Court Ruling Supports State Law That Prohibits Discrimination of Non-Union Contractors

The Michigan law that limits the use of Project Labor Agreements on government projects is constitutional, according to a U.S. 6th Circuit Court of Appeals ruling.

Project Labor Agreements (PLAs) mandate requirements that typically fit only union guidelines and practices. The requirements virtually eliminate non-union contractors from the bidding process for projects. Public Act 98 of 2011 prohibited PLAs from being used on government projects. 

With the 2-1 court decision, the three-judge panel lifted an injunction that had prevented the state from enforcing the law. This change impacts all local government, school district, community college, and public university construction projects that use state, federal or private funds.

The pre-hire requirements mandated by PLAs favor unions at the expense of taxpayers and the majority of construction workers in the state.

According to the U.S. Bureau of Labor Statistics, 13.2 percent of construction workers nationwide belong to a union. A 2012 report from Unionstats.com (a project from researchers Barry Hirsh of Georgia State University and David Macpherson of Trinity University), found that 18.8 percent of Michigan construction workers are unionized.

Associated Builders and Contractors of Michigan President Chris Fisher said the Court of Appeals ruling is a victory for the people of Michigan.

"With this decision the court made it clear that no Michigan citizen can be denied the opportunity to work on a public construction project based on whether or not they are affiliated with a union," Fisher said. "This means the people of Michigan will no longer have to pay for crony construction agreements that are taxpayer rip-offs."

Michigan's Fair and Open Competition in Governmental Construction Act (Public Act 98) was one of the changes Gov. Rick Snyder and Republican-controlled legislature made to undo some of the anti-competitive systemic advantages unions had acquired over previous decades.

The Michigan Building and Construction Trades Council challenged the law in court, arguing that the federal National Labor Relations Act (NLRA) pre-empted it. In early 2012, U.S. District Judge Victoria Roberts agreed and issued the injunction prohibiting the state from enforcing the law.

In response to the injunction, Michigan Attorney General Bill Schuette appealed the decision and the legislature took action. Senate Bill 1085 directed the issue more toward best use of taxpayer dollars and access to open bidding than had been the case with the original language of the act. The measure was signed into law by Gov. Snyder on June 26, 2012.

"It is not banning PLAs, and contractors who enter into PLAs can compete on equal footing with non-PLA contractors for public contracts," Appeals Court Judge John Rogers wrote in the panel's majority opinion. "Private entities, including contractors working on government projects, remain free to enter into PLAs. The law's effect is limited to forbidding governmental units from entering into PLAs and then forcing the terms and conditions found within on bidders, contractors, and subcontractors. Such a limited action is similar to those found to be proprietary by the Supreme Court, this court, and other circuits."

A statement posted on the official website of Attorney General Schuette points out that 18 other states either have public contracting laws or executive orders in place that are similar to the Michigan law.

The website also includes the following quote from Schuette:

"The public contract bidding process should be open and fair for all of Michigan's builders and contractors. Encouraging robust competition and free enterprise will improve efficiency and save hard-earned taxpayer dollars."

Unions opposed to the law do not have many options left, said Patrick Wright, senior legal analyst with the Mackinac Center for Public Policy.

"They could ask the court to reconsider, but that probably wouldn't be realistic," Wright said. "If they continue to pursue the case, it seems likely that they'll either ask that the full U.S. 6^th Circuit Court of Appeals take it up or they'll try to go on to the U.S. Supreme Court."

Patrick Devlin secretary treasurer of the Michigan Building and Construction Trades Council said he was withholding comment on the situation until "our attorneys have had a chance to fully review the decision."