New Final Rule Requires Labor Agreements for Large Federal Construction Projects

By Drew Hintze posted 12-26-2023 07:00 AM


On December 18, 2023, officials from the Biden Administration announced a final rule implementing President Biden’s Executive Order 14063, which requires the use of Project Labor Agreements (PLAs) for most large-scale federal construction projects. The rule purports to help ensure that large federal construction projects are completed efficiently and on time, while also supporting high-quality jobs. 

The rule requires the use of PLAs—a pre-hire collective bargaining agreement unique to the construction industry—for large federal construction projects, where the total estimated cost to the federal government is $35 million or more (with limited exceptions). The rule requires all parties—contractors, subcontractors, and unions—to negotiate set terms and conditions that govern the specific federal construction project. 

In accordance with the Executive Order, the Biden Administration plans to publish companion guidance. The guidance will aim to provide important information to federal agencies responsible for executing the policy throughout the government and to ensure that agencies take full advantage of PLAs on large-scale construction contracts.     

The final rule is poised to extend the benefits of collectively bargained wages, benefits, and safety protections to nearly 200,000 workers engaged in federal construction projects, irrespective of their union membership status. The new final rule will take effect January 21, 2024—30 days from December 22, 2023, when it publishes in the Federal Register. 

As the finalized version of the rule undergoes scrutiny, various business and construction groups are actively assessing its implications and contemplating potential legal challenges. Such groups may file litigation seeking to halt the implementation of the final rule. Employers Council will send out updates as new developments arise.