Workers 'Can Lose One Third Of Their Total Compensation To Wage Theft': Mace Pans Labor Dept's PLA

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During a House Oversight Committee hearing prior to the Congressional recess, Rep. Nancy Mace (R-SC) questioned witnesses about the Labor Department's project labor agreement rules, and their impact on non-union workers.

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Transcript

00:00We've certainly found in our work that it's successful, and I think as we continue to

00:05talk today, it's important to know PLAs are a very flexible vehicle that can be tailored

00:10to the individual project needs and the individual contractor that's going to use them.

00:15And so as we go to think about how we're doing that, they have the ability to go and look

00:19at local workforce inclusivity, cost, all of those things that go in to make a project.

00:24Thank you very much.

00:26And thank you.

00:27I will now recognize myself for five minutes of questioning.

00:31All right.

00:33I would like to start with you, Mr. Brubeck, today, this afternoon.

00:36Non-union construction workers who manage to get on a PLA project can lose one-third

00:40of their total compensation to wage theft.

00:44According to one study, it found the rule could result in a half billion dollars being

00:47stolen from non-union workers employed on federal construction projects.

00:52Is it fair for non-union workers to be forced to pay union dues and contribute to union

00:57pension plans for which they do not benefit?

01:00Thank you for the question.

01:01I'll say that it is rare for non-union construction workers to be allowed on PLA projects.

01:07They can be allowed on PLA projects, but typically what happens is that they have to pay fringe

01:13benefits into the union pension and benefits plans.

01:15And those are confiscated by the union unless they join a union and become vested in those

01:22programs.

01:23The net effect of that is that non-union contractors who want to use their own employees don't

01:27bid on PLA projects.

01:29Gotcha.

01:30Most of your members are small businesses.

01:32Under the PLA mandate, all subcontractors on a project must abide by the terms of the

01:36PLA, even if they had no role in negotiating the terms.

01:40How do small businesses feel about the PLA mandate?

01:43They're devastated by it.

01:44I've been getting calls every day from small businesses who are saying, I can't build federal

01:47contracts in my own backyard.

01:49I get 80 percent of my revenue from these types of contracts.

01:53Once I work through my backlog, I don't know what I'm going to do.

01:55I'm going to have to lay off workers.

01:57There's no exemption in the rule for small businesses at all.

02:01The PLAs are very complicated to negotiate for small business direct contractors.

02:05A lot of the construction trade unions are going to have a hard time negotiating these

02:11contracts with small businesses because they have no familiarity with doing so.

02:14So it's a killer for small businesses, especially in a time when the federal government is begging

02:19for federal contractors, especially small businesses, to compete for this work.

02:23We've seen a massive decline in small business participation in the construction industry

02:28for federal contracts by more than 60 percent.

02:30So this is going to make it worse on top of all these other regulations that the industries

02:33are facing.

02:34A heck of a lot worse.

02:36Mr. Dreer, in the past, agency contracting officers, nonpartisan civil servants entrusted

02:41to get the best value for the government have chosen not to mandate PLAs, even when encouraged

02:47to do so.

02:48Why do you think that is?

02:51Fair and open competition, right?

02:53Getting more contractors, whether they're union or open shop, giving them the opportunity

02:58to bid the work and let the client decide what the best value is for the American taxpayer

03:03and not mandate that only union companies can bid the work.

03:08The Biden administration says PLAs are necessary to ensure major projects are finished on time

03:13and without stoppages.

03:14Is that actually true?

03:16No, absolutely not.

03:17The administration says that merit shop companies and their employees can participate in PLA

03:22projects.

03:23However, these typically require union work rules be followed and that contributions to

03:25union pension plans be paid.

03:27Why is it a problem for your workforce to be restricted to operating under union work

03:32rules?

03:33We're 100 percent employee owned.

03:36Every one of our team members, 4,000 strong, is an owner of a company.

03:41And to, you know, take union workforce, right, then, you know, we have to pay into their

03:49benefits and everything.

03:50That results in my team members not having a job, right?

03:54So that's a major issue for us and certainly a challenge.

03:58They're going to employ a lot of people with this policy, aren't they?

04:01Yeah.

04:02Mr. Lede, since 97 percent of construction workers in Louisiana are non-union, could

04:07this mandate result in fewer state residents getting work on projects that the state itself

04:11is helping to finance?

04:12Yes.

04:13We believe so that it discourages local businesses from competing in these large scale projects.

04:19How has your agency been able to successfully contract out construction work without mandating

04:23PLAs?

04:24Well, since 2005, working with the Corps of Engineers, we've built the largest hurricane

04:30protection system in the nation without PLA mandates.

04:33That's the Greater New Orleans Hurricane Risk Storm Damage Reduction System.

04:37So we believe there's precedent there and that was done on time and under budget.

04:42Are you concerned about the additional costs and budgetary risks the PLA mandate will create?

04:47Yes, our state is concerned.

04:49Are you concerned that you will not be able to work with some of the contractors you've

04:52worked with in the past due to this mandate?

04:54Yeah, our concern is that for those federal projects, those contractors will be discouraged

04:59from competition there.

05:01This is a question for everyone on the panel, Mr. Brubeck.

05:05Is this mandate going to cost American companies, private companies, jobs, or are they going

05:10to have to lay people off?

05:11Yeah, absolutely.

05:12We've been talking to our membership about this and they're very concerned.

05:16Once they burn through their backlog that they currently have, normally they're earning

05:19work and winning work competitively in this time frame.

05:22Once that's over, they're not sure what they're going to do.

05:24They've got to make revenue somewhere else and this may result in them having to lay

05:27off people or find other work elsewhere.

05:30Thank you.

05:31I've just run out of time, so I will yield back.

05:36Okay, we have not called votes yet, so Mr. Connolly, I would like to recognize you for

05:39five minutes.

05:40Thank you, Madam Chair.

05:41I just want to point out that Mr. Dreher

Workers 'Can Lose One Third Of Their Total Compensation To Wage Theft': Mace Pans Labor Dept's PLA

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