The NLRB’s Glens Falls Decision Creates New Opportunities For Construction Firms

August 15, 2007

On July 31, 2007, the National Labor Relations Board (NLRB) invalidated many Project Labor Agreements (PLAs).  The NLRB’s decision creates new opportunities for construction companies.

In Glens Falls Building and Construction Trades Council, the NLRB ruled that PLAs are illegal and invalid when they are the product of political or other union pressure placed on the project owner, rather than collective bargaining negotiations with the contractor.  The ruling will enable merit-shop contractors to work on some projects previously restricted to union-shop contractors.  At the same time, union-shop contractors may obtain new access to projects previously reserved for contractors with different union relationships.

What Happened.   In Glens Falls, a construction trades council and other local unions (“Unions”) warned they would oppose construction of a steam and electrical generating facility unless union labor built it.  The Unions threatened to oppose environmental and other regulatory permits necessary for the project.  Under this pressure, the owner agreed to impose a PLA limiting work on the project to contractors using the Unions’ members.  The owner then challenged the agreement as a violation of Section 8(e) of the National Labor Relations Act (NLRA).

The NLRB Ruling.  The NLRB set aside the PLA because the PLA was not the product of collective bargaining negotiations between the Unions and builders who did or would employ the Unions’ members.  Further, the Unions’ real purpose was to create “a labor monopoly at a major construction site to provide employment for their out-of-work members.” 

What This Means.  Many PLAs across the country are the product of union pressure on owners, not collective bargaining with contractors. Such union efforts to create a “labor monopoly” for union members are now illegal and unenforceable. This gives contractors new opportunities for work on projects to which they were previous excluded.

Construction employers should remember that the application of NLRB and court rulings to specific cases depends upon a careful analysis of all the facts.