13.1 Introduction

The employment of skilled craft labor by a construction firm is subject to the provisions of an array of both federal and state statutes. These laws have such an important bearing on the conduct of a contracting business that the construction contractor is obliged to have at least a general grasp of their workings and implications. The purpose of this chapter is to discuss the important features of the principal federal statutes that apply to the employment of construction workers. Federal laws are discussed because of their wide applicability, and because of the fact that most state labor statutes are patterned after federal law. Emphasis is placed more on the broad implications of these laws than on the intricacies of case studies.

For purposes of discussion in this chapter, those statutes which pertain to labor-management relations are considered first. Following are the federal laws pertinent to equal employment opportunity. The last sections of this chapter discuss labor standards legislation and other related topics.

13.2 History of Law of Labor Relations

In the early days of this nation, the right of working people to associate together, or to organize themselves for their mutual aid and protection in the workplace, was severely restricted. Labor unions were strictly curtailed and were sometimes referred to as “unlawful conspiracies.”

This was the mindset in the workplace until the1930s when the first of the laws of labor relations were created, beginning with the courts. In the almost-complete absence of applicable statute law at the time, employer and union complaints were adjudicated by the courts primarily in accordance with common law. In general, the courts tended to grant employers relief from the unionizing activities of workers, while refusing to assist unions in actions against employers, on the grounds that there was no precedent for this in the common law. Court injunctions were widely used for the purpose of negating the usual union tactics of using strikes, picketing, and boycotts. At the same time, there was no comparable judicial instrument available to the unions to assist their organizing efforts in the workplace.

This state of affairs continued until the passage of the Norris-LaGuardia Act (1932). Additional legislation followed soon thereafter. However, judicial interpretations of the Sherman Antitrust Act of 1890 did provide the first elements of a statutory basis for labor-management policy. This act set forth statutory provisions against the restraint of trade. It was primarily intended to limit the growth of business cartels, and it is debatable whether it was ever intended to apply to labor unions. However, the U.S. Supreme Court ruled in 1908 that labor organizations were covered by the provisions of the act.

The Sherman Antitrust Act provided a broad new basis for the use of court injunctions against unions, and also placed in jeopardy another effective weapon of unions, the boycott. The Supreme Court ruled that a union could be sued for damages suffered by reason of a boycott, and that the union and its members were individually liable. In summary, it is widely held that the common law and the statutory law were strongly discriminatory against labor unions until the advent of the New Deal and the first adoption of new federal legislation in the early 1930s.

During the years since, Congress has passed a series of major federal labor statutes that contain positive and detailed statements of national labor policy. Under the law today, the right of workers to form or join unions and to take concerted action to improve their economic condition is guaranteed, and the exercise of that right is protected. National labor policy today is the sum of the policies and provisions contained in the major federal labor relations statutes: the Norris-LaGuardia Act (1932), the National Labor Relations Act (1935), the Labor Management Relations Act (1947), and the Labor-Management Reporting and Disclosure Act (1959). Most of these acts have been updated and amended by Congress since their initial adoption.

The sections that follow will summarize these major pieces of federal labor-management legislation, and their effects, in greater detail. The discussion of these statutes concentrates on those provisions of the law that pertain especially to the construction industry.

13.3 The Norris-LaGuardia Act

In 1932 Congress enacted the Norris-LaGuardia Act, which strictly limits the power of the federal courts to issue injunctions against union activities in labor disputes and protects the rights of workers to strike and picket peaceably. Also called the Anti-Injunction Act, this statute makes it very difficult for an employer to secure an injunction in a federal court against union activities in labor disputes. Although the act itself pertains only to federal courts, many states have enacted similar injunction-control legislation

Although it is difficult for private parties to obtain federal court injunctions against peacefully conducted labor action, injunctions are available to certain government agents under modern labor relations statutes. In this regard however, injunctions are issued against only those union activities that are in violation of the law or that imperil national health or safety. In addition, the U.S. Supreme Court has decreed that an employer can obtain a federal court injunction against a striking union that is violating a no-strike arbitration pledge in its labor contract

The Norris-LaGuardia Act also expressly prohibits agreements that are called “yellow-dog contracts,” and makes them unenforceable in federal courts. Designed to discourage union membership, such employment contracts provide that a job applicant will not be hired until he or she promises not to join a union during his or her tenure of employment, and to renounce any existing membership in a union. Such contracts were very widely used by a number of industrial employers prior to the passage of the Norris-LaGuardia Act.

13.4 The National Labor Relations Act

The National Labor Relations Act (NLRA) also known as the Wagner Act, was passed by Congress in 1935. Enacted in an atmosphere of depressed business conditions and extensive unemployment, the Wagner Act had as its central purpose the protection of union organizing activity and the fostering of collective bargaining.

By the terms of the NLRA, employers are required to bargain in good faith with the properly chosen representatives of their workers. Additionally, employers are forbidden to practice discrimination against their employees for taking part in labor activities, or to influence their workers' membership in any labor organization.

These and other unfair labor practices were defined as they pertained to employers. However, no such restrictions were applied to employees or unions in their relations with employers. Enforcement of the NLRA was vested in a National Labor Relations Board (NLRB), which was also created by the Wagner Act. Under the shelter of this legislation, union strength and membership increased enormously during the 1937–1945 period. A number of state statutes followed, which were patterned to a greater or lesser extent after the Wagner Act.

It was almost inevitable that the sudden removal of the traditional and long-standing restraints on unions would result in union excesses. Beginning in about 1938, public opinion concerning organized labor became increasingly unfavorable, following the mounting incidence of union restrictive practices, wartime strikes, and criminal activities by some labor leaders.

Congressional resentment against some of the high-handed actions on the part of some officials of organized labor resulted in the passage of the War Labor Disputes Act (Smith-Connally Act) of 1943. However, the provisions of this act proved to be largely ineffective. If nothing else, however, the act reflected the mounting popular sentiment for the enactment of positive union-control legislation. During this period, several state legislatures passed statutes that regulated and curbed union activities. By 1947, thirty-seven states had adopted some form of labor-control legislation.

13.5 The Labor Management Relations Act

In 1947, Congress passed the Labor Management Relations Act, which is commonly known as the Taft-Hartley Act. This was the first federal statute that imposed comprehensive controls upon the activities of organized labor. It amended the earlier National Labor Relations Act in several important respects, and added new provisions of its own. The National Labor Relations Board was reconstituted, and its authority was redefined. One section of the Taft-Hartley Act established the basic right of every worker to participate in union activities, or to refrain from doing so, subject to authorized agreements requiring membership in a union as a condition of employment. To protect such rights, a subsequent section of the Taft-Hartley Act defined unfair labor practices on the part of both employers and labor organizations. The act also established the Federal Mediation and Conciliation Service, and gave the president of the United States certain powers regarding labor disputes that were imperiling national health or safety. Additionally, the act restricted political contributions by labor organizations and business corporations.

In contradistinction to the Wagner Act, the Taft-Hartley Act was designed and intended to curtail the freedom of action of unions in several different and important ways. Although the act reiterates a national labor policy of encouraging and assisting collective bargaining, the provision is made that the public interest must prevail in the conduct of labor affairs. The provisions of the Taft-Hartley Act have had far-reaching effects on the matter of labor-management relations.

Following passage of the NLRA, experience with some of its provisions quickly revealed several imperfections and shortcomings in the law. In particular, some features of labor employment peculiar to the construction industry proved to be inadequately addressed. However, the extremely controversial nature of the act, and the considerable strength of both its supporters and its opponents rendered the likelihood of any truly significant revision of the law a very sensitive and very difficult matter.

13.6 The Labor-Management Reporting and Disclosure Act

In 1959, Congress passed the Labor-Management Reporting and Disclosure Act, also known as the Landrum-Griffin Act. This legislation established a code of conduct for unions, union officers, employers, and labor relations consultants. In addition, it guaranteed certain rights to rank-and-file union members, and imposed stringent controls on the conduct of union internal affairs.

The principal thrust of this law was to safeguard the rights of the individual union member, to ensure democratic elections in unions, to combat corruption and racketeering in unions, and to protect the public and innocent parties against unscrupulous union tactics. By the terms of the act, reports pertaining to union organization, finances, activities, and policies are required from unions, union officials and employees, as well as from employers, labor relations consultants, and union trusteeships. The act also declared that it was illegal for an employer to pay or lend money to any labor representative or labor union of his employees.

Additionally, the Landrum-Griffin Act amended the NLRA and the Taft-Hartley Act. The 1959 law enumerated additional union unfair labor practices, and remedied several inadequacies of the Taft-Hartley Act with respect to pressures that unions and their agents can legally apply to employers and their employees. So-called “hot-cargo” labor agreements, in which an employer promises not to do business with, or not to handle, use, transport, sell, or otherwise deal in the products of another person or employer, were forbidden. However, an exception was made for the construction industry; these exceptions and hot cargo clauses are further discussed in subsequent sections of this chapter.

In addition, limitations were applied to organizational picketing of employers by labor organizations. Most of the restrictions on union-security agreements in the construction industry were removed, and union hiring halls were made lawful.

13.7 Coverage of the National Labor Relations Act

The National Labor Relations Act, as amended by the Taft-Hartley Act and the Landrum-Griffin Act, continues to play a dominant role in national labor relations policy. Its stated purpose is to set forth the recognized rights of employees, employers, and labor unions in their relations with one another and with the public, and to provide mechanisms to prevent or remedy any interference by one with the legitimate rights of another. In particular, the statute protects employees in the free exercise of their right to join or not to join a union, to bargain collectively through representatives of their own choosing, and to act together with other employees for mutual aid and protection. Any violation of these rights, whether by management or by labor representatives, is declared by the NLRA to be an unfair labor practice.

The NLRA applies to employers and employees who are engaged in interstate commerce or the production of goods for such commerce. Interpretation by the courts as to what constitutes interstate commerce in the construction industry has been so broad that the jurisdiction of the act now extends to almost all construction work of any consequence. The act specifically excludes the following employers and employees from its coverage:

Exempted Employers

1. The government of the United States
2. States and their political subdivisions
3. Wholly owned government corporations
4. Federal reserve banks
5. Employers subject to the Railway Labor Act
6. Labor organizations (when not acting as employers)
7. Officers or agents of labor organizations

Exempted Employees

1. Employees of exempted employers as listed in Item 1, above
2. Agricultural laborers
3. Domestic servants
4. Individuals employed by their parents or spouses
5. Independent contractors
6. Supervisors

Selected portions of the NLRA, as amended, have been selected for further discussion in the following sections.

13.8 The National Labor Relations Board

Administration of the NLRA is the defined responsibility of the National Labor Relations Board (NLRB), which is composed of five members, and the general counsel for the board. Members of the NLRB are appointed by the president of the United States, with the consent of the Senate, for terms of five years. The general counsel for the board is appointed by the president, with consent of the Senate, for a term of four years. The NLRB has two primary functions:

1. To establish, usually by secret-ballot elections, whether groups of employees wish to be represented by designated labor organizations for collective bargaining purposes.
2. To prevent and remedy unfair labor practices.

Much of the day-to-day work of investigating and processing charges of unfair labor practices, and of handling representation proceedings has been delegated by the board to the various NLRB regional offices located in major cities throughout the nation. The board has given its regional directors final authority in election cases, subject to limited review. In unfair labor practice cases, the board acts much like an appellate court to determine if an unfair labor practice actually exists, and also to determine how such practices should be remedied.

The NLRB does not ordinarily become involved until an investigation has been conducted and recommendations have been made by an NLRB regional office. The general counsel has largely independent authority in the prosecution of unfair labor practices, and determines which cases are to be put before the board. Responsible for general supervision over the regional NLRB offices, as well as for most of the routine administrative activities of the agency, the general counsel has broad and direct authority to seek injunctions against unfair labor practices.

By statute, the NLRB exercises its powers over all enterprises whose operations affect interstate commerce. It does not act, however, on every case over which it could exercise its jurisdiction. Rather, the board restricts its attention to a caseload it can handle expeditiously, and within its budgetary limitations. The Landrum-Griffin Act authorized the NLRB to limit its cases to those whose effect on commerce is, in the opinion of the board, “substantial.”

As a guide to when it will exercise its power, the board has established minimum measures of the annual volume of business that must be involved before the NLRB will accept a case. These standards are expressed in terms of the gross dollar volume of the employer's sales and purchases that cross state lines, and these vary for different segments of industry. The Landrum-Griffin Act further provides that state and territorial courts and agencies can assume jurisdiction over labor disputes the NLRB declines to hear.

13.9 Representation Elections

The NLRA requires that an employer bargain in good faith with the representative selected by a majority of its employees but does not stipulate a selection procedure for the representative. The only requirement is that the representative clearly be the choice of the majority of the workers. The representative may be an individual or a labor union but cannot be a supervisor or other representative of the employer.

For the employees to select a majority representative, it is usual for the nearest regional office of the NLRB to conduct or to oversee representation elections. However, such an election can be held only when a petition has been filed by the employees, or by an individual or a labor organization acting in behalf of the employees, or by an employer who has been confronted with a claim of representation from an individual or labor organization. In a representation election, a labor union or an individual candidate must receive a majority of the eligible votes cast. There are numerous procedural rules being applied, regarding which employees are eligible to vote. If an election is held, the NLRB, through its regional office, supervises every step in the election procedure.

In a representation election, the employees are given a choice of one or more bargaining representatives, or no representative at all. To be chosen, a labor organization must receive a majority of the valid votes cast. The NLRB has a policy whereby it will certify the choice of the majority of employees for a bargaining representative only after a secret-ballot election.

Section 7 of the Taft-Hartley Act has a free speech provision that establishes the employee's right to hear the arguments of both labor and management. The expressing or disseminating of any views, arguments, or opinions by either side does not constitute an unfair labor practice as long as it contains no threat of reprisal, or force, or promise of benefit. Within these limitations, an employer who wants to remain nonunion can state his or her opinions to the employees.

13.10 Employer Unfair Labor Practices

Under the NLRA, as amended, an employer commits an unfair labor practice if the employer:

• Interferes with, restrains, or coerces employees in the exercise of rights protected by the act, such as their right of self-organization for the purpose of collective bargaining, or other mutual assistance.
• Dominates or interferes with any labor organization in either its formation or its administration, or contributes financial or other support to the union. Thus, “company unions” that are dominated by the employer are prohibited, and employers may not lawfully assist any union financially or otherwise.
• Discriminates against an employee in order to encourage or discourage union membership. It is illegal for an employer to discharge or to demote an employee, or to single him out in any other discriminatory manner, simply because he is or is not a member of a union. In this regard, however, it is not unlawful for employers and unions to enter into compulsory union-membership agreements that are permitted by the NLRA. This condition is subject to applicable state laws that may prohibit compulsory unionism.
• Discharges or otherwise discriminates against an employee because he has filed charges or given testimony under the act. This provision protects the employee from retaliation if he seeks assistance in enforcing his rights under the act.
• Refuses to bargain in good faith in matters regarding wages, hours, and other conditions of employment with the properly chosen representative of its employees. Matters concerning rates of pay, wages, hours, and other conditions of employment are called mandatory subjects, that is, subjects about which the employer and the union must bargain in good faith. However, the law does not require either party to agree to a proposal or to make concessions.
• Enters into a “hot-cargo agreement” with a union. Under a hot-cargo agreement, the employer promises not to do business with, or not to handle, use, transport, sell, or otherwise deal in the products of another person or employer. This unfair labor practice can be committed only by an employer and a labor organization acting together. A limited exception to this ban on hot-cargo clauses was adopted for the garment industry and the construction industry, and is discussed in subsequent sections of this chapter.

13.11 Union Unfair Labor Practices

By the terms of the NLRA, as amended, it is an unfair labor practice for a labor organization or its agents:

1. To restrain or coerce employees in the exercise of their rights as guaranteed in Section 7 of the Taft-Hartley Act. In essence, Section 7 gives an employee the right to join a union, to assist in the promotion of a labor organization, or to refrain from such activities. This section further provides that it is not intended to impair the right of a union to prescribe its own rules concerning membership.
2. To restrain or coerce an employer in its selection of a representative for collective-bargaining purposes.
3. To cause an employer to discriminate against an employee with regard to wages, hours, or other conditions of employment for the purpose of encouraging or discouraging membership in a labor organization. This section includes employer discrimination against an employee whose membership in the union has been denied or terminated for cause other than failure to pay customary dues or initiation fees. Contracts or informal arrangements with a union under which an employer gives preferential treatment to union members are violations of this section. It is not unlawful, however, for an employer and a union to enter an agreement whereby the employer agrees to hire new employees exclusively through a union hiring hall, as long as there is no discrimination against nonunion members. Union agreements that require employees to become members of the union after they are hired are also permitted by this section.
4. To refuse to bargain in good faith with an employer about wages, hours, and other conditions of employment if the union is the representative of its employees. This section imposes on labor organizations the same duty to bargain in good faith that is imposed on employers.
5. To engage in, or to induce or encourage others to engage in, strike or boycott activities, or to threaten or coerce any person, if in either ease an object thereof is:
   1. To force or require any employer or self-employed person to join any labor or employer organization, or to enter a “hot-cargo agreement” that is prohibited by the act.
   2. To force or require any person to cease using or dealing in the products of any other producer, or to cease doing business with any other person. (This is a prohibition against “secondary boycotts,” which are further discussed further in a subsequent section of this chapter.) This section of the NLRA further provides that, when not otherwise unlawful, a primary strike or primary picketing is a permissible union activity.

      (It is noted that this provision permits “publicity,” other than picketing, provided such action does not have the effect of inducing a work stoppage by neutral employees. Such publicity can lawfully notify the public, including the customers of a neutral employer, that a labor dispute exists concerning a primary employer's products being distributed by the neutral employer.

      Additionally, this provision does not apply to picketing or other publicity for the purpose of truthfully advising the public that an employer does not have a union contract or does not employ union labor, unless it has the effect of inducing employees of persons doing business with the picketed employer not to pick up, deliver, or transport goods or not to perform services. If the purpose is purely informational, it can be continued indefinitely. If the purpose is organizational, it cannot be continued more than 30 days without a petition for an election.)

   3. To force or require any employer to recognize or bargain with a particular labor organization as the representative of its employees that has not been certified as the representative of such employees.
   4. To force or require any employer to assign certain work to the employees of a particular labor organization or craft, rather than to employees in another labor organization or craft, unless the employer is failing to conform with an order or certification of the NLRB. This provision is directed against jurisdictional disputes, a topic discussed in a subsequent section of this chapter.
6. To require of employees, covered by a valid union shop, membership fees that the NLRB finds to be excessive or discriminatory.
7. To cause or attempt to cause an employer to pay or agree to pay for services that are not performed or not to be performed. This section forbids practices commonly known as “feather bedding.”
8. To picket or threaten to picket any employer to force it to recognize or bargain with a union:
   1. When the employees of the employer are already lawfully represented by another union.
   2. When a valid election has been held within the past 12 months.
   3. When no petition for an NLRB election has been filed within a reasonable period of time, not to exceed 30 days from the commencement of such picketing.

The NLRB has ruled that discrimination by a labor union because of race is an unfair practice under the Taft-Hartley Act. Discrimination on the basis of race in determining eligibility for full and equal union membership, and segregation on the basis of race have also been found unlawful by the NLRB. This has made possible the filing of unfair labor practice charges against a union because of alleged racial discrimination. A union found guilty of such practices faces cease-and-desist orders, as well as possible rescission of its right to continue as the authorized employee representative.

13.12 Charges of Unfair Labor Practices

Charges of unfair labor practices can be filed with the NLRB by a contractor, or by a union, or by an individual worker. Any charges to be filed must usually be filed with the NLRB regional office that serves the area in which the case arose, and must be filed within six months from the date of the alleged unfair activity. After charges are filed, NLRB field examiners will conduct an investigation regarding the circumstances, and a formal complaint is issued if the charges are determined to be well founded and if the case cannot be settled by informal adjustment.

When a complaint is issued, a public hearing is held before a trial examiner whose findings and recommendations are served on the parties and are also sent to the NLRB in Washington, D.C. If no exceptions are filed by either party within a statutory period, the examiner's judgment takes the full effect of an order by the NLRB. If exceptions are taken, the NLRB reviews the case and makes a decision regarding next steps.

If a contractor or a union fails to comply with an order of the NLRB, the board has no statutory power of enforcement of its own, but can petition the appropriate United States Court of Appeals for a decree to enforce the order. If the court issues such a decree, failure to comply may be punishable by a fine, or by imprisonment for contempt of court. Parties aggrieved by the order may seek judicial review.

13.13 Remedies

When the NLRB finds that a contractor or a union has engaged in an unfair labor practice, it is empowered to issue a cease-and-desist order, and to take such affirmative action as deemed necessary to erase the effects of the unfair practice found to have been committed. The purpose of the board's orders is remedial, and it has broad discretion in fashioning remedies for unfair labor practices. Typical affirmative actions ordered by the NLRB include reinstatement of persons discharged, reimbursement of wages lost, or refund of dues or fees illegally collected.

The law provides that whenever a charge is filed alleging certain unfair labor practices relating to secondary boycotts, hot-cargo clauses, or organization or recognition of picketing, the preliminary investigation of the charge must be given first priority. The board or the general counsel is authorized to petition the appropriate federal district court for an injunction to stop any conduct alleged to constitute an unfair labor practice. If the preliminary investigation of a first-priority case reveals reasonable cause to believe the charge is true, the law requires that the general counsel seek such injunctive relief or temporary restraining order as seems proper under the circumstances.

In addition to filing charges of unfair labor practices when faced with illegal union activity, the contractor has access to other remedies. In case of a union's illegal use of various economic tactics such as secondary boycotts, unlawful picketing, and illegal strikes, there are corrective actions available to the contractor. A court injunction directing that the activity cease is probably the most powerful weapon for prompt resolution of the matter, and such an order usually prevents serious economic damage before it can occur. An action for damages is usually possible when it can be shown that the illegal conduct has caused harm or damage to the contractor. Discipline or discharge of the striking employees, and seeking arbitration, are additional potential remedies available to the contractor.

13.14 Union-Shop Agreements

The NLRA makes it illegal to conduct a closed shop, but does permit the establishment of a union shop. A closed shop is one that requires that a worker be a member of the appropriate union at the time he is hired. Under a union shop, a new employee need not be a union member at the time of employment, but must join within a stipulated period of time in order to retain his job. Therefore, a union security agreement (an agreement providing for compulsory union membership) cannot require that applicants for employment be members of the union to be hired, but can stipulate that all employees covered by the agreement must become members of the union within a certain period of time. This grace period cannot be less than 30 days after hiring, except in the building and construction industry, in which a shorter grace period of seven days is permissible.

Union-shop agreements often provide for the check-off of union dues, an arrangement whereby the employers deduct dues from their employees' wages and pay the withheld money to the union as union dues for the employee. The NLRB provides that such check-off is permitted only by written assignment of each employee, and such assignment is not to remain in effect for a period of more than one year or beyond the end of the current collective bargaining agreement, whichever occurs sooner. A mandatory check-off is illegal, and is defined as an unfair labor practice on the part of both the employer and the union.

The Taft-Hartley Act also provides that the individual states have the right to forbid negotiated labor agreements that require union membership as a condition of employment. In other words, any state or territory of the United States may, if it chooses, pass a law making a union-shop labor agreement illegal. This is called the “right-to-work” section of the act, and such state laws are termed right-to-work statutes. States that adopt such laws are often referred to as right to work states.

It is interesting to note that most of these state right-to-work laws go beyond the issue of compulsory unionism inherent in the union shop. Most of these states also outlaw the agency shop, an arrangement where workers, in lieu of joining a union, must pay the same initiation fees, dues, and assessments as union members, as a condition of their original or continued employment. Additionally, some of the state laws explicitly forbid unions to strike over the issue of employment of nonunion workers.

In a fundamental sense, state right-to-work laws prohibit discrimination in employment on the basis of membership or nonmembership in a labor union. It is interesting to note that in some right-to-work states, their statutes have been interpreted to protect subcontractors as well as workers. In these states, the courts have ruled that a general contractor cannot discriminate against a subcontractor on the basis of whether the subcontractor is union or nonunion.

13.15 Prehire Agreements

The NLRA allows an employer who is engaged primarily in the building and construction industry to sign a labor agreement with a union prior to the hiring of any workers or before the union can show that it represents a majority of the employees involved. Such labor contracts are called prehire or Section 8(f) agreements. Such agreements may apply only to one specific project, or to a designated geographical area.

Prehire arrangements of this kind are permitted only in the construction industry, which is considered unique because of the transience of its workers and the relatively short durations of its projects. Contractors enter such agreements primarily as a means of access to established labor rates, stable labor relations, and a ready-made source of skilled manpower in union hiring halls. By its 1987 rulings in the Deklewa case, the NLRB established the rules that now govern construction industry prehire agreements. The general workings of these rules will be further discussed in the following paragraphs.

When an employer enters into a prehire pact with a union, the status of the agreement can depend on whether there is an NLRB representation election by the bargaining unit employees during the life of the prehire arrangement. If there is such an election and the union receives majority support, the prehire agreement does not automatically convert to a conventional labor contract unless the union receives formal recognition from the contractor. At this point, the employees, a rival union, or the contractor can petition for a union decertification election at any time during the life of the 8(f) arrangement, and the prehire agreement cannot bar such an election.

If a union receives formal recognition from the contractor after establishing majority support, the union then becomes the exclusive bargaining agent for the employees and the contractor will be obligated to bargain in good faith for a new labor contract. If the union loses the election, the prehire agreement is terminated and the parties are prohibited from entering into another prehire agreement for a period of one year.

When the employer has entered into a prehire contract with a union and there is no representation election held, the contractor cannot repudiate the agreement during its tenure. The contractor is bound by the terms of the contract for all work done on any job site within the area covered by the agreement, unless the agreement is limited to a particular job site.

Under the rules of the NLRB, the parties to prehire agreements are bound by those agreements unless the workers vote to decertify or to change the union in an NLRB election. During its term, a prehire agreement is just as enforceable as a labor contract that has been negotiated with the union involved. However, when the 8(f) arrangement expires, there is no presumption that the union represents a majority of the workforce covered, and either party can end the relationship at that time. The employer must be left free from coercive union efforts to compel the negotiation or adoption of a successor agreement. By the removal of the presumption of the union's majority status when the prehire arrangement expires, neither employer nor employees are locked into a union relationship, and the contractor can walk away without bargaining if he elects to do so.

13.16 Union Hiring Halls

The NLRA provides that in the construction industry a labor agreement can require the contractor to acquire its workers only through a designated local union. Referred to as requiring the use of a “union hiring hall,” such an arrangement requires the contractor to notify the union of employment opportunities available, and to give the union an opportunity to refer qualified applicants. The collective bargaining agreement may specify minimum training or experience qualifications for employment, or may provide for priority in job referrals based on length of service with the employer, or in the industry, or in the particular geographical area. However, hiring-hall agreements that give priority to employees who previously worked for employers subject to collective bargaining agreements with the union have been found to be illegal under the NLRA.

Contracts or informal arrangements with a union under which an employer gives preferential treatment to union members are illegal. It is not unlawful however, for an employer and a union to enter into an agreement whereby the employer agrees to hire new employees exclusively through a union hiring hall, so long as there is no discrimination against nonunion members in favor of union members. Both the agreement and the actual operation of the hiring hall must be nondiscriminatory. Job referrals must be made without reference to race, color, religion, sex, national origin, or union membership. The employer must not discriminate against a nonunion employee if union membership is not available to that employee under the usual terms, or if membership is denied to that employee for reason other than nonpayment of union dues and fees. Hiring-hall provisions in labor contracts usually give the contractor the right to reject any applicant, as well as the right to obtain employees from other sources when the union is unable to supply a sufficient number of qualified people to meet the needs of the contractor.

The courts have held that a lawful hiring hall is a mandatory subject of bargaining between employers and unions, and that a union can strike and picket to press its demands for an exclusive nondiscriminatory hiring-hall referral system. Once obtained in a collective bargaining agreement, a hiring-hall arrangement is enforceable in the federal courts or before the NLRB.

Contractor responsibility for discriminatory hiring-hall practices was a troublesome issue for many years. However, the U.S. Supreme Court has ruled that contractors who are not guilty of intentional discrimination are not liable if the union-operated hiring halls they use are shown to be operated on a biased or discriminatory basis. The courts have also ruled that union hiring halls are permissible in states with right-to-work laws as long as the hiring-hall agreement expressly states that union membership is not to be considered in job referrals.

Construction hiring halls or referral systems that discriminate against minorities are certainly also illegal by the provisions of civil rights statutes, even though they may appear to be legal under the NLRA. The matter of contractor responsibility has become particularly troublesome with regard to the hiring of workers from minority groups. In this regard, the NLRB has held that hiring is a management responsibility and cannot be delegated to a union. The contractor, not the union, must be the judge of a worker's competence, and a worker's access to a construction job cannot be conditioned on his ability to pass a union examination. If a contractor hires or retains a worker the union will not accept, the union is liable for the consequences if it strikes to force that worker off the job.

13.17 Secondary Boycotts

A primary boycott arises when a union that is engaged in a dispute with an employer, exhorts that firm's customers and the general public to refrain from all dealings with that employer. A secondary boycott occurs if a union has a dispute with Company A and attempts to exert pressure on that company by causing the employees of Company B to stop handling or using the products of Company A, or otherwise attempts to force Company B to stop doing business with Company A. The primary employer, in this case Company A, is the employer with whom the union has the dispute. Company B is the neutral secondary employer, hence the name secondary boycott.

Secondary boycotts have a long and turbulent legal history. Illegal in the common law, secondary boycotts were ruled to have been forbidden by the Sherman Act in a decision by the U.S. Supreme Court. This prohibition was reversed by the Norris-LaGuardia Act and the Wagner Act, which gave unions almost complete immunity from liability for damages arising from secondary boycotts. The pendulum has since returned almost to its original position, with the NLRA forbidding secondary boycotts.

Secondary boycotts in construction can take many forms, and the dividing line between a legal primary boycott and an illegal secondary boycott is sometimes hazy and difficult to establish. The wording of the law is strictly construed in determining the legality of a boycott action. A form of secondary boycott that is of extraordinary importance to the construction industry, common situs picketing, will be discussed in the following section.

13.18 Common Situs Picketing

A common situs is a given location such as an industrial plant or a construction project at which several different employers are simultaneously engaged in their individual business activities. A dispute between one of these employers and a union is likely to involve the other employers who may very well be neutral, especially if picketing is involved. Decisions of the NLRB and of the courts have evolved some rules for establishing whether such common situs picketing constitutes an illegal secondary boycott action.

In an attempt to give effect to both the union's right to picket the primary employer and the right of the secondary employer to be free from disputes that are not its own, the NLRB established in 1950 the Moore Dry Dock tests, which determine when a union may picket a common site without committing an illegal secondary boycott.

These rules are summarized as follows:

1. The picketing must be limited to times when the employees of the primary employer are working on the premises.
2. The picketing must be limited to times when the primary employer is carrying on its normal business there.
3. The picket signs must clearly indicate the identity of the primary employer with whom the union is having the dispute.
4. The picketing must be carried on reasonably close to where the employees of the primary employer are working.

Common situs picketing occurs frequently in the construction industry, often as the result of a union contractor awarding work to a nonunion subcontractor. The resulting picketing causes the employees of the union contractors on the project to refuse to cross the picket line.

In 1951 the U.S. Supreme Court decided the Denver Building and Construction Trades Council case. This dispute involved a general contractor whose employees were union members and a nonunion subcontractor. The project was picketed and shut down by the construction unions, which demanded that the subcontractor be discharged. The U.S. Supreme Court found that the unions were guilty of an illegal secondary boycott because the object of the picketing was to force the general contractor (secondary employer) to quit doing business with the nonunion subcontractor (primary employer).

Following the Denver Building Trades case, the “separate gate” doctrine was developed. On multi-employer construction sites, one gate is reserved and marked for the primary contractor involved in the labor dispute and another gate is designated for the neutral contractors who are not involved. On the basis of the Moore Dry Dock standards traditionally applied to common situs picketing and the Denver Building Trades case, the NLRB and the courts now hold that picketing of the gate reserved for the contractor directly involved in the dispute is permissible, but that the unions cannot picket separate gates which are used by employees of the neutral secondary contractors if the effect is to keep them off the project. In essence, this decision says that construction contractors at the site are separate and distinct employers, and union picketing must be limited to the primary contractor involved in the dispute.

However, other courts have ruled that common situs picketing is permissible under certain circumstances. The court has decreed that a union can engage in common situs picketing when the gate reserved for the open-shop employer is so located that the union cannot communicate its picketing message to the public. Recent years have seen a sustained attempt by organized labor to prevail upon Congress to amend the NLRA to permit unrestricted picketing of construction sites.

The U.S. Supreme Court, in the General Electric case (1961), decided that the matter of situs picketing is different, however, when construction work is being done at an industrial plant by a construction contractor. The Court ruled that picketing by plant strikers of gates reserved exclusively for contractor personnel can be banned only if there is a separate, marked gate set apart for the contractor, if the work being done by the contractor is unrelated to the normal operations of the industrial company, and if the work is of a kind that will not curtail normal plant operations. The courts have ruled that the General Electric decision does not apply to a prime contractor and subcontractors at the usual construction site.

13.19 Subcontractor Agreements

The Landrum-Griffin Act made it an unfair labor practice for an employer and a union to enter into an agreement whereby the employer agrees to refrain from handling the products of another employer or to cease doing business with any other person. As has already been pointed out, such a contract provision is called a “hot-cargo clause.” However, the construction industry was exempted from this ban under certain circumstances.

Under the construction industry proviso to Section 8(e) of the National Labor Relations Act, contractors can agree to restrictions on subcontracting or can agree not to handle certain products as long as the restrictions relate to the contracting or subcontracting of work to be done at the site. This construction industry exemption has led to the widespread use of two forms of “hot-cargo clauses” in construction labor contracts. One of these is the subcontractor agreement, a subject to be discussed in this section. The other is the prefabrication clause, which is discussed in the following section.

Subcontractor agreements in this sense are agreements that require the general contractor to award work only to those subcontractors who are signatory to a specific union labor contract, or who are under agreement with the appropriate union. Such agreements do not extend to supplies or other products produced or manufactured elsewhere and delivered to the construction site.

The NLRB and the courts have ruled that construction unions may strike to obtain subcontractor clauses in their labor contracts if no secondary boycott is involved. To illustrate, picketing to induce a general contractor to accept a subcontractor clause is legal, but picketing is illegal as a secondary boycott if it is designed to force a neutral general contractor to stop doing business with an existing and identified nonunion subcontractor. The courts have held that unions cannot enforce subcontractor clauses by threats, coercion, strikes, or picketing, but that violations of such labor contract provisions can be submitted to arbitration, or that a civil action can be taken under Section 301 of the Taft-Hartley Act.

Additionally, self-enforcing clauses have been ruled illegal and unenforceable. These are clauses in which the contracting firm agrees that if it violates the terms of the subcontract agreement, the union can take action against the contractor such as picketing, refusing to provide workers, or canceling the labor contract between them.

For many years there has been considerable uncertainty as to just what constitutes a legal subcontracting clause. As a result of U.S. Supreme Court decisions in the Connell case (1975) and the Woelke & Romero case (1982), the following guidelines have emerged with respect to subcontractor clauses not being in violation of federal labor or antitrust statutes:

1. The agreement with a union containing restrictions on subcontracting must pertain only to work performed at a construction site. There is no requirement, however, that the pact be limited to the subcontracting of work to be performed at a particular project.
2. The workers represented by the union that makes the agreement restricting the contractor's right to subcontract must have an employer-employee relationship with that contractor.
3. The subcontracting restrictions must be provided for in a collective bargaining agreement.

13.20 Prefabrication Clauses

The prefabrication clause is the second form of “hot-cargo” provision ruled to be permissible under the construction industry exemption provision of the NLRA. In accordance with a U.S. Supreme Court decision concerning the installation of precut doors in Philadelphia, construction unions may legally obtain labor agreements to bar the use of prefabricated products in construction in order to preserve their customary onsite work. In addition, the ruling provided that unions can enforce such clauses by strikes and picketing.

These provisions ban the use of prefabricated construction products manufactured off the construction site, and products that eliminate work normally done on the project itself. Examples of these construction products are precut and prefitted wooden doors, precut pipe insulation, prefabricated trusses, prepackaged boilers, and many others. Such product boycotts have been construed to fall within the construction industry exemption from the ban on “hot-cargo clauses,” and can be legal provisions included in a labor agreement if the prefabricated products is found to replace work customarily and traditionally performed on the site by union members.

The NLRB typically applies the “right-of-control test” as one factor in determining the legality of prefabrication clauses. Under this test, if a prefabricated product is specified by the architect-engineer and/or owner, then the contractor is required by the terms of the construction contract to provide the materials as specified and has no control over product selection. In such a case, the union cannot refuse to handle and install the product, whether or not a prefabrication clause exists. However, if the construction contract provisions do not specify the use of a prefabricated product, but the contractor, on its own volition, decides to use such materials, then the union is entitled to enforce the clause, and to strike and picket the offending contractor to block the use of the prefabricated materials. Application of the right-to-control test to determine when a prefabrication dispute becomes an illegal secondary boycott has been upheld by the U.S. Supreme Court.

13.21 Jurisdictional Disputes

A jurisdictional dispute can arise when more than one union claims jurisdiction over a given item of work on a construction job site. The dispute is actually between the unions, and the prime contractor or subcontractor who are responsible for the performance of the work in accord with the provisions of their prime contracts and their subcontract agreements are caught in the middle. The unionized segment of the construction industry frequently has disputes of this kind because each of the many craft unions regards its type of work as a proprietary right, and jealously guards against any encroachment of its traditional jurisdiction by other unions.

Craft jurisdiction is of great economic and personal importance to the unionized worker and has been a continual source of contention among construction unions. The issue is compounded by the fact that lines of demarcation between the various jurisdictions are sometimes indistinct, and the development of new products and methods is often accompanied by jurisdictional clashes between different unions whose members claim exclusive right to the work assignment.

With the thought in mind that jurisdictional conflicts are an ever-present possibility on union projects, construction contractors and their project managers and superintendents can avail themselves of some basic and commonsense precautions in order to preclude such disputes before they occur. One such action is to hold a meeting of the craft foremen and union stewards and business agents before work starts in the field. At this meeting, items of work and activities to be performed are discussed, and work assignments are made by the prime contractor. This allows potential disputes to surface early, and gives the conflicting unions time to resolve their differences. However, if agreement between the unions is not forthcoming, the contractor typically makes the final assignment and moves on.

The craft stewards can informally settle many jurisdictional differences that arise during the construction period. Despite these types of preemptive actions however, jurisdictional disputes do occur, and when they do the contractor is confronted with the inevitable need to get the matter resolved as quickly as possible.

When disputed work is at issue, the contractor has the authority and responsibility to assign the work to the workers of one of the unions involved. Although strikes, picketing, and other coercive action by a union to gain a work assignment is defined as an unfair labor practice, and most labor contracts contain provisions prohibiting such union actions, the union which is not receiving the assignment may well resort to mechanisms such as slowdowns, walkoffs, or other disruptive action. And the contractor finds that he now has a jurisdictional dispute on his hands.

If informal efforts to avert a jurisdictional dispute are to no avail, the contractor who is responsible for the management of the work must now make an assignment to one of the disputing unions. Although contractor decision criteria tend to vary, time efficiency and economy of operation are normally important aspects of the choice. If the jurisdictional dispute persists, the contractor may determine the need to take the matter to the National Labor Relations Board as discussed in the following section, or he may utilize a voluntary plan negotiated with the union representatives for the resolution of such matters.

13.22 NLRB Jurisdictional Settlement

The provisions of the Taft-Hartley Act provide that the NLRB will hear and determine a jurisdictional dispute if the parties to the dispute have not agreed to a voluntary procedure. After a contractor has made the work assignment and the offended union begins or threatens picketing or other coercive action, the contractor can initiate a proceeding with the NLRB.

To do this, the contractor must file an unfair labor practice charge with the regional NLRB office. The regional office conducts a hearing on the matter, makes a determination, and notifies the parties, and the results are sent to the NLRB headquarters in Washington, D.C.

In the event one of the unions refuses to comply with this ruling, the board can petition the appropriate U.S. Circuit Court of Appeals to enforce its order. The NLRB can obtain an injunction to halt any project picketing, or strikes, or other union activity associated with the dispute.

Many contractors utilize the NLRB to resolve their jurisdictional disputes. Work awards made by the NLRB are limited in scope to the disputes from which they arise. The Taft-Hartley Act provides private parties who have been damaged by a jurisdictional strike, or picketing, or other union action the right to sue the union or unions involved. The NLRB has consistently given priority to contractor decisions regarding jurisdictional disputes that can be shown to be based in achieving economy and efficiency of the contractor's operation when making work awards. When the contractor's assignment can be shown to be based on these considerations, NLRB awards uphold the contractor's original assignment in more than 90 percent of the cases.

In the Texas Tile case (1971), the U.S. Supreme Court held that the contractor is a party to a jurisdictional dispute as well as the rival unions. The effect of this ruling is that any private arrangement between unions providing for the settlement of their jurisdictional differences must include the employer if the employer is to be bound by it. Otherwise, such an agreement between the unions does not prevent a contractor from referring the matter to the NLRB, and will not bar the NLRB from hearing the dispute and making an assignment regarding the contested work.

13.23 Voluntary Jurisdictional Settlement Plans

The Taft-Hartley Act does not require the NLRB to rule on jurisdictional matters when the disputants have agreed to voluntary methods of settlement. Accordingly, the construction industry has established a number of voluntary plans, one of which is national in scope, and many others that are local in their coverage.

The Plan for the Settlement of Jurisdictional Disputes in the Construction Industry is a national procedure for the resolution of disputes. This joint labor-management mechanism was established in 1984 by the AFL-CIO Building and Construction Trades Department and six contractor associations; the plan was amended in 2011.

Under this plan, there is a Joint Administrative Committee (JAC) that oversees administration of the plan through an Administrator appointed by the JAC. This committee also produces a list of arbitrators from which one is selected to decide a certain jurisdictional dispute.

When the disputing unions wish to utilize this plan for the resolution of a jurisdictional dispute, they first sign a “stipulation,” which in effect says that each agrees to this procedure, and that each agrees to be bound by the findings. In accord with the elements of the plan, the administrator sees to the appointment of an arbitrator who will hear the cases of the two disputants. The arbitrator will then schedule a hearing, and subsequently will make a ruling in accord with the procedural elements set forth in the plan. The criteria to be used by the arbitrator in reaching a decision are prescribed in the settlement plan. Included in these criteria is a requirement that the arbitrator must first determine whether there has been a previous decision or national agreement between the unions concerning the matter at issue. Rulings of arbitrators under the plan are enforceable in federal court. While it has been used in a number of cases, this national plan has not received widespread acceptance from contractor ranks.

In addition to this national plan, there are many local areas that have set up mechanisms for the voluntary local settlement of jurisdictional disputes. Several large metropolitan areas maintain their own boards for settling jurisdictional strikes. A large proportion of the jurisdictional disputes in the construction industry are settled in this manner at the local level.

13.24 Payments to Employee Representatives

Other provisions of the Taft-Hartley Act prohibit any employer or association of employers from paying, lending, or delivering money or other things of value to its employees or their representatives, if the purpose of the payment is to influence the right of employees to organize and bargain collectively. This includes labor unions or officers thereof and any employee or group of employees. Specifically permitted within the act however, are various fringe benefits such as health, welfare, pension, vacation, holiday, and annuity payments, as well as apprenticeship plans and prepaid legal services for which employer contributions are permissible and over which unions are given some control. Such contributions must be paid to a trust fund, and the trustees must consist of an equal number of labor and management representatives.

13.25 Political Contributions

The Taft-Hartley Act makes it unlawful for certain organizations, including business corporations, labor organizations, and trade associations, to make a contribution or expenditure in connection with the election of federal officials. A labor organization is defined to be any organization in which employees participate and which exists for the purpose of dealing with employers concerning grievances, labor disputes, wages, rates of pay, hours of employment, or conditions of work. The obvious intent is to refer to labor unions.

Despite these restrictions however, business corporations, labor unions, and trade associations are very active on the American political scene through the medium of sponsoring political action committees (PACs). Under federal campaign laws and Federal Election Commission regulations, corporations, labor unions, and trade associations are permitted to establish PACs at the national, state, and local levels. Within limitations established by law, these organizations are authorized to solicit and receive personal contributions from individuals and then to disburse these funds to selected candidates for political office.

PACs established by corporate businesses and trade associations use contributed funds to help elect candidates who are philosophically in tune with management viewpoints. At the same time, PACs associated with labor unions contribute large sums toward the election of candidates who support the causes of organized labor. PACs now account for a large percentage of the campaign funds raised by those who seek election to public office.

In addition, labor unions maintain local “education” funds through the AFL-CIO Committee on Political Education (COPE). This committee is allowable under federal law that allows labor unions to spend unlimited amounts of their own monies on communications to members and their families on any subject. These funds support get-out-the-vote efforts through the publication and distribution of union newsletters that make specific candidate endorsements. They also finance meet-the-candidates sessions where union-endorsed candidates may speak and solicit funds, and ask for volunteer labor for their campaign. While the campaign laws allow business corporations to conduct similar education activities with their management employees and stockholders, this is a not commonly done.

13.26 The Civil Rights Act of 1964

In passing the Civil Rights Act of 1964, Congress confirmed and established certain basic individual rights pertaining to voting; access to public accommodations, public facilities, and public education; participation in federally assisted programs; and opportunities for employment. Title VII of this act, Equal Employment Opportunity, prohibits discrimination in employment or in union membership. It is an unlawful practice for an employer to refuse to hire or to discharge any individual or otherwise discriminate against him or her regarding conditions of employment because of race, color, religion, sex, or national origin. It is also illegal for an employer to limit, segregate, or classify employees in any way that would deprive the individual of employment opportunity or adversely affect his or her status as an employee because of race, color, religion, sex, or national origin.

Administration and enforcement of the Civil Rights Act is the responsibility of the Equal Employment Opportunity Commission (EEOC), which was created for this purpose when the Civil Rights Act was adopted. The responsibility of the EEOC is to assure that consideration for hiring and promotion is based on ability and qualifications, without discrimination. Title VII prohibits discriminatory practices on the part of employers, employment agencies, labor organizations, and apprenticeship or training programs.

The Civil Rights Act applies to interstate commerce and covers both employers and labor organizations. The law requires that employers, labor unions, employment agencies, and joint labor-management apprenticeship committees keep such records and submit such reports as the EEOC may require. Special rules apply in states that have their own enforceable fair employment practice laws.

The Equal Employment Opportunity Act of 1972 amended the Civil Rights Act of 1964 in several important respects, and expanded its coverage substantially. This legislation authorized the EEOC for the first time to go directly to court for temporary restraining orders and for permanent injunctions against unlawful discrimination. Additionally, the EEOC is provided other remedies such as requiring reinstatement or hiring, with back pay and appropriate affirmative action directives.

The Civil Rights Act of 1964 now covers joint labor-management committees for apprenticeship and other training programs. The coverage of the act was expanded to include employers of 15 or more employees and unions that operate hiring halls or referral systems or that have 15 or more members. Also created was the position of general counsel for the EEOC with the intent for this general counsel to act along much the same lines as defined for the general counsel in the NLRB. The general counsel of the EEOC has authority to bring civil court actions against patterns and practices of employment discrimination in interstate commerce.

13.27 Executive Order 11246

Issued in 1965, Executive Order 11246 applies to contracts and subcontracts exceeding $10,000 on federal and federally assisted construction projects. By the terms of this order, contractors are prohibited from discriminating against any employee or applicant for employment because of race, color, religion, or national origin. Further, the contractor must take positive action to ensure that applicants are employed, and that employees are treated during employment, without discrimination. Additionally, affirmative action must be taken by contractors on projects covered by the executive order, to increase the level of minority representation in their workforces. Actions pertaining to employment, promotion, transfer, recruitment, layoff, rates of pay, training, and apprenticeship must not be discriminatory. Executive Order 11375 (1968), which is an extension of Executive Order 11246, applies to federal and federal-aid contracts, and prohibits discrimination against any employee because of sex.

Executive Order 11246, is administered by the Office of Federal Contract Compliance Programs (OFCCP), a division of the U.S. Department of Labor. The language of the order states that each federal contracting agency shall be primarily responsible for obtaining compliance with the provisions of the order. In addition, each administering agency is made responsible for compliance by the recipients of federal financial assistance.

Federal agencies have compliance officers whose duties are to ensure adherence to the objectives of the order, including compliance reviews. A compliance review is a procedure used to check an ongoing contract. In such a review, the contractor is required to provide information to show that it is complying with the nondiscriminatory requirements of its contract, including meeting affirmative action requirements.

In the event of a finding of noncompliance with OFCCP rules, the federal contract may be canceled or suspended, and the contractor can be declared ineligible for further government or federally assisted construction contracts. Additionally, the OFCCP has the authority to withhold progress payments from contractors who are found to be in violation of Executive Order 11246. This authority stems from the government's right to suspend payment when a contractor fails to comply with any requirement of the contract. Compliance reports from contractors are required, and the general contractor must include suitable provisions concerning compliance with the order in its subcontracts and purchase orders.

13.28 The Age Discrimination in Employment Act

The Age Discrimination in Employment Act of 1967 prohibits arbitrary age discrimination in employment. This act protects individuals 40 years of age or older from age discrimination by employers of 20 or more persons in an industry affecting interstate commerce. Employment agencies, labor organizations, and most employees of federal, state, and local governments are also covered by the act.

By the terms of the act, it is against the law for an employer to:

1. Fail or refuse to hire, to discharge, or to otherwise discriminate against any individual as to conditions of employment because of age.
2. Limit, segregate, or classify its employees so as to deprive any individual of employment opportunities or to adversely affect his status as an employee because of age.
3. Reduce the wage rate of any employee in order to comply with the act.

The prohibitions against discrimination because of age do not apply when age can be shown to be a bona fide occupational qualification, when differentiation is based on reasonable factors other than age, when the differentiation is caused by the terms of a bona fide seniority system or employee benefit plan, or when the discharge or discipline of the individual is for good cause.

Employers must post an approved notice of the Age Discrimination in Employment Act in a prominent place where employees can see it, and must maintain records with regard to their compliance with the act as required. The act is enforced by the EEOC, which can conduct investigations, issue procedural rules, and enforce its provisions through the courts.

13.29 The Davis-Bacon Act

The Davis-Bacon Act (1931), as subsequently amended, is a federal law that determines the wage rates, including fringe benefits, that must be paid to workers on all federal construction projects, as well as on a host of federally assisted projects. The Davis-Bacon Act is administered by the U.S. Department of Labor.

The law applies to contracts in excess of $2,000 and states that the wages of workers shall not be less than the wage rates specified in the schedule of prevailing wages as determined by the Secretary of Labor for comparable work on similar projects in the vicinity in which the work is to be performed. Further, the act requires that the contractor must pay overtime at the rate of time and one-half for all work performed by an employee in excess of 40 hours per week. General contractors and subcontractors are required to make payment at least once a week to all workers employed directly on the site of the work, at wage rates no lower than those prescribed. Additionally, contractors and subcontractors whose projects are covered by the act must keep certain records, and must file periodic reports, and must comply with various regulations with respect to the use of apprentices.

The act also stipulates that the prime contractor is responsible for its subcontractors' compliance with prevailing wage requirements. This means that the general contractor assumes the duty of checking to ascertain that the required Davis-Bacon compensation is being paid by his subcontractors. The act requires that all workers must be paid in full each week, with the exception of such payroll deductions as are permitted by the Copeland Act. The purpose of the law is to protect the local wage rates and the local economies of each community, and presumably to put union and nonunion contractors on a more nearly equal competitive footing in the bidding of federal and federally assisted projects.

For purposes of defining the coverage of prevailing wages prescribed for a given project, the work site is defined as being limited to the physical place or places where the construction called for will remain, and to other adjacent or nearby property used by the contractor or subcontractors that can reasonably be included in the “site” because of proximity. This means that fabrication plants, batch plants, borrow pits, tool yards, and the like are considered to be a part of the work site, provided they are dedicated exclusively or nearly so to performance of the contract, and are so located in relation to the actual construction location that it would be reasonable to include them. Exempt from the work site definition, and therefore from Davis-Bacon wage rates, are contractors' permanent offices, branch plants, or fabrication plants whose locations and continuance are governed by the contractor's or subcontractor's general business operations.

Violation of Davis-Bacon requirements constitutes a breach of contract, and exposes the contractor and subcontractors to government compliance action. The prevailing legal opinion is that workers cannot sue employers who fail to pay prevailing wages required under the Davis-Bacon act. Only the federal government can enforce the law. Restitution is secured for workers found to have been underpaid, and penalties are assessed for violations of the overtime requirements. Additionally, violators can be denied the right to bid on other federal or federal-aid projects.

The act does not provide for judicial review of Labor Department wage rate determinations, but a Wage Appeals Board that operates under delegated authority from the Secretary of Labor has been established to hear appeals from findings or decisions of the Davis-Bacon Division. Federal contracting agencies have primary responsibility for Davis-Bacon enforcement, because obligations under the act become a part of the construction contract. Most of the states and many cities also have some type of prevailing wage requirement covering state and locally funded construction work.

13.30 Davis-Bacon Administration

Recent years have seen the Davis-Bacon Act come under criticism from a number of different quarters. The General Accounting Office of the federal government has recommended that the act be repealed, and demands for its reform have been voiced by many responsible parties, including committees of the U.S. Congress. Much of the criticism has been directed at the administration of the act and the procedures that have been followed in determining prevailing wages. There have been numerous allegations that prevailing wages as determined were often too high, thus resulting in excessive construction costs for the government. In many instances, prevailing wage rates have simply been equated to local union pay scales. It has been stated that the Davis-Bacon Act eliminates competition between union and nonunion contractors, and imposes costly and burdensome reporting requirements on contractors.

The act is now being applied to more and more construction projects as a result of the Department of Labor rendering more expansive interpretations of “site of the work” and “expenditure of federal funds.” However, in 1984 the following additional regulations were put into effect:

1. A prevailing wage is determined as a weighted average when a single wage rate does not apply to a majority of workers in a given area.
2. Wage data from prior Davis-Bacon projects are excluded from wage surveys when setting prevailing wages for building and residential construction work. (This rule does not apply to heavy and highway projects where there is little nonfederal construction.)
3. Urban wage data cannot be used in the determination of rural prevailing wages, and vice versa.

The Davis-Bacon Act requires that workers on covered projects receive at least the hourly wages and fringe benefits prevailing in the project locality. Payment by the contractor must equal or exceed this total hourly sum. However, the law does not limit the portion of the total amount that can be paid to the worker in the form of fringe benefits. Contractors could conceivably abuse this by reducing a worker's cash wages and paying more of the required compensation into fringe benefit trust funds, thus reducing the employer payments for Social Security, workers' compensation insurance, and unemployment tax. To guard against this possibility, the Internal Revenue Service and Department of Labor now limit the contractor's contribution for fringe benefits to 25 percent of an employee's annual compensation.

The craft classification of “helpers” is now allowed on Davis-Bacon projects located in those areas where the use of such a labor classification is a prevailing practice. Helpers are defined as semiskilled workers who perform their job duties under the direction of, and provide assistance to, a journeyman tradesman. A maximum ratio of two helpers for every three journeymen in a given craft is normally permitted, although variances allowing a larger ratio can be granted under certain circumstances.

Another recent action regarding Davis-Bacon is based on the Freedom of Information Act. The courts have ruled that a contractor on a Davis-Bacon project must, on request, provide unions with copies of its certified payroll reports showing the workers' names, job classifications, pay scales, and fringe benefits. In this way, the unions can check on the contractor's compliance with the prevailing wage law.

13.31 The Copeland Act

As passed in 1934, and since amended, the Copeland Act makes it a punishable offense for an employer to deprive anyone employed on federal construction work, or work financed in whole or in part by federal funds, of any portion of the compensation to which the employee is entitled. Other than deductions provided by law, the employer may not induce “kickbacks” from its employees by force, intimidation, threat of dismissal, or any other means whatsoever. This portion of the Copeland Act is commonly known as the Anti-Kickback Law. A violation may be punished by fine, imprisonment, or both.

Regulations issued by the secretary of labor allow a contractor or subcontractor to make additional deductions from wages, provided the prior approval of the Department of Labor is obtained, by showing that the proposed deductions are proper. For example, union dues may be deducted by the employer if such holdback is consented to by the employee and is provided for in a collective bargaining agreement.

The law stipulates that payroll records shall be maintained and reports submitted by contractors as the Department of Labor may require. The Copeland Act covers all construction projects on which Davis-Bacon prevailing wages apply. The contracting agency is responsible for enforcing compliance with the act.

13.32 The Fair Labor Standards Act

First enacted by Congress in 1939 and since amended several times, the Fair Labor Standards Act, also known as the Wage and Hour Law, contains provisions relating to minimum wages, maximum hours, overtime pay, equal pay, and child-labor standards. Workers whose employment is related to interstate commerce or consists of producing goods for interstate commerce are covered by the act, without regard to the dollar volume of business conducted by the employer.

The Fair Labor Standards Act provides for a minimum wage for all employees covered. This minimum wage has been steadily increased over the years. The act also requires payment of an overtime rate of one and one-half times the regular hourly rate of pay for all hours worked by craft workers in excess of 40 hours in any workweek. However, the act does not require payment of overtime for more than 8 hours of work per day, nor is there a limit set on the number of hours that may be worked in any one day, or during any one week. The law does not require premium pay for Saturday, Sunday, or holiday work, or vacation or severance pay.

An employer who violates the wage and hour requirements of the Fair Labor Standards Act is liable to its employees for double the unpaid minimum wages or overtime compensation, plus associated court costs and attorney's fees. Willful violation of the law is made a criminal act, and the errant employer can be prosecuted. Several classes of employees are exempted from coverage under the act, such as bona fide executive, administrative, management, and professional employees who meet certain tests established for exemption.

The Fair Labor Standards Act, as amended by the Equal Pay Act of 1963, provides that an employer must not discriminate on the basis of sex by paying employees of one sex wages at rates lower than it pays employees of the other sex for doing equal work on jobs requiring comparable skill, effort, and responsibility, and performed under similar working conditions. Pay differentials can be justified by a seniority system, merit system, piecework pay system, or other system based on factors other than the sex of the employee.

The basic minimum age for employment covered by the Fair Labor Standards Act is 16 years of age, except for occupations declared to be hazardous by the Secretary of Labor. For these jobs an 18-year minimum age applies. Construction work itself is not designated as hazardous work, but specified work assignments such as truck driving, demolition, roofing, and power tool operation are so designated.

13.33 The Contract Work Hours and Safety Standards Act

In 1962, Congress passed the Contract Work Hours and Safety Standards Act, also known as the Work Hours Act of 1962. This act, as subsequently amended, applies to federal construction projects as well as to projects financed in whole or in part by the federal government. The primary thrust of this law is a requirement that every worker shall be paid at a rate not less than one and one-half times the basic rate of pay for all hours worked in excess of 8 hours per day or 40 hours per week. In the event of violation, the contractor or subcontractor responsible is liable for unpaid wages to the employees affected, and for liquidated damages to the federal government. Willful violation of the Work Hours Act is punishable by fine, imprisonment, or both. The enforcement of the law and the withholding of funds from the contractor to secure compliance with the act are made the responsibility of the government agency for which the work is being done.

An earlier congressional enactment related to overtime pay was the Walsh-Healey Public Contracts Act (1936), which requires contractors performing federal or federally assisted work to pay overtime wages after 8 working hours per day. Amendments made in 1986 to the Walsh-Healey Public Contracts Act and the Contract Work Hours and Safety Standards Act eliminated the requirement that contractors pay workers overtime when their workers work more than eight hours per day. Contractors on federally funded construction can now work flexible hours up to 40 per week before they must pay overtime rates. For example, a contractor can schedule 4 days of 10-hour shifts in one week without being required to pay overtime wages. Contractors have long supported such a change, maintaining that it would clear the way for more flexible schedules, resulting in savings of time and cost to the federal government. This change does not affect any obligation to pay overtime after 8 hours per day contained in state laws, local laws, collective bargaining agreements, or employment contracts.

13.34 The Hobbs Act

Also known as the Anti-Racketeering Act, the Hobbs Act, enacted in 1946, makes it a felony to obstruct, delay, or affect interstate commerce by robbery or extortion. To attempt or conspire to do so is also made a felony. Robbery is defined as the unlawful taking or obtaining of personal property from a person against that person's will by means of actual or threatened force or violence. Extortion is defined as the obtaining of property from another, with that person's consent, but with the consent induced by the wrongful use of actual or threatened force, violence, or fear. The underlying motive behind the act was to put an end to the use of threats, force, or violence by union officials to obtain payment from employers under the guise of recompense for services rendered. Prosecution of violators is placed in the hands of the U.S. Department of Justice.

Extortion by unions and union officials has been practiced in many guises against contractors, with payments being demanded as a condition of avoiding “labor trouble.” These payments have been concealed behind many subterfuges such as “gifts,” “commissions,” “equipment rentals,” and “services.”

The courts have held that, under the Hobbs Act, extortion extends to attempts by a union or union officials to obtain money from an employer in the form of wages for imposed, unwanted, and superfluous services. Violence or threats of violence need not be involved if such attempts involve fear of economic loss, injury to employees, or damage to equipment. However, by its 1973 decision in the Enmons case, the U.S. Supreme Court held that the Hobbs Act does not extend to extortion connected with legitimate labor disputes such as acts of violence committed on a picket line set up to obtain economic bargaining demands. However, it is possible to prosecute a union for its extortionary demands for superfluous and unnecessary employees. Such demands are not a legitimate labor objective under the law.

13.35 Immigration Reform and Control Act

The Immigration Reform and Control Act of 1986 contains civil and criminal penalties for employers who knowingly hire aliens who are not authorized to work in the United States. The law requires every employer to establish both the identity and eligibility for employment of each person hired. This act requires all employers to verify the employment status and keep records on each new employee. Under the law, employers are subject to sanction if they knowingly hire unauthorized aliens or if they discriminate against prospective employees on the basis of national origin or citizenship status.

One of the principal goals of this act was to stem the flood of illegal aliens into the United States by making it difficult for them to find work. It is to be noted that the construction industry has been among the top employers of illegal aliens nationally. The act requires employers to verify the status of all their new hires and to examine certain documents to ensure identity and work authorization. The law forbids employers from hiring any aliens known to be unauthorized to work in the United States, or to continue to employ any of these aliens. Employers face stiff fines for not requiring proper documentation and knowingly hiring an illegal alien. Federal agents can seek criminal penalties for a pattern or practice of violating the provisions of this act.

Under the provisions of the act, employers must check that employees hired have documents which establish both identity and employment authorization. Documents such as a driver's license, certificate of naturalization, Social Security card, U.S. military card, certificate of citizenship, passport, birth certificate, or alien registration card must be provided by the prospective employee. The employer is required to have each newly hired employee complete a sworn statement on Immigration and Naturalization Service (INS) Form 1–9, which attests that the person is either a citizen of the United States or is authorized to work in the United States. The employer provides a sworn statement on the same Form 1–9 that the employer has examined the documents provided showing both the individual's identity and employment authorization. The specific documents examined must be listed, including their identification numbers and expiration dates. Form 1–9 must be retained by the employers for three years after date of hire or one year after employment is terminated, whichever is later.

The INS has ruled that contractors do not need to complete verification forms for temporary workers each time they are rehired. Employers must prepare the forms only once a year for such employees. Employers may, but are not required to, retain copies of the documents used to complete the verification procedures. Contractors may, under certain circumstances, rely on unions, central clearinghouses, or state employment agencies to complete the verification process.

It should be noted that at the time of this writing, there is a great deal of attention being focused, at both the national and state levels, on the matter of immigration control and immigration policy. It is to be expected that additional legislation will soon be forthcoming having to do with this matter.

13.36 The National Apprenticeship Act

In 1937, Congress passed the National Apprenticeship Act, authorizing the establishment of the Bureau of Apprenticeship and Training (BAT) of the U.S. Department of Labor. The bureau has the responsibility to encourage the establishment of apprenticeship programs and to help improve existing programs but does not itself conduct such programs. One of its prime objectives, however, is to promote the development of such programs.

Since its establishment, the bureau has provided technical assistance in developing and improving apprenticeship and other industrial training programs, and has set up minimum standards for the registration of local apprenticeship programs. The bureau works closely with state apprenticeship agencies, as well as with trade and industrial education institutions, and with management and labor. Through its field staff the bureau cooperates with local employers and unions in developing apprenticeship programs to meet specific needs.

To implement apprentice training on a local level, many states have passed laws that provide for the establishment of state apprenticeship councils. These state agencies function cooperatively with the Bureau of Apprenticeship and Training and are comprised of labor, management, and public representatives, often with the addition of members from the state labor departments, and others. Using the standards recommended by the Bureau of Apprenticeship and Training as a guide, these councils have established detailed standards and procedures that apprenticeship and training programs in the state are expected to follow. A state council that wishes to do so can become a part of the national apprenticeship program by securing recognition of its standards and procedures by the Bureau of Apprenticeship and Training.

13.37 The Drug-Free Workplace Act

In 1988, the Drug-Free Workplace Act was passed, which requires federal government contractors and employers who receive federal contracts and grants to maintain a drug-free workplace. Construction contractors performing federal work of $25,000 or more are required by law to take various steps to discourage drug use by their employees. Specifically, the act requires the contractor to:

1. Publish and distribute to each employee a statement prohibiting drugs in the workplace and specifying punitive actions.
2. Establish a drug awareness program.
3. Notify the contracting agency of a workplace drug conviction.
4. Discipline any employee convicted of a criminal drug offense in the workplace, or require the employee to participate in an approved drug abuse treatment program.
5. Make a good-faith effort to maintain a drug-free workplace.

Contracting agencies can suspend or terminate contracts and can bar contractors from federal work for up to five years if they make a false certification, fail to carry out the requirements of the act, or have such a number of employees convicted of drug offenses as to indicate that the contractor failed to make a good faith effort to provide a drug-free workplace.

At the present time, drug testing has become a common employment requirement on both union and open shop construction projects. Many unions have now entered into labor contracts that require prehire drug testing as a part of contractors' anti-drug programs. Many open shop firms now reserve the right to spot-check individual employees on their job sites. Employees of subcontractors are also subject to such examination. Both union and contractor testing policies call for the firing of employees who test positive.

13.38 Family and Medical Leave Act

In 1993, Congress adopted the Family and Medical Leave Act (FMLA), which provides that an eligible employee, whether male or female, is entitled to up to 12 weeks of unpaid medical leave during any 12-month period:

1. Due to the birth or adoption of the employee's son or daughter.
2. To care for the employee's spouse, son, or daughter, or parent having a serious health condition.
3. Because of a serious health condition that makes the employee unable to perform the functions of the employee's position.

The secretary of labor has issued regulations to carry out the intent of Congress in the FMLA. Under FMLA and Labor Department regulations, when an employee requests leave due to the birth or adoption of a child, the employer may require that the employee use all accrued paid personal, vacation, and family leave, but not sick leave toward the leave provided for in the act. In the event of an employee's serious health condition or that of a family member, the employer may require verification of the condition. Additionally, the employer may require that the employee use any available paid vacation time, and personal, medical, or sick leave toward any part of the twelve weeks of leave provided by the act.

Additionally, an employer cannot utilize FMLA leave time in an adverse manner in any decision regarding hiring, promotion, or discipline, nor may this leave time be taken into consideration with regard to matters such as bonuses for a good record of safety in the workplace or for perfect attendance at work. Upon return from FMLA leave, the employee is entitled to be restored to the same or equivalent position in the company, with equivalent pay and benefits.

The act applies to employees of companies that have 50 or more employees. To be eligible for FMLA leave, an employee must have been employed for at least 12 months and must have worked for at least 1,250 hours during that 12-month period.

13.39 Americans with Disabilities Act (ADA)

Enacted in 1990, the Americans with Disabilities Act (ADA) was the first federal statute to extend civil rights protections to the disabled. This act extends extensive legal protections and remedies to persons with disabilities, or to persons who are defined as being disabled. The stated purpose of this act is:

to provide a national mandate to end discrimination against disabled individuals and to bring them into the economic and social mainstream of life, to provide enforceable standards addressing discrimination against disabled individuals, and to ensure that the federal government play a central role in enforcing the standards on behalf of disabled individuals.

The ADA prohibits discrimination based on a disability in both the private and public sectors, in areas of employment, public accommodations, public service, transportation, and telecommunications. The act sets forth prohibitions against discrimination on the basis of disability by employers, employment agencies, labor organizations, or joint labor-management committees with respect to hiring and all terms, conditions, and privileges of employment.

The act defines an individual who is disabled as:

1. Having a physical or mental impairment that substantially limits one or more of the major life activities of such individual.
2. Having a record of such an impairment.
3. Being regarded as having such an impairment.

Under the provisions of the ADA, employers may not discriminate against any qualified individual with a disability in any aspect of hiring or employment. Only disabled individuals who are otherwise “qualified” can be protected against employment discrimination. A “qualified individual” is a person with a disability who, with or without reasonable accommodation, can perform the essential functions of the job. The phrase “essential functions” means job tasks that are basic and fundamental and not marginal.

An additional requirement in the ADA, is the provision of “reasonable accommodation” for persons defined as disabled. This matter is subject to varying interpretations, and the courts and federal agencies are continuing to define, on an ongoing basis, what is, and what is not, reasonable accommodation.

In addition to the general provisions in the ADA prohibiting employment discrimination, this law also contains a number of additional specific prohibitions. Some of these are: limiting, segregating, or classifying a job applicant or employee in a manner that adversely affects his opportunities or status; using standards, criteria, or methods of administration in a manner that results in or perpetuates discrimination; imposing or applying tests and other selection criteria that screen out disabled individuals, unless the test or selection criteria is job-related or consistent with business necessity; and denying employment opportunities because a qualified individual with a disability needs reasonable accommodation.

13.40 ERISA

The Employee Retirement Income Security Act (ERISA) is a federal statute adopted in 1974. The purpose of the act is to “set minimum standards for most voluntarily established pension and private health plans in private industry, so as to provide protection for individuals in these plans.”

ERISA requires such plans to provide participants with plan information, including important information about plan features and funding; provides fiduciary responsibilities for those who manage and control plan assets; requires plans to establish a grievance and appeals process for participants who get benefits from the plans; and gives participants the right to sue for benefits and breach of fiduciary duty.

There have been a number of amendments to ERISA, expanding the protections available to health benefit plan participants and beneficiaries. One important amendment, the Consolidated Omnibus Budget Reconciliation Act (COBRA), provides some workers and their families with the right to continue their health coverage for a limited time after certain events, such as the loss of a job. Another amendment to ERISA is the Health Insurance Portability and Accountability Act (HIPAA), which provides important new protections for working Americans and their families who have preexisting medical conditions or might otherwise suffer discrimination in health coverage based on factors that relate to an individual's health. Other important amendments include the Newborns' and Mothers' Health Protection Act, the Mental Health Parity Act, and the Women's Health and Cancer Rights Act.

In general, ERISA does not cover group health plans established or maintained by governmental entities, churches for their employees, or plans which are maintained solely to comply with applicable workers compensation, unemployment, or disability laws. ERISA also does not cover plans maintained outside the United States primarily for the benefit of nonresident aliens or unfunded excess benefit plans.

(Department of Labor Website, www.dol.gov/dol/topic/health-plans/erisa.htm)

13.41 Summary and Conclusions

National and local labor statutes, as well as the interpretations and policies which have been formulated on the basis of these statutes, regulate in numerous ways the interactions between management and labor, both within construction companies and on construction projects. Understanding and complying with all of the applicable laws and policies is both a matter of obvious significance, as well as a matter of critical importance, for the construction contractor.

Chapter 13 Review Questions

1. Define hot cargo agreement.
2. Define secondary boycott.
3. Provide a synonym for the National Labor Relations Act, and state two of its key provisions.
4. Define ERISA and discuss the basics of its provisions as they relate to construction workers.
5. Define common situs picketing. Include discussion of the “secondgate” policy.
6. Define and contrast the meaning of the terms union shop and closed shop.
7. Define jurisdictional dispute. Define two methods by which they may be resolved, as discussed in this chapter.
8. Define ADA, and discuss its impact on the construction industry in terms of a contractor's hiring and employment practices.
9. State the key provisions of Executive Order 11246.
10. State the key provisions of the Davis-Bacon Act.
11. Describe the conditions under which a contractor can deduct union dues from an employee's paycheck, and state the name of the legislation that made this a legal practice.
12. State the key provisions of the Fair Labor Standards Act.
13. State the key provisions of the National Apprenticeship Act.
14. State the key provisions of the Contract Work Hours and Safety Standards Act, and contrast these provisions with those of the Fair Labor Standards Act.
15. Describe the key provisions of the Immigration Reform and Control Act.