The big picture of why legislation is passed is often missed in legal analysis. I have posted a separate legal update on our web site regarding the effects of California’s AB 219 and AB 852, but the reasoning behind the bills is more interesting. Throughout the country the unionized workforce is dwindling, and many union pension trust funds are grossly underfunded, threatening their ability to provide the retirement benefits they have promised. To address these issues, organized labor is aggressively pursuing legislative efforts to virtually guarantee a monopoly on certain work, and eliminate the financial disincentives to either the hiring of signatory contractors, or employer opposition to unionization of their workforce. This is particularly true in the construction industry.
The Legislature’s passage of AB 219 and 852 at the behest of the State Building & Construction Trades Council are two such efforts. Traditionally, under California law the hauling of supplies and materials to and from a public works project has not been subject to prevailing wage. Through AB 219 the SBCTC has chipped away at that bright line, and drivers hauling ready-mix concrete to a public works project must be paid prevailing wage. There are two benefits to this for SBCTC’s members. First, signatory contractors are no longer at a competitive disadvantage due to their higher labor costs. Second, non-signatory contractors no longer have a financial incentive to oppose unionization of their drivers as they will be paid union scale regardless of signatory status.
At the behest of the SBCTC, the California Legislature made a similar change regarding private nonprofit hospital construction that makes it easier to pressure nonprofit hospital boards to adopt union-only Project Labor Agreements governing construction and retrofit of acute care facilities.
Project Labor Agreements that typically require, as a condition of working on a project, all contractors to be signatory to or abide by union collective bargaining agreements, use only union workers, and pay into union trust funds. These agreements typically increase costs upwards of 20%, and for this reason many nonprofit hospitals have declined to adopt them on hospital construction or seismic retrofit projects. Nevertheless, SBCTC targeted these projects. With SBCTC working through the Legislature to legally mandate the payment of prevailing wages on these private nonprofit hospital projects, hospital boards have lost their fiduciary obligation to weigh the dramatic increase in labor costs from a Project Labor Agreement. The ultimate effect of AB 852 is to make it easier for the SBCTC to pressure public nonprofit hospitals to adopt Project Labor Agreements as the financial concerns over the increased costs of construction have been taken off of the table.