriations Committee, minor and absorbable costs to the Judicial Council, which oversees California's court system, to identify at least three major state construction projects to subject to a PLA. Judicial Council notes that its individual branch entities do not handle their own construction projects and interprets this bill to apply to a total of three court projects (not three court projects per branch). Judicial Council further notes it utilizes the design-build project delivery method, which encompasses certain PLA and apprenticeship requirements. Thus, Judicial Council has prior, current, and planned projects already subject to a PLA, such as the new Sacramento county courthouse.

Additionally, costs of an unknown, but potentially significant, amount to CSU if this bill impacts project costs or CSU's ability to complete projects, especially those projects supported by revenue bonds paid for by student fees (General Fund (GF) cost pressure). It is unclear how many CSU projects, if any, may meet the criteria for a major state construction project within the specified time period.

Finally, one-time Costs of an unknown, but potentially absorbable, amount to Judicial Council and CSU to report information about the selection of projects to the Legislature

SUPPORT: (Verified 8/19/24)

State Building and Construction Trades Council of California (source)

Alameda County Democratic Party

California-Nevada Conference of Operating Engineers

California Labor Federation

California State Association of Electrical Workers

California State Council of Laborers

California State Pipe Trades Council

International Union of Operating Engineers

Western States Council of Sheet Metal Workers

OPPOSITION: (Verified 8/19/24)

Associated Builders and Contractors, Northern California Chapter

Associated General Contractors, California Chapters

Associated Roofing Contracts of the Bay Area Counties, Inc.

Burr Plumbing & Pumping, Inc.

California Chamber of Commerce

California Highway Construction Group, Inc.

Casey Construction, Inc.

Central Valley Business Federation

Construction Employers’ Association

Diede Construction, Inc.

Don Celillo Electric Company

Electrical Services Co.

Haggerty Construction

Housing Contractors of California

IMP Electrical & Automation Solutions

J.I. Garcia Construction, Inc.

Los Angeles County Business Federation

Modesto Executive Electric

Robert Colburn Electric, Inc.

Southern California Contractors Association

Stephens Construction Inc.

W.E. Lyons Construction Co.

Western Electrical Contractors Association

ARGUMENTS IN SUPPORT: According to the State Building and Construction Trades Council of California, “PLAs provide structure and stability to large-scale construction projects. These agreements help avoid labor-related disruptions, secure the commitment of all stakeholders on a construction site, and advance the interests of the project owners, contractors, and subcontractors, including small businesses. When the rules are in place from the start, workers will not be exploited, projects will be safer, and taxpayer investments will be protected. Without a PLA, this often leads to out-of-area contractors using out-of-area workers on projects, meaning most of the dollars earned by the construction workforce leave the community as soon as they are earned.”

ARGUMENTS IN OPPOSITION: According to the Associated General Contractors, “Our opposition lies with the PLA process where contractors are not engage in PLA negotiations. PLAs generally are negotiated between project owners and construction unions. This leaves out a key partner in delivering public works projects – general contractors. General contractors bid on and are responsible for delivering projects. Without contractors having a seat at the negotiation table, many important elements that will determine how a contractor can best deliver a project are already decided.”

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Prepared by: Felipe Lopez / G.O. / (916) 651-1530

8/28/24 22:09:21

**** END ****

SENATE THIRD READING

STR Bill Id:SB 984

Author:(Wahab)

As Amended Ver:August 19, 2024

Majority vote

SUMMARY

Requires, by January 1, 2027, the Judicial Council and the California State University (CSU) to identify and select a minimum of three major construction projects and to subject those projects to the requirements of a project labor agreement (PLA), as specified. Additionally requires, beginning January 1, 2027, the Judicial Council and the CSU to submit a report to the Legislature regarding the selection of the aforementioned projects.

Major Provisions

1. Finds and declares that state agencies, as defined, should, to the greatest extent feasible, make use of PLAs for major state construction projects and consider the use of PLAs for other state projects.
2. Finds and declares that the CSU should, to the greatest extent feasible, make use of PLAs for major construction projects funded by state bonds.
3. Defines "major state construction project" to include the erection, construction, alteration, repair, or improvement of any state structure, building, or other state improvement of any kind exceeding a total estimated cost of 35 million dollars ($35,000,000) overseen by the Judicial Council or the CSU.
4. Requires, by January 1, 2027, the Judicial Council and the CSU to identify and select a minimum of three major construction projects and to subject those projects to the requirements of a PLA, defined as a pre-hire collective bargaining agreement that establishes terms and conditions of employment for a specific construction project or projects.
5. Outlines additional provisions for the participation of labor organizations in the projects selected in 4) above, including but not limited to:
   1. All labor organizations, regardless of association or affiliation, with collective bargaining agreements that are the basis of prevailing wage coverage determinations, for the specified scopes of work and geographic area of the project, and which have been party to a PLA with a public entity during the prior 10 years, shall be invited to participate in the negotiations of the agreement.
   2. All labor organizations invited to participate in the negotiations of the agreement pursuant to a) above shall be permitted to become signatory to the agreement, regardless of whether the labor organization chooses to participate in negotiations.
   3. The decision by a labor organization not to become signatory to the agreement shall not invalidate the agreement, provided that the labor organization is given full opportunity to participate in the negotiations and execution of the agreement pursuant to a) above.
   4. An agreement shall require the payment of at least the applicable prevailing wage rate to all construction workers employed in the execution of the major state construction project and provide for enforcement of that obligation through an arbitration procedure.
6. States that the above provisions do not preclude the use of PLAs on any project not covered by this section.
7. Requires, on or before January 1, 2027, the Judicial Council and the CSU to each submit a report to the Legislature regarding the selection of projects pursuant to 4) above.

COMMENTS

Under California law, a project labor agreement is defined as a pre-hire collective bargaining agreement that establishes terms and conditions of employment for a specific construction project or projects. Generally speaking, PLAs promise two things: first, most of the workforce on the project will be dispatched through local union hiring halls. Second, during the term of the agreement there will be no work stoppage regardless of whether there are either strikes or lockouts elsewhere within the local construction labor market.^[1] Both conditions of a PLA create a more stable project that is likely to reach its completion date with few delays.

Furthermore, a number of studies have concluded that the use of PLAs in construction does not raise the cost of the projects. For example, a 2017 study of the use of PLAs on construction projects for community colleges in California that evaluated both PLA and nonPLA projects found that PLAs do not reduce the number of bidders nor do they raise costs.^[2] In fact, researchers found that the PLAs had slightly more bidders than the nonPLA projects.^[3]

As pointed out by the bill sponsor below, another benefit of PLAs is that they often include local hire provisions and thus create good-paying, quality jobs for members of the local community. For example, recent projects like the Golden 1 Center in Sacramento or the SoFi Stadium in Southern California utilized PLAs, which required that priority apprenticeship slots be created for residents of surrounding disadvantaged communities.

According to the Author

"Project labor agreements provide structure and stability to large-scale construction projects. These agreements help avoid labor-related disruptions, secure the commitment of all stakeholders on a construction site, and advance the interests of the project owners, contractors, and subcontractors, including small businesses.

California state agencies can also face the same challenges on large-scale projects with coordinating various contractors and employers, uncertain terms and conditions of employment, cost overruns, and project delays as federal agencies.

California is a leader in the use of Project Labor Agreements since Gov. Jerry Brown signed SB 922 into law. Project labor agreements have proven to be a successful construction management tool for the efficient completion of public projects. Project labor agreements also can provide contractors on state projects with access to registered apprentices and protect employees on public construction projects without burdening the resources of the Division of Labor Standards Enforcement.

SB 984 aims to ensure that the California State University, a superior court, court of appeal, the California Supreme Court use effective tools like project labor agreements for especially complex large-scale construction projects while guaranteeing a baseline of protections and community benefits goals, such as hiring locals, women, formerly incarcerated people, and underrepresented and disadvantaged groups."

The author further states that the bill promotes equity solutions because "Project Labor Agreements ensure that the workforce on a given project is diverse, and reflects the community that will benefit from the project itself."

Arguments in Support

The State Building and Construction Trades Council, sponsor of the bill, state, "PLAs have been around for nearly a hundred years and are proven to control costs, ensure efficient completion of projects, and establish fair wages and benefits for all workers. As an added resource, PLAs

provide contractors on state projects with access to registered apprentices, and these agreements can be written to engage local populations, provide jobs for underrepresented groups, and develop experience for apprentices. These blue-collar jobs provide family-sustaining wages, a middle-class livelihood, and an economic boost to the cities and counties where workers live and work. PLAs allow signatory agencies to prioritize apprenticeship opportunities for people in their communities."

Arguments in Opposition

The Associated Builders and Contractors of California are opposed and state, "Associated Builders and Contractors of California members are committed to building taxpayer-funded construction projects with the highest standards of safety and quality and stand ready for the chance to build and maintain California's infrastructure. State funded construction projects provide significant opportunities, particularly to small construction businesses. ABC of California apprenticeship programs are state and federally registered apprenticeship programs employing thousands of apprentices across California.

PLA mandates unfairly discourage competition from quality, qualified nonunion contractors and their employees and apprentices (who choose not to join a union), and who contribute over $1.83 Billion in state income taxes. Importantly, we believe that any state investment in construction must ensure opportunity to all Californians, regardless of labor affiliation."

FISCAL COMMENTS

According to the Assembly Appropriations Committee:

1. Minor and absorbable costs to the Judicial Council, which oversees California's court system, to identify at least three major state construction projects to subject to a PLA. Judicial Council notes that its individual branch entities do not handle their own construction projects and interprets this bill to apply to a total of three court projects (not three court projects per branch). Judicial Council further notes it utilizes the design-build project delivery method, which encompasses certain PLA and apprenticeship requirements. Thus, Judicial Council has prior, current, and planned projects already subject to a PLA, such as the new Sacramento county courthouse.
2. Costs of an unknown, but potentially significant, amount to CSU if this bill impacts project costs or CSU's ability to complete projects, especially those projects supported by revenue bonds paid for by student fees (General Fund (GF) cost pressure). It is unclear how many CSU projects, if any, may meet the criteria for a major state construction project within the specified time period.
3. One-time Costs of an unknown, but potentially absorbable, amount to Judicial Council and CSU to report information about the selection of projects to the Legislature

VOTES

SENATE FLOOR: 28-10-2

YES: Archuleta, Ashby, Atkins, Becker, Blakespear, Bradford, Caballero, Cortese, Dodd, Durazo, Gonzalez, Hurtado, Laird, Limón, McGuire, Menjivar, Min, Newman, Padilla, Portantino, Roth, Rubio, Skinner, Smallwood-Cuevas, Stern, Umberg, Wahab, Wilk

NO: Alvarado-Gil, Dahle, Eggman, Glazer, Grove, Jones, Nguyen, Niello, Ochoa Bogh, Seyarto

ABS, ABST OR NV: Allen, Wiener

ASM LABOR AND EMPLOYMENT: 7-0-0

YES: Ortega, Flora, Alanis, Lowenthal, Lee, Ward, Zbur

ASM APPROPRIATIONS: 11-0-4

YES: Wicks, Arambula, Bryan, Calderon, Wendy Carrillo, Mike Fong, Grayson, Haney, Hart, Pellerin, Villapudua

ABS, ABST OR NV: Sanchez, Dixon, Jim Patterson, Ta

UPDATED

VERSION: August 19, 2024

CONSULTANT: Megan Lane / L. & E. / (916) 319-2091 FN: 0004022

1. Waitzman, E. & Philips, P. (2017) Project Labor Agreements and Bidding Outcomes, UC Berkeley Labor Center, p. 20. ↑

2. Ibid. at 2. ↑

3. Ibid. ↑

Date of Hearing: August 7, 2024

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Buffy Wicks, Chair

SBPCA Bill Id:SB 984

Author:(Wahab) – As Amended Ver:May 16, 2024

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill requires, by January 1, 2027, specified state agencies to select a minimum of three major state construction projects required to be governed by a project labor agreement (PLA).

Specifically, this bill:

1. Requires, by January 1, 2027, a superior court, court of appeal, the California Supreme Court, and the California State University (CSU) to identify and select a minimum of three major construction projects and subject those projects to existing law governing PLAs. A “major state construction project” includes the construction or improvement of any state structure exceeding a total estimated cost of $35 million.
2. Requires, beginning January 1, 2029, and every four years thereafter, the Department of General Services (DGS) to report information to the Legislature about the use of PLAs, the advancement of any community benefit goals, and apprenticeships.

FISCAL EFFECT:

1. Minor and absorbable costs to the Judicial Council, which oversees California’s court system, to identify at least three major state construction projects to subject to a PLA. Judicial Council notes that its individual branch entities do not handle their own construction projects and interprets this bill to apply to a total of three court projects (not three court projects per branch). Judicial Council further notes it utilizes the design-build project delivery method, which encompasses certain PLA and apprenticeship requirements. Thus, Judicial Council has prior, current, and planned projects already subject to a PLA, such as the new Sacramento county courthouse.
2. Costs of an unknown, but potentially significant, amount to CSU if this bill impacts project costs or CSU’s ability to complete projects, especially those projects supported by revenue bonds paid for by student fees (General Fund (GF) cost pressure). It is unclear how many CSU projects, if any, may meet the criteria for a major state construction project within the specified time period.
3. Costs of an unknown, but potentially significant, amount to DGS to report information about projects not under DGS jurisdiction (GF). DGS would also need additional resources to work with other state agencies to compile information about those agencies’ use of PLAs, community benefit goals, and apprenticeships.

According to the Legislative Analyst’s Office, the GF faces a structural deficit in the tens of billions of dollars over the next several fiscal years.

COMMENTS:

1. Purpose. According to the author:

[PLAs] have proven to be a successful construction management tool for the efficient completion of public projects. [PLAs] also can provide contractors on state projects with access to registered apprentices and protect employees on public construction projects without burdening the resources of the Division of Labor Standards Enforcement.

SB 984 aims to ensure that the [CSU], a superior court, court of appeal, the California Supreme Court use effective tools like [PLAs] for especially complex large-scale construction projects while guaranteeing a baseline of protections and community benefits goals, such as hiring locals, women, formerly incarcerated people, and underrepresented and disadvantaged groups.

1. Support and Opposition. This bill is sponsored by the State Building and Construction Trades Council, which argues this bill builds off President Biden’s 2022 executive order requiring PLAs on federal construction projects over $35 million and “ensures that the state’s investment in major state construction projects is protected from costly delays, is executed efficiently, and provides an economic boom to the respective communities by utilizing a local workforce to perform the construction.” This bill is also supported by other labor organizations and the California Democratic Party.

This bill is opposed by the California Chamber of Commerce and various contractor associations, with the Associated Builders and Contractors of California arguing “PLA mandates unfairly discourage competition from quality, qualified nonunion contractors and their employees and apprentices…we believe that any state investment in construction must ensure opportunity to all Californians, regardless of labor affiliation.”

1. Background.

Public Entity PLAs. A PLA is a pre-hire collective bargaining agreement that establishes terms and conditions of employment for a specific construction project. Existing law authorizes a public entity to enter into, or require contractors to enter into, a PLA only if the agreement includes specified “taxpayer protection provisions,” such as permitting all qualified contractors to bid for and be awarded work without regard to whether the contractor is party to a collective bargaining agreement, and containing guarantees against work stoppages, strikes, and lockouts. SB 150 (Durazo), Chapter 61, Statutes of 2023, authorized a state agency to enter into, or require contractors to enter into, a PLA for a project or set of projects with aggregate construction costs in excess of $35 million only if the agreement includes provisions to address community benefits. Community benefits may include partnerships with high road construction careers programs, local hire goals, or job fairs for construction apprenticeship programs, among other types of workforce development.

Scope of This Bill. This bill requires, by January 1, 2027, a superior court, court of appeal, the California Supreme Court, and CSU to identify and subject at least three major construction projects to existing law governing PLAs, including requiring a PLA to address community benefits if the project has costs in excess $35 million. It is unclear whether the author intends each branch of the court system to identify three projects for a PLA, resulting in a total of nine impacted projects, or the court system as a whole to identify one project from each of the three branches.

This bill also requires DGS to report information to the Legislature about the use of PLAs, the advancement of any community benefit goals, and apprenticeships. It is unclear whether the author intends DGS to report this information for all state agencies that utilize PLAs, or only the “state agencies” specifically named in this bill, even though DGS does not oversee projects for either the court system or CSU. Additionally, specifying additional data points and metrics DGS must report regarding PLAs, community benefits, and apprenticeships may help ensure the reporting requirement is useful in discerning the impact of requiring PLAs for major construction projects.

1. Related Legislation. SB 574 (Wahab) permits a state agency to undertake a major construction project only if the project is governed by a PLA that includes community benefit goals. SB 574 was not heard by the Senate Governmental Organization Committee at the request of the author.

Analysis Prepared by: Irene Ho / APPR. / (916) 319-2081

Date of Hearing: June 19, 2024

ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT

Liz Ortega, Chair

SBPCA Bill Id:SB 984

Author:(Wahab) – As Amended Ver:May 16, 2024

SENATE VOTE: 28-10

SUBJECT: Public agencies: project labor agreements

SUMMARY: Requires, by January 1, 2027, specified courts and the California State University (CSU) to identify and select a minimum of three major construction projects and to subject those projects to the requirements governing project labor agreements (PLAs). Additionally requires, beginning January 1, 2029, the Department of General Services (DGS) to report to the Legislature about the use of PLAs, as specified. Specifically, this bill:

1. Finds and declares that state agencies, as defined, should, to the greatest extent feasible, make use of PLAs for major state construction projects and consider the use of PLAs for other state projects.
2. Finds and declares that the CSU should, to the greatest extent feasible, make use of PLAs for major construction projects funded by state bonds.
3. Defines “major state construction project” to include the erection, construction, alteration, repair, or improvement of any state structure, building, or other state improvement of any kind exceeding a total estimated cost of thirty-five million dollars ($35,000,000).
4. Defines “state agency” to mean a superior court, court of appeal, the California Supreme Court, and the CSU.
5. Requires, by January 1, 2027, each state agency to identify and select a minimum of three major construction projects and to subject those projects to the requirements governing PLAs.
6. States that the above provisions do not preclude the use of PLAs on any project not covered by this section.
7. Requires, beginning January 1, 2029, the DGS to report to the Legislature every four years about the use of PLAs, the advancement of any community benefit goals, as described, and apprenticeships.

EXISTING LAW:

1. Establishes procedures for state agencies to enter into contracts for goods and services, including generally requiring that certain contracts by a state agency to construct, alter, improve, repair, or maintain public property be approved by the DGS. Public Contract Code §10295.
2. Defines a PLA as a pre-hire collective bargaining agreement that establishes terms and conditions of employment for a specific construction project or projects. Public Contract Code §2500(b)(1).
3. Requires anyone working on a public works project to be paid prevailing wages, as determined by the Department of Industrial Relations. Labor Code §1771.
   
4. Provides, beginning January 1, 2026, that a state agency may use, enter into, or require contractors to enter into, a PLA that applies to a project or set of projects with aggregate construction costs in excess of $35,000,000 if the agreement also includes provisions to address community benefits. Community benefits may include partnerships with high road construction careers programs, local hire goals, coordination with programs that assist veterans in transitioning to civilian employment, job fairs for construction apprenticeship or preapprenticeship programs, or other methods agreed upon by the parties to promote employment and training opportunities for veterans and individuals who reside in economically disadvantaged areas. Public Contract Code §2500.5.

FISCAL EFFECT: According to the Senate Appropriations Committee,

• Unknown fiscal impact on court construction projects. To the extent that entering into a PLA increases costs for three prospective court projects, there may significant cost pressures for the Judicial Council to complete its existing and other future court capital-outlay projects. The Judicial Council is currently managing 17 active or in-progress capital projects.
• Unknown fiscal impact to the California State University (CSU). It is unknown to what extent this bill may impact CSU project costs or ability to complete projects, as CSU’s budget is generally tied to the state budget. It is also unknown how increased projects costs may impact CSU projects implemented pursuant to a student referendum, which generally are paid for by student fees. It is unknown if increased project costs for those projects may be passed onto students through increased fees.
• The Department of General Services (DGS) anticipates minor and absorbable workload to report on specified state agencies’ PLA use.

COMMENTS: Note: This bill is double referred to the Committee on Governmental Organization upon passage out of this Committee.

Under California law, a project labor agreement is defined as a pre-hire collective bargaining agreement that establishes terms and conditions of employment for a specific construction project or projects. Generally speaking, PLAs promise two things: first, most of the workforce on the project will be dispatched through local union hiring halls. Second, during the term of the agreement there will be no work stoppage regardless of whether there are either strikes or lockouts elsewhere within the local construction labor market.^[1] Both conditions of a PLA create a more stable project that is likely to reach its completion date with few delays.

Furthermore, a number of studies have concluded that the use of PLAs in construction does not raise the cost of the projects. For example, a 2017 study of the use of PLAs on construction projects for community colleges in California that evaluated both PLA and nonPLA projects found that PLAs do not reduce the number of bidders nor do they raise costs.^[2] In fact, researchers found that the PLAs had slightly more bidders than the nonPLA projects.^[3]

As pointed out by the bill sponsor below, another benefit of PLAs is that they often include local hire provisions and thus create good-paying, quality jobs for members of the local community. For example, recent projects like the Golden 1 Center in Sacramento or the SoFi Stadium in Southern California utilized PLAs, which required that priority apprenticeship slots be created for residents of surrounding disadvantaged communities.

According to the author, “Project labor agreements provide structure and stability to large-scale construction projects. These agreements help avoid labor-related disruptions, secure the commitment of all stakeholders on a construction site, and advance the interests of the project owners, contractors, and subcontractors, including small businesses.

California state agencies can also face the same challenges on large-scale projects with coordinating various contractors and employers, uncertain terms and conditions of employment, cost overruns, and project delays as federal agencies.

California is a leader in the use of Project Labor Agreements since Gov. Jerry Brown signed SB 922 into law. Project labor agreements have proven to be a successful construction management tool for the efficient completion of public projects. Project labor agreements also can provide contractors on state projects with access to registered apprentices and protect employees on public construction projects without burdening the resources of the Division of Labor Standards Enforcement.

SB 984 aims to ensure that the California State University, a superior court, court of appeal, the California Supreme Court use effective tools like project labor agreements for especially complex large-scale construction projects while guaranteeing a baseline of protections and community benefits goals, such as hiring locals, women, formerly incarcerated people, and underrepresented and disadvantaged groups.”

The author further states that the bill promotes equity solutions because “Project Labor Agreements ensure that the workforce on a given project is diverse, and reflects the community that will benefit from the project itself.”

Committee Comments

Committee staff recommend the author, subsequent to this committee, consider revising proposed Labor Code Section 2504(d)(1) to require the CSU and the Judicial Council to report to the Legislature on the use of PLAs rather than DGS. The DGS is not the appropriate entity to report on construction projects undertaken by the CSU or the courts.

Arguments in Support

The State Building and Construction Trades Council, sponsor of the bill, state, “PLAs have been around for nearly a hundred years and are proven to control costs, ensure efficient completion of projects, and establish fair wages and benefits for all workers. As an added resource, PLAs

provide contractors on state projects with access to registered apprentices, and these agreements can be written to engage local populations, provide jobs for underrepresented groups, and develop experience for apprentices. These blue-collar jobs provide family-sustaining wages, a middle-class livelihood, and an economic boost to the cities and counties where workers live and work. PLAs allow signatory agencies to prioritize apprenticeship opportunities for people in their communities.”

Arguments in Opposition

The Associated Builders and Contractors of California are opposed and state, “Associated Builders and Contractors of California members are committed to building taxpayer-funded construction projects with the highest standards of safety and quality and stand ready for the chance to build and maintain California’s infrastructure. State funded construction projects provide significant opportunities, particularly to small construction businesses. ABC of California apprenticeship programs are state and federally registered apprenticeship programs employing thousands of apprentices across California.

PLA mandates unfairly discourage competition from quality, qualified nonunion contractors and their employees and apprentices (who choose not to join a union), and who contribute over $1.83 Billion in state income taxes. Importantly, we believe that any state investment in construction must ensure opportunity to all Californians, regardless of labor affiliation.”

Prior Legislation

SB 574 (Wahab) of 2023 would have permitted a state agency to undertake a major state construction project only if that project is governed by a project labor agreement and if that project labor agreement includes community benefit goals, as specified. The bill died in the Senate Committee on Governmental Organization.

REGISTERED SUPPORT / OPPOSITION:

Support

State Building and Construction Trades Council (Sponsor)
Alameda County Democratic Central Committee
Bluegreen Alliance
California Democratic Party
California Labor Federation
California Legislative Conference of Plumbing, Heating & Piping Industry
California State Association of Electrical Workers
California State Pipe Trades Council
California Teamsters Public Affairs Council
International Union of Operating Engineers, Cal-Nevada Conference
National Electrical Contractors Association 
Northern California Allied Trades
Smart, Sheet Metal Workers' Local Union No. 104
Southern California Glass Management Association 
Western Painting and Coating Contractors Association
Western States Council Sheet Metal, Air, Rail and Transportation

Opposition

Associated Builders and Contractors of California
Associated General Contractors of California
Associated General Contractors-San Diego Chapter
Associated Roofing Contractors
Bizfed Central Valley
Burr Plumbing and Pumping Inc.
California Chamber of Commerce
California Highway Construction Group, Inc.
Carter/Kelly Incorporated
Casey Construction, Inc.
Diede Construction, Inc.
Don Celillo Electric
Electrical & Automation Solutions, LLC
Electrical Services Company
Haggerty Construction
Housing Contractors of California
Imp Electrical & Automation Solutions, LLC
J.I. Garcia Construction, Inc.
Modesto Executive Electric, Inc.
Robert Colburn Electric, Inc.
Stephens Construction, Inc.
W.E. Lyons Construction
Western Electrical Contractors Association

Oppose Unless Amended

Southern California Contractors Association

Other

Community College Facility Coalition

Analysis Prepared by: Megan Lane / L. & E. /

1. Waitzman, E. & Philips, P. (2017) Project Labor Agreements and Bidding Outcomes, UC Berkeley Labor Center, p. 20. ↑

2. Ibid. at 2. ↑

3. Ibid. ↑

 THIRD READING  

Bill No: SB 984

Author: Wahab (D), et al.

Amended: 5/16/24

Vote: 21

SENATE GOVERNMENTAL ORG. COMMITTEE: 10-5, 4/23/24

AYES: Dodd, Wilk, Archuleta, Ashby, Bradford, Padilla, Portantino, Roth, Rubio, Smallwood-Cuevas

NOES: Glazer, Jones, Nguyen, Ochoa Bogh, Seyarto

NO VOTE RECORDED: Alvarado-Gil

SENATE LABOR, PUB. EMP. & RET. COMMITTEE: 5-0, 4/24/24

AYES: Smallwood-Cuevas, Wilk, Cortese, Durazo, Laird

SENATE APPROPRIATIONS COMMITTEE: 5-2, 5/16/24

AYES: Caballero, Ashby, Becker, Bradford, Wahab

NOES: Jones, Seyarto

SUBJECT: Public agencies: project labor agreements

SOURCE: State Building and Construction Trades Council of California

DIGEST: This bill requires specified state agencies, by January 1, 2027, to identify and select a minimum of three major state construction projects that are required to be governed by a project labor agreement (PLA).

ANALYSIS:

Existing law:

1. Establishes procedures for state agencies to enter into contracts for goods and services, including generally requiring that certain contracts by a state agency, including, but not limited to, contracts for the construction, alteration, improvement, repair, or maintenance of property, be approved by the Department of General Services (DGS).
2. Authorizes public entities to enter into, or require contractors to enter into, a PLA for a construction project only if the agreement includes specified taxpayer protection provisions.
3. Requires the inclusion of community benefits, as defined, in PLAs entered into by a state agency for projects of $35 million and above in construction costs.
4. Defines “community benefits” to mean high road construction careers programs, local hire goals, coordination with programs that assist veterans in transitioning to civilian employment, job fairs for construction partnership, or other methods agreed upon by the parties to promote employment and training opportunities for veterans and individuals who reside in economically disadvantaged areas.
5. Authorizes members of the governing board of a local public entity to choose by majority vote whether to use, or require contractors to enter into PLAs for specific projects or projects awarded by that entity and whether to allocate funding to a specific project covered by such an agreement.
6. Requires anyone working on a public works projects to be paid prevailing wages as determined by the Department of Industrial Relations.

This bill:

1. Requires state agencies as defined, by January 1, 2027, to identify and select a minimum of three major construction projects and subject those projects to a PLA, as specified.
2. Defines a “state agency” to mean a superior court, court of appeal, the California Supreme Court, and the California State University (CSU).
3. Defines a “major construction project” to mean the erection, construction, alteration, repair, or improvement of any state structure, building, or other state improvement of any kind exceeding a total estimated cost of $35 million dollars.
4. Clarifies that nothing in this bill preclude the use of PLAs on any project not covered by the provisions of this bill.
5. Requires DGS, beginning on January 1, 2029, and every four years thereafter to issue a report on the use of PLAs, the advancement of community benefit goals, and apprenticeships, as specified.
6. Makes various legislative findings.

Background

Author Statement. According to the author’s office, “California is a leader in the use of PLAs since Gov. Jerry Brown signed SB 922 into law. Project labor agreements have proven to be successful construction management tool for the efficient completion of public projects. Project labor agreements also can provide contractors on state projects with access to registered apprentices and protect employees on public construction projects without burdening the resources of the Division of Labor Standards Enforcement. SB 984 aims to ensure that agencies use effective tools like project labor agreements for especially complex large-scale construction projects while ensuring a baseline of protections and community benefit goals, such as hiring locals, women, formerly incarcerated people, and underrepresented and disadvantaged groups.”

Project Labor Agreements. Project labor agreements are pre-hire labor agreements negotiated between a project owner or developer and building trades unions that establish the terms and conditions of employment for a specific construction project. In California, state agencies are authorized to enter into PLAs but are not required to do so. If a state agency does enter into a PLA, the agreement is required to include all of the following taxpayer protection provisions:

1. The agreement prohibits discrimination based on race, national origin, religion, sex, sexual orientation, political affiliation, or membership in a labor organization in hiring and dispatching workers for the project.
2. The agreement permits all qualified contractors and subcontractors to bid for and be awarded work on the project without regard to whether they are otherwise parties to collective bargaining agreements.
3. The agreement contains an agreed-upon protocol concerning drug testing for workers who will be employed on the project.
4. The agreement contains guarantees against work stoppages, strikes, lockouts, and similar disruptions of the project.
5. The agreement provides that disputes arising from the agreement shall be resolved by a neutral arbitrator.

Last year, Governor Newsom signed SB 150 (Durazo, Chapter 61, Statutes of 2023) which, among other things, requires that if a state agency enters into, or requires contractors to enter into a PLA, for that PLA to include provisions to address community benefits. The bill defined community benefits to include high road construction careers programs, local hire goals, coordination with programs that assist veterans in transitioning to civilian employment, job fairs for construction partnerships, or other methods agreed upon by the parties to promote employment and training opportunities for veterans and individuals who reside in economically disadvantaged areas.

Supporters of PLAs argue that PLAs provide long-term project stability because PLAs address labor issues, establish cost standards and help projects stay on schedule by preventing costly shutdowns caused by labor disputes. Supporters also argue that PLAs often establish goals of inclusion of small businesses, minority contractors and businesses that meet disability requirements, and sometimes encourage the hiring of targeted segments of the community such as veterans and minorities. Finally, supporters of PLAs argue that PLAs increase training and advancements since some PLAs sometimes include provisions for training and apprenticeships that increase career opportunities.

Critics of PLAs argue that PLAs increase construction costs on public works by restricting the number of contractors willing to bid on these projects compared to comparable public projects without PLAs. Opponents argue that some nonunion contractors are unwilling to bid on projects requiring PLAs because these contractors do not wish to obtain a majority of their blue collar labor from the local union hall. Contractors might also be deterred from bidding if the PLA requires that they pay into collectively bargained health and retirement funds.

The debate on whether PLAs are good or bad has been an enduring debate. For example, the National University System Institute for Policy Research, in its study of the cost of PLAs on California construction between 1996 and 2008, found that PLAs added between 13-15 percent to constructions costs. The author’s office points to a study by Emma Waitzman and Peter Phillips, who in their study of the effects of using PLAs in the construction of community college construction projects in California, concluded that evidence does not support the argument that PLAs reduce the number of bidders or raise bid prices.

President Biden Executive Order. On February 4, 2022, President Biden signed an Executive Order (EO) on Use of Project Labor Agreements for Federal Construction Projects, which requires the federal government to require a PLA for a “large-construction contract,” defined in the EO as a contract for which the estimated cost is $35 million or more. It is estimated that the EO will affect an estimated $262 billion in federal construction contracting for nearly 200,000 workers.

The EO does not require construction companies to unionize, it only binds a federal construction contractor’s employees to the terms of a PLA. The EO requires every PLA to contain all of the following: (1) guarantees against strikes, lockouts, and similar job disruptions; (2) prompt, mutually binding procedures for resolving labor disputes; and (3) mechanisms for labor-management cooperation on “matters of mutual and concern, including productivity, quality of work, safety, and health.”

The EO included a number of exceptions to the PLA requirement. Specifically, the EO will not mandate a PLA if doing so would, among other things, substantially reduce potential bidders or result in inefficiency, such as projects of short duration and lacking complexity, only involving one craft or trade, or involving particularly specialized construction work. Furthermore, a PLA would not be required based on unusual and compelling needs, and other factors deemed acceptable by senior officials in federal agencies. Finally, the EO did not affect projects controlled by state and/or local governments, even if those projects receive federal funding.

It must also be noted that the EO could be terminated at any point. There is no guarantee that a new administration would continue the EO.

Related/Prior Legislation

SB 150 (Durazo, Chapter 61, Statutes of 2023) among other things, requires the inclusion of community benefits in PLAs entered into by a state agency for projects of $35 million and above in construction costs.

SB 574 (Wahab, 2023) would have prohibit a state agency from undertaking a major construction project, defined as a project that will exceed $35 million dollars, unless that project is governed by a PLA and if that PLA includes a community benefit goal, as defined. (Never Heard in the Senate Governmental Organization Committee)

SB 922 (Steinberg, Chapter 431, Statutes of 2011) requires that all PLAs incorporate specified provisions, and prohibits state funding assistance, after January 1, 2015, on public works projects of charter cities having ordinances prohibiting the Use of PLAs.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

According to the Senate Appropriations Committee, unknown fiscal impact on court construction projects. To the extent that entering into a PLA increases costs for three prospective court projects, there may significant cost pressures for the Judicial Council to complete its existing and other future court capital-outlay projects. The Judicial Council is currently managing 17 active or in-progress capital projects.

Unknown fiscal impact to the California State University (CSU). It is unknown to what extent this bill may impact CSU project costs or ability to complete projects, as CSU’s budget is generally tied to the state budget. It is also unknown how increased projects costs may impact CSU projects implemented pursuant to a student referendum, which generally are paid for by student fees. It is unknown if increased project costs for those projects may be passed onto students through increased fees.

SUPPORT: (Verified 5/15/24)

State Building and Construction Trades Council of California (source)

Alameda County Democratic Party

California-Nevada Conference of Operating Engineers

California Labor Federation

California State Association of Electrical Workers

California State Council of Laborers

California State Pipe Trades Council

International Union of Operating Engineers

Western States Council of Sheet Metal Workers

OPPOSITION: (Verified 5/15/2024)

Associated Builders and Contractors, Northern California Chapter

Associated General Contractors, California Chapters

Associated Roofing Contracts of the Bay Area Counties, Inc.

Burr Plumbing & Pumping, Inc.

California Chamber of Commerce

California Conference of Carpenters

California Highway Construction Group, Inc.

Casey Construction, Inc.

Central Valley Business Federation

Construction Employers’ Association

Diede Construction, Inc.

Don Celillo Electric Company

Electrical Services Co.

Haggerty Construction

Housing Contractors of California

IMP Electrical & Automation Solutions

J.I. Garcia Construction, Inc.

Los Angeles County Business Federation

Modesto Executive Electric

Robert Colburn Electric, Inc.

Southern California Contractors Association

Stephens Construction Inc.

W.E. Lyons Construction Co.

Western Electrical Contractors Association

ARGUMENTS IN SUPPORT: According to the State Building and Construction Trades Council of California, “PLAs provide structure and stability to large-scale construction projects. These agreements help avoid labor-related disruptions, secure the commitment of all stakeholders on a construction site, and advance the interests of the project owners, contractors, and subcontractors, including small businesses. When the rules are in place from the start, workers will not be exploited, projects will be safer, and taxpayer investments will be protected. Without a PLA, this often leads to out-of-area contractors using out-of-area workers on projects, meaning most of the dollars earned by the construction workforce leave the community as soon as they are earned.”

ARGUMENTS IN OPPOSITION: According to the California Conference of Carpenters, “existing law already allows public entities to use a ‘prehire collective bargaining agreement’ for projects over $35 million. California Public Works laws, among the strongest in the nation, already require the payment of prevailing wages with a benefit package including pension and health benefits. When pension and health benefits are not provided, the worker receives the costs of these benefits on the paycheck. The use of registered apprentices is required unless there are none available, or none are made available, by the existing registered apprentice training program in the region. SB 984 adds nothing to those protections.”

According to the Associated Builders and Contractors (ABC) of California, “[our] members are committed to building taxpayer-funded construction projects with the highest standards of safety and quality and stand ready for the chance to build and maintain California’s infrastructure. State funded construction projects provide significant opportunities, particularly to small construction businesses. ABC of California apprenticeship programs are state and federally registered apprenticeship programs employing thousands of apprentices across California. PLA mandates unfairly discourage competition from quality, qualified nonunion contractors and their employees and apprentices (who choose not to join a union), and who contribute over $1.83 Billion in state income taxes. Importantly, we believe that any state investment in construction must ensure opportunity to all Californians, regardless of labor affiliation.”

Prepared by: Felipe Lopez / G.O. / (916) 651-1530

5/17/24 10:09:14

**** END ****

SENATE COMMITTEE ON

Senator Anna Caballero, Chair

2023 - 2024 Regular Session

SB 984 (Wahab) - Public agencies: project labor agreements

Bill Summary:

SB 984 requires specified state agencies to identify and select a minimum of three major construction projects that are required to be governed by a project labor agreement (PLA) by January 1, 2027.

*********** ANALYSIS ADDENDUM – SUSPENSE FILE ***********

The following information is revised to reflect amendments

adopted by the committee on May 16, 2024

Fiscal Impact:

• Unknown fiscal impact on court construction projects. To the extent that entering into a PLA increases costs for three prospective court projects, there may significant cost pressures for the Judicial Council to complete its existing and other future court capital-outlay projects. The Judicial Council is currently managing 17 active or in-progress capital projects.
• Unknown fiscal impact to the California State University (CSU). It is unknown to what extent this bill may impact CSU project costs or ability to complete projects, as CSU’s budget is generally tied to the state budget. It is also unknown how increased projects costs may impact CSU projects implemented pursuant to a student referendum, which generally are paid for by student fees. It is unknown if increased project costs for those projects may be passed onto students through increased fees.
• The Department of General Services (DGS) anticipates minor and absorbable workload to report on specified state agencies’ PLA use.

Committee Amendments:

Remove DGS and the Department of Toxic Substances Control from PLA project requirements.

-- END --

SENATE COMMITTEE ON APPROPRIATIONS

Senator Anna Caballero, Chair

2023 - 2024 Regular Session

SB 984 (Wahab) - Public agencies: project labor agreements

Bill Summary:

SB 984 requires specified state agencies to identify and select a minimum of three major construction projects that are required to be governed by a project labor agreement (PLA) by January 1, 2027.

Fiscal Impact:

• The Department of General Services (DGS) notes it has required PLAs for all of its major state construction projects since 2016. However, DGS also notes that PLAs are market and project based, and the cost impacts of entering into a PLA vary significantly. Factors include, among other things, project specifics, location, availability of labor, the number of firms able to complete the work, and the bonding capacity of available contractors. DGS anticipates minor and absorbable workload to report on specified state agencies’ PLA use.
• The Department of Toxic Substances Control (DTSC) reports an unknown likely significant increase in project costs, ranging in the millions of dollars per project (Toxic Substances Control Account). DTSC notes that it is unclear if any of its major cleanup projects would qualify under the bill’s definition of “major state construction project.” Assuming so, DTSC anticipates total increased cleanup project costs in the tens of millions of dollars over the course of three projects.

DTSC has previously entered into a PLA for the Exide residential cleanup in 2017, and found that utilizing a PLA for this project increased the cost of the cleanup by approximately 25 percent. Using the Exide cleanup as a model, DTSC anticipates entering into a PLA for a project meeting the $35 million threshold in this bill will cost the department an additional $8.8 million over the course of that project. Therefore, total costs to DTSC to meet the PLA requirements of this bill over the course of three projects is estimated to be $26.4 million.

• Unknown fiscal impact on court construction projects. To the extent that entering into a PLA increases costs for three prospective court projects, there may significant cost pressures for the Judicial Council to complete its existing and other future court capital-outlay projects. The Judicial Council is currently managing 17 active or in-progress capital projects.
• Unknown fiscal impact to the California State University (CSU). It is unknown to what extent this bill may impact CSU project costs or ability to complete projects, as CSU’s budget is generally tied to the state budget. It is also unknown how increased projects costs may impact CSU projects implemented pursuant to a student referendum, which generally are paid for by student fees. It is unknown if increased project costs for those projects may be passed onto students through increased fees.

Background:

Project labor agreements are pre-hire labor agreements negotiated between a project owner or developer and building trades unions that establish the terms and conditions of employment for a specific construction project. In California, state agencies are authorized to enter into PLAs but are not required to do so. If a state agency does enter into a PLA, the agreement is required to include all of the following taxpayer protection provisions:

• The agreement prohibits discrimination based on race, national origin, religion, sex, sexual orientation, political affiliation, or membership in a labor organization in hiring and dispatching workers for the project.
• The agreement permits all qualified contractors and subcontractors to bid for and be awarded work on the project without regard to whether they are otherwise parties to collective bargaining agreements.
• The agreement contains an agreed-upon protocol concerning drug testing for workers who will be employed on the project.
• The agreement contains guarantees against work stoppages, strikes, lockouts, and similar disruptions of the project.
• The agreement provides that disputes arising from the agreement shall be resolved by a neutral arbitrator.

Last year, Governor Newsom signed SB 150 (Durazo, Chapter 61, Statutes of 2023) which, among other things, requires that if a state agency enters into, or requires contractors to enter into a PLA, for that PLA to include provisions to address community benefits. The bill defined community benefits to include high road construction careers programs, local hire goals, coordination with programs that assist veterans in transitioning to civilian employment, job fairs for construction partnerships, or other methods agreed upon by the parties to promote employment and training opportunities for veterans and individuals who reside in economically disadvantaged areas.

Proposed Law:

• By January 1, 2027, requires state agencies to identify and select a minimum of three major construction projects and subject those projects to the requirements governing PLAs.
  • Specifies that “state agencies” means DGS, DTSC, a superior court, court of appeal, the California Supreme Court, and the CSU.
  • Provides that a major construction project includes the erection, construction, alteration, repair, or improvement of any state structure, building, or other state improvement of any kind exceeding a total estimated cost of $35,000,000.
• Beginning January 1, 2029, requires DGS to report to the Legislature every four years about the use of PLAs, the advancement of any community benefit goals, and apprenticeships.
• States legislative findings and declarations.

-- END --

SENATE COMMITTEE ON LABOR, PUBLIC EMPLOYMENT AND RETIREMENT

Senator Lola Smallwood-Cuevas, Chair

2023 - 2024 Regular

Bill No: SB 984 Hearing Date: April 24, 2024

SUBJECT: Public agencies: project labor agreements

KEY ISSUE

This bill requires specified agencies to identify and select at least three major state construction projects each, which would then be required to be governed by project labor agreements (PLAs) and also requires the Department of General Services to report to the Legislature regarding the use of those PLAs and their advancement of community benefit goals and apprenticeships.

ANALYSIS

Existing law:

1. Establishes procedures for state agencies to enter into contracts for goods and

services, including generally requiring that certain contracts by a state agency to construct, alter, improve, repair, or maintain public property be approved by the Department of General Services (DGS). (Government Code §§10300 et seq.)

1. Defines a PLA as a pre-hire collective bargaining agreement that establishes terms and conditions of employment for a specific construction project or projects. (Public Contract Code §2500(b)(1))
   
2. Requires anyone working on a public works project to be paid prevailing wages, as determined by the Department of Industrial Relations. (Labor Code §1700 et seq.)
   
3. Provides, beginning January 1, 2026, that a state agency may use, enter into, or require contractors to enter into, a project labor agreement that applies to a project or set of projects with aggregate construction costs in excess of $35,000,000 if the agreement also includes provisions to address community benefits. Community benefits may include partnerships with high road construction careers programs, local hire goals, coordination with programs that assist veterans in transitioning to civilian employment, job fairs for construction apprenticeship or preapprenticeship programs, or other methods agreed upon by the parties to promote employment and training opportunities for veterans and individuals who reside in economically disadvantaged areas. (Public Contract Code §2500.5)

This bill:

1. Requires the following state agencies, by January 1, 2027, to identify and select at least three major construction projects each of $35 million or more and subject those projects to PLAs:
   1. Department of General Services (DGS);
   2. Department of Toxic Substances Control;
   3. California State University; and
   4. California Supreme Court, any superior court, and court of appeal.
      
2. Requires, by January 1, 2029, DGS to report to the Legislature every four years regarding the use of the PLAs required by this bill, the advancement of any community benefit goals, and apprenticeships. The report shall be submitted to the Secretary of the Senate, Chief Clerk of the Assembly, and Legislative Counsel, and posted on the DGS website.
   
3. Defines a “major state construction project” as the erection, construction, alteration, repair, or improvement of any state structure, building, or other state improvement of any kind exceeding a total estimated cost of $35,000,000.
   
4. Specifies that the requirements contained in this bill do not preclude the use of PLAs on any other projects.
   
5. Makes the following Legislative findings and declarations:
   
   1. Project labor agreements have proven to be a successful construction management tool for the efficient completion of certain public projects.
   2. Project labor agreements also can provide contractors on certain state projects with access to registered apprentices and protect employees on public construction projects without burdening the resources of the Division of Labor Standards Enforcement.
   3. The state agencies described in Section 2504 of the Public Contract Code should, to the greatest extent feasible, make use of project labor agreements for major state construction projects and consider the use of project labor agreements for other state projects.
   4. The University of California and the California Community Colleges should also, to the greatest extent feasible, make use of project labor agreements for major construction projects funded by state bonds.
      

COMMENTS

1. Background

In December 2023, President Biden’s Executive Order (EO) regarding the use of PLAs for federal construction projects was published in the Federal Register as the Federal Acquisition Regulatory Council’s final rule.^[1] The rule requires the federal government to secure a PLA for a construction contract with an estimated cost of $35 million or more. Construction means construction, reconstruction, rehabilitation, modernization, alteration, conversion, extension, repair, or improvement of buildings, structures, highways, or other real property. Should an agency determine it appropriate to require a PLA for projects that cost less than $35 million, the rule authorizes them to do so. This rule does not apply to federally assisted projects, although a federal agency is not precluded by the rule from requiring a PLA on a federally assisted project procured by private owners or state/local governments.

The rule binds an employer to the terms of a PLA and requires the PLA to include guarantees against strikes, lockouts, and similar job disruptions and prompt, mutually binding procedures for resolving labor disputes. The PLAs are also required to include mechanisms for labor-management cooperation on matters of mutual concern, including productivity, quality of work, safety, and health.

The rule included some exceptions to the PLA requirement. A project would not need to require a PLA if it is determined by the contracting agency to not advance the federal government’s interests in achieving economy and efficiency in federal procurement, based on the following factors:

• The project is of short duration and lacks operational complexity.
• The project will involve only one craft or trade.
• The agency's need for the project is of such an unusual and compelling urgency that a project labor agreement would be impracticable.

Additionally, a project could be exempt from the rule if (1) market research indicates requiring a PLA would substantially reduce the number of potential contractors to such a degree that adequate competition at a fair and reasonable price could not be achieved, or (2) requiring a PLA would otherwise be inconsistent with federal statutes, regulations, executive orders, or Presidential memoranda.

On March 28, 2024, Associated Builders and Contractors and its Florida Coast chapter filed a lawsuit in the U.S. District Court for the Middle District of Florida in Jacksonville seeking a national injunction against President Biden’s EO. Their complaint asserts the President lacked the authority to impose these regulation.^[2]

The previous amendments to this bill specified the California Supreme Court, any superior court, and court of appeal shall each identify three major construction projects to apply PLAs. If it is the intent to require California’s judicial branch as a whole to identify three major construction projects, the author may wish to consider amendments to clarify this in the future.

2. Need for this bill?

The author states “Several California cities have banned the use of PLAs either through voter-approved initiatives, or city and county ordinances on the grounds of pre-emption under the National Labor Relations Act (NLRA) and alleging violation of state or local competitive bidding requirements that require public construction contracts to be awarded to the lowest responsible bidder.

Without additions to Public Contract Code specifying the State’s interest in protecting employees on state construction projects, as well as furthering community benefit goals such as hiring locals, women, the formerly incarcerated, underrepresented groups and disadvantaged groups, the current law does not adequately address those shortcomings.”

3. Proponent Arguments

The California State Pipe Trades Council, California State Association of Electrical Workers, State Building and Construction Trades Council of California, and Western States Council of Sheet Metal Workers state “PLAs have been around for nearly a hundred years and are proven to control costs, ensure efficient completion of projects, and establish fair wages and benefits for all workers. As an added resource, PLAs provide contractors on state projects with access to registered apprentices and these agreements can be written to engage local populations, provide jobs for underrepresented groups, and develop experience for apprentices. These blue-collar jobs provide family-sustaining wages, a middle-class livelihood, and provide an economic boost to the cities and counties where workers live and work. PLAs allow signatory agencies to prioritize apprenticeship opportunities for people in their own communities.

When projects like the Golden 1 Center in Sacramento or SoFi Stadium in Southern California were constructed under negotiated PLAs, priority apprenticeship slots were created for residents of disadvantaged communities near the projects, even down to the zip code. Similar agreements statewide have prioritized apprenticeship opportunities for members of indigenous tribes, women, veterans, and other specific groups. By leveraging their projects through these agreements, policymakers have found a powerful tool capable of creating great change in their communities.

Project labor agreements provide structure and stability to large-scale construction projects. These agreements help avoid labor-related disruptions, secure the commitment of all stakeholders on a construction site, and advance the interests of the project owners, contractors, and subcontractors, including small businesses. When the rules are in place from the start, workers will not be exploited, projects are safer, and taxpayer investments are protected. Without a PLA, this often leads to out-of-area contractors using out-of-area workers on projects, meaning most of the dollars earned by the construction workforce leave the community as soon as they are earned.

PLAs are the optimal method to deliver public and private projects that guarantee workers earn fair wages for their work while providing public agencies and private customers a construction project that reduces costs, promotes on-time project completion, and delivers higher quality construction using a highly skilled workforce.”

4. Opponent Arguments

Construction Employers’ Association (CEA) states “CEA members are signatory to the Carpenters and the Laborers and often benefit from PLAs when properly drafted. Unfortunately, because PLAs are generally negotiated without contractor involvement, many do not recognize CEA’s subcontracting clauses which obligate CEA members to hire subcontractors that are signatory to either the Carpenters or Laborers. In fact, grievances are routinely filed on PLA projects alleging that work was improperly assigned when there are overlapping jurisdictions. Pursuant to CEA’s CBAs however, when there are overlapping jurisdictions, CEA members must contract with firms signatory to the Carpenters or Laborers. This places CEA members in an untenable position, they can either violate their CBAs or they can elect to not take work.”

Associated Builders and Contractors of California state “[We] are committed to building taxpayer-funded construction projects with the highest standards of safety and quality and stand ready for the chance to build and maintain California’s infrastructure. State funded construction projects provide significant opportunities, particularly to small construction businesses. ABC of California apprenticeship programs are state and federally registered apprenticeship programs employing thousands of apprentices across California. [PLA] mandates unfairly discourage competition from quality, qualified nonunion contractors and their employees and apprentices (who choose not to join a union), and who contribute over $1.83 Billion in state income taxes. Importantly, we believe that any state investment in construction must ensure opportunity to all Californians, regardless of labor affiliation.”

5. Dual Referral

The Senate Rules Committee referred this bill to the Senate Committee on Governmental Organization, which heard and passed the bill, and to the Senate Labor, Public Employment and Retirement Committee.

6. Prior Legislation

SB 574 (Wahab, 2023) would have prohibited a state agency from undertaking a major

construction project unless that project was governed by a PLA that included a community benefit goal. This bill was held in the Senate Committee on Governmental Organization.

SB 922 (Steinberg, Chapter 431, Statutes of 2011) required all PLAs to incorporate specified provisions, and prohibited state funding assistance, after January 1, 2015, on public works projects of charter cities that have ordinances prohibiting the use of PLAs.

SUPPORT

State Building and Construction Trades Council (Sponsor)

Alameda County Democratic Central Committee
California Labor Federation
California State Association of Electrical Workers

California State Council of Laborers
California State Pipe Trades Council
International Union of Operating Engineers, Cal-Nevada Conference
Western States Council Sheet Metal Workers

OPPOSITION

Associated Builders and Contractors Northern California Chapter

Associated Builders and Contractors of California

Associated General Contractors of California

Associated General Contractors-san Diego Chapter

Associated Roofing Contractors

Burr Plumbing and Pumping INC.

California Chamber of Commerce

California Highway Construction Group, INC.

Carter/Kelly Incorporated

Casey Construction, INC.

Construction Employers' Association

Diede Construction, INC.

Don Celillo Electric

Electrical & Automation Solutions, LLC

Electrical Services Company

Haggerty Construction

Housing Contractors of California

Imp Electrical & Automation Solutions, LLC

J.I. Garcia Construction, INC.

Modesto Executive Electric, INC.

Robert Colburn Electric, INC.

Stephens Construction, INC.

W.E. Lyons Construction

Western Electrical Contractors Association

-- END --

1. National Archives and Records Administration, Federal Register, April 18, 2024, Federal Register :: Federal Acquisition Regulation: Use of Project Labor Agreements for Federal Construction Projects, 22.503 ↑

2. ABC Files Lawsuit Against President Biden’s…, Associated Builders and Contractors, march 28, 2024, https://www.abc.org/News-Media/News-Releases/abc-files-lawsuit-against-president-bidens-anti-competitive-project-labor-agreement-rule-for-federal-construction-projects ↑

SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION

Senator Bill Dodd

Chair

2023 - 2024 Regular

Bill No: 984 Hearing Date: 4/23/2024

SUBJECT: Public agencies: project labor agreements

DIGEST: This bill requires a state agency, as defined, by January 1, 2027, to identify and select a minimum of three major state construction projects that are required to be governed by a project labor agreement (PLA).

ANALYSIS:

Existing law:

1. Establishes procedures for state agencies to enter into contracts for goods and services, including generally requiring that certain contracts by a state agency, including, but not limited to, contracts for the construction, alteration, improvement, repair, or maintenance of property, be approved by the Department of General Services (DGS).
2. Authorizes public entities to enter into, or require contractors to enter into, a PLA for a construction project only if the agreement includes all of the following taxpayer protection provisions:
   1. The agreement prohibits discrimination based on race, national origin, religion, sex, sexual orientation, political affiliation, or membership in a labor organization in hiring and dispatching workers for the project.
   2. The agreement permits all qualified contractors and subcontractors to bid for and be awarded work on the project without regard to whether they are otherwise parties to collective bargaining agreements.
   3. The agreement contains an agreed-upon protocol concerning drug testing for workers who will be employed on the project.
   4. The agreement contains guarantees against work stoppages, strikes, lockouts, and similar disruptions of the project.
   5. The agreement provides that disputes arising from the agreement shall be resolved by a neutral arbitrator.
3. Requires the inclusion of community benefits, as defined, in PLAs entered into by a state agency for projects of $35 million and above in construction costs.
4. Defines “community benefits” to mean high road construction careers programs, local hire goals, coordination with programs that assist veterans in transitioning to civilian employment, job fairs for construction partnership, or other methods agreed upon by the parties to promote employment and training opportunities for veterans and individuals who reside in economically disadvantaged areas.
5. Authorizes members of the governing board of a local public entity to choose by majority vote whether to use, or require contractors to enter into PLAs for specific projects or projects awarded by that entity and whether to allocate funding to a specific project covered by such an agreement.
6. Provides that if a charter provision, initiative, or ordinance of a charter city prohibits the governing board’s consideration of a PLA that includes all the taxpayer provisions for a project to be awarded by the city, or prohibits the governing board from considering whether to allocate funds to a city-funded project covered by such an agreement, then state funding or financial assistance shall not be used to support that project.
7. Requires anyone working on a public works projects to be paid prevailing wages as determined by the Department of Industrial Relations.

This bill:

1. Requires state agencies as defined, by January 1, 2027, to identify and select a minimum of three major construction projects and subject those projects to a PLA, as specified.
2. Defines a “state agency” to mean DGS, the Department of Toxic Substances Control (DTSC), a superior court, court of appeal, the California Supreme Court, and the California State University (CSU).
3. Defines a “major construction project” to mean the erection, construction, alteration, repair, or improvement of any state structure, building, or other state improvement of any kind exceeding a total estimated cost of $35 million dollars.
4. Clarifies that nothing in this bill preclude the use of PLAs on any project not covered by the provisions of this bill.
5. Requires DGS, beginning on January 1, 2029, and every four years thereafter to issue a report on the use of PLAs, the advancement of community benefit goals, and apprenticeships, as specified.
6. Makes various legislative findings.

Background

Author Statement. According to the author’s office, “California is a leader in the use of PLAs since Gov. Jerry Brown signed SB 922 into law. Project labor agreements have proven to be successful construction management tool for the efficient completion of public projects. Project labor agreements also can provide contractors on state projects with access to registered apprentices and protect employees on public construction projects without burdening the resources of the Division of Labor Standards Enforcement. SB 984 aims to ensure that agencies use effective tools like project labor agreements for especially complex large-scale construction projects while ensuring a baseline of protections and community benefit goals, such as hiring locals, women, formerly incarcerated people, and underrepresented and disadvantaged groups.”

Project Labor Agreements. Project labor agreements are pre-hire labor agreements negotiated between a project owner or developer and building trades unions that establish the terms and conditions of employment for a specific construction project. In California, state agencies are authorized to enter into PLAs but are not required to do so. If a state agency does enter into a PLA, the agreement is required to include all of the following taxpayer protection provisions:

• 1. The agreement prohibits discrimination based on race, national origin, religion, sex, sexual orientation, political affiliation, or membership in a labor organization in hiring and dispatching workers for the project.
  2. The agreement permits all qualified contractors and subcontractors to bid for and be awarded work on the project without regard to whether they are otherwise parties to collective bargaining agreements.
  3. The agreement contains an agreed-upon protocol concerning drug testing for workers who will be employed on the project.
  4. The agreement contains guarantees against work stoppages, strikes, lockouts, and similar disruptions of the project.
  5. The agreement provides that disputes arising from the agreement shall be resolved by a neutral arbitrator.

Last year, Governor Newsom signed SB 150 (Durazo, Chapter 61, Statutes of 2023) which, among other things, requires that if a state agency enters into, or requires contractors to enter into a PLA, for that PLA to include provisions to address community benefits. The bill defined community benefits to include high road construction careers programs, local hire goals, coordination with programs that assist veterans in transitioning to civilian employment, job fairs for construction partnerships, or other methods agreed upon by the parties to promote employment and training opportunities for veterans and individuals who reside in economically disadvantaged areas.

Supporters of PLAs argue that PLAs provide long-term project stability because PLAs address labor issues, establish cost standards and help projects stay on schedule by preventing costly shutdowns caused by labor disputes. Supporters also argue that PLAs often establish goals of inclusion of small businesses, minority contractors and businesses that meet disability requirements, and sometimes encourage the hiring of targeted segments of the community such as veterans and minorities. Finally, supporters of PLAs argue that PLAs increase training and advancements since some PLAs sometimes include provisions for training and apprenticeships that increase career opportunities.

Critics of PLAs argue that PLAs increase construction costs on public works by restricting the number of contractors willing to bid on these projects compared to comparable public projects without PLAs. Opponents argue that some nonunion contractors are unwilling to bid on projects requiring PLAs because these contractors do not wish to obtain a majority of their blue collar labor from the local union hall. Contractors might also be deterred from bidding if the PLA requires that they pay into collectively bargained health and retirement funds.

The debate on whether PLAs are good or bad has been an enduring debate. For example, the National University System Institute for Policy Research, in its study of the cost of PLAs on California construction between 1996 and 2008, found that PLAs added between 13-15 percent to constructions costs. The author’s office points to a study by Emma Waitzman and Peter Phillips, who in their study of the effects of using PLAs in the construction of community college construction projects in California, concluded that evidence does not support the argument that PLAs reduce the number of bidders or raise bid prices.

President Biden Executive Order. On February 4, 2022, President Biden signed an Executive Order (EO) on Use of Project Labor Agreements for Federal Construction Projects, which requires the federal government to require a PLA for a “large-construction contract,” defined in the EO as a contract for which the estimated cost is $35 million or more. It is estimated that the EO will affect an estimated $262 billion in federal construction contracting for nearly 200,000 workers.

The EO does not require construction companies to unionize, it only binds a federal construction contractor’s employees to the terms of a PLA. The EO requires every PLA to contain all of the following: (1) guarantees against strikes, lockouts, and similar job disruptions; (2) prompt, mutually binding procedures for resolving labor disputes; and (3) mechanisms for labor-management cooperation on “matters of mutual and concern, including productivity, quality of work, safety, and health.”

The EO included a number of exceptions to the PLA requirement. Specifically, the EO will not mandate a PLA if doing so would, among other things, substantially reduce potential bidders or result in inefficiency, such as projects of short duration and lacking complexity, only involving one craft or trade, or involving particularly specialized construction work. Furthermore, a PLA would not be required based on unusual and compelling needs, and other factors deemed acceptable by senior officials in federal agencies. Finally, the EO did not affect projects controlled by state and/or local governments, even if those projects receive federal funding.

It must also be noted that the EO could be terminated at any point. There is no guarantee that a new administration would continue the EO.

Community Benefits in PLAs. As previously mentioned, last year, Governor Newsom signed SB 150 (Durazo, Chapter 61, Statutes of 2023) which, among other things, requires that if a state agency enters into, or requires contractors to enter into a PLA, for that PLA to include provisions to address community benefits. The bill defined community benefits to include high road construction careers programs, local hire goals, coordination with programs that assist veterans in transitioning to civilian employment, job fairs for construction partnership, or other methods agreed upon by the parties to promote employment and training opportunities for veterans and individuals who reside in economically disadvantaged areas.

Because the inclusion of community benefit goals is already a requirement for any major construction project governed by a PLA, the three major construction projects that each state agency are required to identify would have to include community benefit goals as described in last year’s SB 150.

Prior/Related Legislation

SB 150 (Durazo, Chapter 61, Statutes of 2023) among other things, requires the inclusion of community benefits in PLAs entered into by a state agency for projects of $35 million and above in construction costs.

SB 574 (Wahab, 2023) prohibits a state agency from undertaking a major construction project, defined as a project that will exceed $35 million dollars, unless that project is governed by a PLA and if that PLA includes a community benefit goal, as defined. (Never Heard in the Senate Governmental Organization Committee)

SB 922 (Steinberg, Chapter 431, Statutes of 2011) requires that all PLAs incorporate specified provisions, and prohibits state funding assistance, after January 1, 2015, on public works projects of charter cities having ordinances prohibiting the Use of PLAs.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

SUPPORT:

State Building and Construction Trades Council of California (Source)

Alameda County Democratic Party

California-Nevada Conference of Operating Engineers

California Labor Federation

California State Association of Electrical Workers

California State Council of Laborers

California State Pipe Trades Council

International Union of Operating Engineers

Western States Council of Sheet Metal Workers

OPPOSITION:

Associated Builders and Contractors, Northern California Chapter (ABC NorCal)

Associated General Contractors, California Chapters

Associated Roofing Contracts of the Bay Area Counties, Inc.

California Chamber of Commerce

California Conference of Carpenters

California Highway Construction Group, Inc.

Casey Construction, Inc.

Construction Employers’ Association

Diede Construction, Inc.

Electrical Services Co.

Housing Contractors of California

J.I. Garcia Construction, Inc.

Los Angeles County Business Federation

Modesto Executive Electric

Robert Colburn Electric, Inc.

Stephens Construction Inc.

Western Electrical Contractors Association

ARGUMENTS IN SUPPORT: According to the State Building and Construction Trades Council of California, “PLAs provide structure and stability to large-scale construction projects. These agreements help avoid labor-related disruptions, secure the commitment of all stakeholders on a construction site, and advance the interests of the project owners, contractors, and subcontractors, including small businesses. When the rules are in place from the start, workers will not be exploited, projects will be safer, and taxpayer investments will be protected. Without a PLA, this often leads to out-of-area contractors using out-of-area workers on projects, meaning most of the dollars earned by the construction workforce leave the community as soon as they are earned.”

ARGUMENTS IN OPPOSITION: According to the California Conference of Carpenters, “existing law already allows public entities to use a ‘prehire collective bargaining agreement’ for projects over $35 million. California Public Works laws, among the strongest in the nation, already require the payment of prevailing wages with a benefit package including pension and health benefits. When pension and health benefits are not provided, the worker receives the costs of these benefits on the paycheck. The use of registered apprentices is required unless there are none available, or none are made available, by the existing registered apprentice training program in the region. SB 984 adds nothing to those protections.”

According to the Associated Builders and Contractors (ABC) of California, “[our] members are committed to building taxpayer-funded construction projects with the highest standards of safety and quality and stand ready for the chance to build and maintain California’s infrastructure. State funded construction projects provide significant opportunities, particularly to small construction businesses. ABC of California apprenticeship programs are state and federally registered apprenticeship programs employing thousands of apprentices across California. PLA mandates unfairly discourage competition from quality, qualified nonunion contractors and their employees and apprentices (who choose not to join a union), and who contribute over $1.83 Billion in state income taxes. Importantly, we believe that any state investment in construction must ensure opportunity to all Californians, regardless of labor affiliation.”

DUAL REFERRAL: Senate Governmental Organization Committee & Senate Labor, Public Employment and Retirement Committee