President Biden’s latest Executive Order (EO), signed Friday, mandates U.S. agencies to require the use of project labor agreements (PLA) on large federal construction projects.

PLAs are collective bargaining agreements setting terms of employment on a specific contract. Even before workers are hired, construction unions may bargain for wage rates and other benefits. Once the contract is awarded, the terms of the PLA apply to all workers, including employees of contractors and subcontractors. In addition, the PLA will supersede current or former collective bargaining agreements.

The National Labor Relations Act (NLRA) authorizes these collective bargaining agreements. 29 U.S.C. §§ 151-169. Sections 8(e) and (f) of the NLRA, 29 U.S.C. §§ 158(e) and (f). The legal validity of such collective bargaining agreements in public contracting has been challenged many times.

In general, federal law rule prohibits employers from agreeing to be bound by the terms and conditions of a collective bargaining agreement before a majority of the employer’s employees designate the union as their exclusive representative for purposes of collective bargaining. See Raymond F. Kravis Ctr. For Performing Arts, Inc. v. N.L.R.B., 550 F.3d 1183, 1188 (D.C. Cir. 2008). Section 8(f) of the NRLA, however, creates an exception for construction industry employers. As a result, PLAs, which are pre-hire collective bargaining agreements, are legal only when used in construction work. This means that contractors or subcontractors who are not engaged in construction work cannot legally be subject to PLAs.

The EO, which Biden signed into law on February 3, 2022, applies to contracts worth over $35 million. The White House claims the move will affect $262 billion in federal government construction contracts and over 200,000 workers. The decision comes in the wake of a 2009 EO signed by President Obama, which encouraged, but did not require, federal agencies to consider using PLAs on large construction contracts.

Biden called himself a “union President” in comments related to the EO in a speech to Ironworkers Local 5 in Upper Marlboro, Maryland. While pro-union groups such as The Association of Union Constructors (TAUC) have praised the decision, other organizations like the Associated Builders and Contractors (ABC) been critical.

Critics attack the Order as anticompetitive, favoring unionized contractors to the exclusion of non-union contractors who tend to be more local businesses. Critics also point out that the Order will result in increased project costs (by some estimates as much as 20%), resulting in fewer projects being funded.  Proponents say that costs are reduced when work rules, compensation, and dispute settlement processes are standardized. In addition, the White House claims that quality standards will rise, benefitting workers by increasing pay.