Council considers dropping labor agreements

Cloquet City Councilors took a step toward getting rid of the city requirement for project labor agreements Tuesday, as recommended by staff in response to a lawsuit targeting PLAs in Cloquet, Duluth and Two Harbors.

A number of people — mostly union representatives — asked the council to continue with its PLA during the online meeting; only one person spoke against it. None of the councilors addressed the issue during the meeting, nor did they vote on the recommendation. Tuesday simply marked the first reading of the proposal to repeal the PLA, city administrator Tim Peterson said. There will be two weeks for more consideration and feedback before the council votes on the proposal at its meeting May 4.

Generally, under the terms of a PLA, construction unions have bargaining rights to determine the wage rates and benefits of all employees working on a project covered by a PLA. PLAs also typically require that employees hired for the project are referred through union hiring halls — in this case the Duluth Building and Construction Trades Council — and that non-union workers pay union dues for the length of the project. The contractor has to follow union rules on pensions, work conditions and dispute resolution.

The Cloquet PLA applies to any city project over $175,000 or private project with more than $175,000 in city funding (which can include financing, loans, grants, tax abatements, etc.). Cloquet was the first city in the area to apply a PLA to private projects that the city was involved in.

Peterson explained that staff have reviewed the benefits and disadvantages of the PLA requirements since the lawsuit was filed in late January. They concluded that the five PLA benefits touted in the city code are “a direct result of proper project management, not a result of requiring a project labor agreement.”

Peterson read the entire staff report aloud during the meeting. The report asserts that the PLA requirement has actually had a negative impact on city projects, and therefore residents.

“In specialty projects, including the salt shed, skate park, water tank repairs, landscaping, etc. We have seen negative impacts to timely projects and cost control. In these examples, we found that many necessary contractors are entirely unwilling to sign a project labor agreement, causing the pool of potential contractors to shrink all the way to, in some situations, one willing contractor.”

Lack of competition can lead to increased costs, the report continued, noting that the city has also used additional staff time to unnecessarily break up projects for bidding or simply trying to find contractors.

Cloquet’s PLA was somewhat controversial from the start. Cloquet was the first city in the region to require a PLA on private projects. The Cloquet Economic Development Authority was not consulted before the council voted on the measure in 2017, and the EDA has since suggested at least twice that the council modify the PLA and remove the private business requirements.

Since the lawsuit was filed, the council voted in March to remove language that required all employees covered by the agreement to “remain members of good standing in their respective Unions” or “become members of the respective Unions within seven days after their employment.” They also added language to the PLA stating that “nothing in this agreement” requires employees to join a union or pay fees to a union.

Daniel Gilbert, representing the International Union of Operating Engineers Local 49, spoke about the benefits of a PLA, including good wages for local workers, and projects that finish on time and on budget. He also stressed that both the Supreme Court and the Minnesota Court of Appeals have upheld project labor agreements.

“With all that being said, when you’re voting against a PLA, that is a direct attack against your local, responsible skilled labor,” Gilbert told the council.

Craig Olson, president of the Duluth Building and Construction Trades Council, said PLAs help keep the labor local on projects, ensure a quality workforce and keep money in the community.

He said the Building Trades have helped file briefs to have the lawsuit dismissed, pointing out there are five similar lawsuits around the country, possibly funded by “dark money.”

“You deleted the union security clause, their point is moot,” he said.

“Please don’t throw the baby out with the bathwater,” Olson added later. “We’re fixing this.”

Only Lee Anderson spoke against the PLA.

In 35 years of working in construction sales, he said his experience with PLAs has been “totally negative,” citing cost increases in particular.

Peterson limited speakers who were repeating the same points, and encouraged people to email or call him or their city councilors between now and the next meeting in May. Contact Peterson at 218-879-3347 or [email protected].