The Blog

By Joe Camilo, Tocco Building Systems

Unfortunately, politics is often as much a part of what we do as actual building.  And as all of us know, it’s not easy being an open-shop contractor in Massachusetts.

This reality has certainly been on display of late.  The Boston Globe published an editorial entitled “Project labor agreements are bad policy” on May 28, not long after Hampden County Superior Curt Judge Michael Callan prohibited a proposed PLA on a Springfield water treatment project from going forward.  There was as eerie and uncomfortable unease when construction unions didn’t respond to the editorial.

Now we know why.  The unions took to the State House and succeeded in getting the House to amend at least two bills by adding language that bypasses limits set by Massachusetts’ Supreme Judicial Court and gives municipalities and public agencies expanded authority to use union-only PLAs on public construction projects.

We have been working the Senate, House and the media to change the PLA language, and our government team was able to secure some qualifying language in the House, which is better than the blanket authorization the unions wanted.  Our work has also produced a strong anti-PLA editorial in the Springfield Republican, the newspaper’s second editorial on the topic this year.

During debate over the amended bills, it was disheartening to hear state representatives claiming that PLAs are needed to ensure that construction workers on public projects are paid fairly and treated well.  Of course, public construction projects are already covered by state and federal prevailing wage laws that guarantee union-scale wages for all workers, regardless of labor affiliation.  And open-shop companies are also subject to state certification and local prequalification requirements that apply to all contractors.

In its editorial, the Globe argued that “There really is no strong policy argument for imposing a PLA…”  They mean “that those workers are paying taxes to help fund projects that PLAs would exclude them from working on.”

Our challenge is to keep debunking myths and drive home the point that excluding the 81.8 percent of Massachusetts construction workers who choose not to join a union is unfair, reduces competition and drives up costs.  You can count on the fact that we will continue to do exactly that.

The construction industry added 27,000 jobs on net in June, according to an Associated Builders and Contractors analysis of U.S. Bureau of Labor Statistics data. On a year-over-year basis, industry employment has increased by 235,000 jobs, an increase of 2.9%.

 Nonresidential construction employment increased by 21,200 positions on net, with growth in all three subcategories. Nonresidential specialty trade contractors added the most jobs for the month, (+9,200 jobs), followed by heavy and civil engineering (+6,300 jobs) and nonresidential building (+5,700 jobs).

The construction unemployment rate decreased to 3.3% in June. Unemployment across all industries rose from 4.0 in May to 4.1% last month.

“Despite indications that the broader economy is slowing, the construction industry continued to add jobs at a rapid pace in June,” said ABC Chief Economist Anirban Basu. “Contractors added another 27,000 jobs for the month, with hiring concentrated in the nonresidential segment. Nonresidential construction employment has expanded 3.8% over the past year, a rate of growth over twice as fast as that of the broader economy. With backlog still at healthy levels, according to ABC’s Construction Backlog Indicator, hiring should continue in the coming months.

“Of course, the Industry would have added jobs at an even faster pace if not for ongoing labor shortages,” said Basu. “The construction unemployment rate fell to 3.3% in June, the second-lowest level ever recorded. This is in stark contrast to the nationwide unemployment rate which, while still low by historical standards, rose to the highest level since November 2021.”

WASHINGTON, July 9—Associated Builders and Contractors reported today that its Construction Backlog Indicator increased to 8.4 months in June, according to an ABC member survey conducted June 20 to July 3. The reading is down 0.5 months from June 2023.

View the full Construction Backlog Indicator and Construction Confidence Index data series.

The entire decline in backlog observed over the past calendar year is attributable to the Middle States and Northeast. Backlog in the South and West regions was unchanged between June 2023 and June 2024.

ABC’s Construction Confidence Index readings for sales and staffing levels fell slightly in June, while the reading for profit margins improved. All three readings remain above the threshold of 50, indicating expectations for growth over the next six months.

“Backlog continues to hold up remarkably well despite high interest rates, inflation and emerging weakness in the broader economy," said ABC Chief Economist Anirban Basu. “While contractor confidence regarding the outlook for sales and staffing levels fell modestly in June, all three Construction Confidence Index components are higher than they were one year ago.

“The combination of slowing inflation and softening growth suggests that the Federal Reserve may begin to lower interest rates as soon as September,” said Basu. “That will buoy backlog as some of the softer construction segments, like office and commercial, benefit from lower borrowing costs and looser lending standards.”

ABC applauded a decision by the U.S. District Court for the Northern District of Texas granting a nationwide preliminary injunction that blocks some provisions in the U.S. Department of Labor’s final rule expanding the Davis-Bacon Act.

Associated General Contractors of America’s lawsuit asserted that the Biden administration lacks the legal authority to expand the law to cover manufacturing facilities miles away from projects and delivery truck drivers spending any amount of time on a jobsite, or to retroactively impose the measure on already-executed contracts, among other things. The court granted AGC’s motion for a nationwide preliminary injunction, temporarily blocking the AGC-challenged provisions.

“The preliminary injunction issued in response to AGC’s federal lawsuit is a victory for the construction industry and the rule of law. It strikes down the Biden administration’s effort to do an end-run around Congress via regulatory action that benefits special interests,” said Ben Brubeck, ABC vice president of regulatory, labor and state affairs.

“ABC’s pending federal lawsuit, filed in East Texas, targets other provisions in the DOL’s extreme overhaul of more than 50 Davis-Bacon Act regulations that undermine commonsense reforms put in place by the Reagan administration. We are hopeful ABC’s lawsuit will also prevail over the Biden administration’s regulatory overreach,” said Brubeck.

On Aug. 8, 2023, the U.S. Department of Labor released a final rule, Updating Davis-Bacon and Related Act Regulations, which makes drastic revisions to the Davis-Bacon Act and Related Acts regulations that apply to federal and federally assisted construction projects funded by taxpayers.

The DOL’s final rule mostly disregards the feedback of ABC contractors, construction industry stakeholders, and thousands of small businesses urging the withdrawal of this unnecessary, costly and burdensome regulation.

On Nov. 7, 2023, ABC and its Southeast Texas chapter filed a complaint in the U.S. District Court for the Eastern District of Texas, challenging the controversial final rule.

Learn more at abc.org/davisbacon.

Associated Builders and Contractors’ 2024 Workforce Development Survey found that its contractors invested $1.6 billion to provide craft, leadership and health and safety education to more than 1.3 million course attendees nationwide in 2023, up from $1.5 billion in 2022 and on track with $1.6 billion in 2021.

Other key findings include:

• Safety education accounts for the greatest share of total workforce investment at 59%, which has remained stable since 2022.
• ABC contractors invested an average of 7.5% of payroll on workforce development in 2023, slightly down from 8% in 2022.
• Trade and specialty contractors continued to increase their share of the total workforce development investment, which grew to 50% in 2023 from 42% in 2022.
• 58% of respondents reported a labor shortage that is severe or very severe, citing an exodus of baby boomers as the top contributor.
• 81% of respondents who utilize virtual or augmented reality used it for safety education.

“ABC member contractors not only build and rebuild structures with excellence, but they also help build lifelong, durable, transferable skill sets for their employees by investing billions to cultivate their career progression in commercial and industrial construction,” said Greg Sizemore, ABC’s vice president of health, safety, environment and workforce development. “This investment is in response to the need for more than half a million additional construction workers in 2024 alone. Workforce development is part of the culture of ABC member contractors, which continue to choose flexible, competency-based and market-driven methods to upskill their workforces. Construction is among the few industries where an individual can become an apprentice, earn a paycheck while learning the skills needed for their chosen craft and receive a portable, industry-recognized credential that will further their career.”

The annual workforce development survey quantifies the scope of ABC members’ education and upskilling initiatives to advance their employees’ careers in commercial and industrial construction to build the places where we gather, live, work, learn and heal.

ABC’s all-of-the-above approach to upskilling has produced a network of more than 800 apprenticeship, craft, health and safety and management education programs—including more than 450 government-registered apprenticeship programs across 20 different occupations—in order to develop a safe, skilled and productive workforce. ABC chapters also have 328 entry-point programs in place nationally to welcome all to begin a career in construction. Members contribute about $500,000 annually to ABC’s Trimmer Construction Education Fund to support the development of a skilled, safe and sustainable workforce through grants awarded to its chapters.

Industry consulting firm FMI conducted the 2024 Workforce Development Survey from Jan. 4 to May 20, 2024. Aggregated data was derived by calculating the average amount spent on education by each respondent and multiplying that by the total number of ABC contractor members.

The construction industry added 21,000 jobs on net in May, according to an Associated Builders and Contractors analysis of U.S. Bureau of Labor Statistics data. On a year-over-year basis, industry employment has increased by 251,000 jobs, an increase of 3.1%.

Nonresidential construction employment increased by 17,100 positions on net in May, with growth registered in all three major subcategories. Nonresidential specialty trade added the most jobs, with employment increasing by 13,000 positions. Nonresidential building and heavy and civil engineering added 3,000 and 1,100 jobs, respectively.

The construction unemployment rate fell to 3.9% in May. Unemployment across all industries rose from 3.9% in April to 4.0% last month.

“Every monthly employment report is important,” said ABC Chief Economist Anirban Basu. “But this year’s reports are scrutinized carefully for several reasons, including upcoming federal elections. Economists are asking whether indications of softening in certain parts of the economy might cause deterioration in the overall labor market and whether the virtuous cycle of consumer spending and job growth will persist. May’s report indicates that we remain in that virtuous cycle.

“Despite perpetual fears of recession and the dislocating impacts of high borrowing costs, the U.S. nonresidential construction industry is adding jobs rapidly and will continue to, according to ABC’s Contractor Confidence Index,” said Basu. “While many would point to public infrastructure outlays as an obvious source of strength, this report indicates job growth among many industry segments. The rapid transformation of the U.S. economy continues to more than offset the negative impacts of elevated project financing costs.

“As always, the news was not purely positive,” said Basu. “Wage pressures picked up in May, likely quashing hopes for a Federal Reserve rate cut in July. While the establishment survey indicated that the nation added 272,000 jobs in May on a seasonally adjusted basis, blowing through consensus expectations, the household survey indicated that the nation’s unemployment rate increased despite a shrinking U.S.  labor force. What that means is that the headline job growth number emerging from the establishment survey may be overstating U.S. economic strength while also delaying the Federal Reserve’s response to potentially emerging economic weakness.”

Associated Builders and Contractors reported that its Construction Backlog Indicator fell to 8.3 months in May, according to an ABC member survey conducted May 20 to June 4. The reading is down 0.6 months from May 2023.

View the full Construction Backlog Indicator and Construction Confidence Index data series.

Backlog declined on a monthly basis for every company size except those contractors with greater than $100 million in annual revenues. On an annual basis, backlog is down for contractors of all sizes.

ABC’s Construction Confidence Index readings for profit margins and staffing levels fell slightly in May, while the reading for sales improved. All three readings remain above the threshold of 50, indicating expectations for growth over the next six months.

“Over a year has passed since the Federal Reserve raised the target range of the federal funds rate above 5%," said ABC Chief Economist Anirban Basu. "Despite widespread expectations that rates will remain elevated through at least the end of the year, contractors remain confident about the future, with a majority of contractors expecting their sales and staffing levels to expand over the next six months.

“Although backlog has been lower in 2024 than it was during 2023, it has also been stable,” said Basu. “While significant spending activity in manufacturing and infrastructure-related segments has kept contractors busy, input cost escalation has reemerged in recent months. As a result, contractor confidence regarding profit margins has fallen to the lowest level since November 2023.”

by Brian Lynch, Esq., Rudolph Friedmann LLP

On April 23, 2024, the Federal Trade Commission (the “FTC”) approved a new rule prohibiting employment related non-compete clauses. FTC Commissioners voted 3-2 along party lines to approve the new rule. The rule will be effective 120 days after publication in the Federal Register, and employees and employers should expect the rule to become effective on approximately September 1, 2024.

What Is Covered by the New Rule?

The new rule bans non-compete agreements or clauses for all workers going forward after the rule’s effective date. The rule also invalidates existing non-compete agreements or clauses made prior to the rule’s effective date. In other words, current agreements will no longer be enforceable.

The rule is applicable to any clause between an employer and employee that (i) prohibits a worker from, or (ii) penalizes a worker for, or (iii) functions to prevent a worker from seeking or accepting another job after the conclusion of their employment. Items (i) or (ii) can be read as a straightforward ban on clauses that prohibit an employee’s ability to accept employment with a competitor (or another employer). Item (iii) could, arguably, expand the concept of non-compete clauses to include non-solicitation clauses as well. Should a non-solicit clause be construed to functionally prevent a worker from obtaining work, the non-solicit clause could also be unenforceable under the new rule.

What Is Not Covered by the New Rule?

There are certain types of non-compete agreements that will not fall under the rule. Any existing non-compete for “Senior Executives” will still be enforceable. The FTC defines Senior Executives as any employee earning $151,164 or more annually and has a policy making position. This exemption for Senior Executives is not available to new non-compete clauses entered into after the rule’s effective date. Non-compete clauses that are related to the sale of a business are also outside of the scope of the rule and are not banned. Additionally, the FTC has enacted the new rule under Section 5 of the FTC Act, which does not apply to non-profit organizations and as such the rule cannot apply to agreements entered into with a non-profit. 

Alternatives to Non-Compete Clauses

In the FTC’s corresponding press release announcing the rule, it pointed to alternatives to non-compete agreements or clauses. The FTC noted that an estimated 95% of workers subject to a non-compete agreement are also subject to non-disclosure agreements that protect the employer’s confidential and proprietary information. Although the new rule did not include an exception if so called “Garden Leave” (compensation paid in exchange for the non-compete) is provided to a former employee, the FTC does note in the rule “that an agreement whereby the worker is still employed and receiving the same total annual compensation and benefits on a pro rata basis would not be a non-compete clause under the [the rule’s] definition, because such an agreement is not a post-employment restriction. Instead, the worker continues to be employed, even though the worker’s job duties or access to colleagues or the workplace may be significantly or entirely curtailed.”

Challenge to the Rule

The United States Chamber of Commerce (the “Chamber of Commerce”) immediately condemned the new rule as “undermining well-established state laws that have governed the use of non-compete agreements.” The Chamber of Commerce has taken the position that the FTC is acting outside of its constitutional and statutory authority by issuing the new rule. The Chamber of Commerce has filed a complaint against the FTC for declaratory and injunctive relief in the United States District Court for the Eastern District of Texas.

New Developments  

Rudolph Friedmann LLP will provide further information on the FTC’s new rule as it becomes available. Should you have any questions on the rule’s impact on your company or your employment, please contact the attorneys at Rudolph Friedmann LLP.

On May 21, ABC joined the U.S. Chamber of Commerce and a coalition of business groups in filing a lawsuit in the U.S. District Court for the Western District of Texas, Waco Division against the U.S. Department of Labor’s Occupational Safety and Health Administration’s Worker Walkaround Representative Designation Process final rule. Read the news release announcing the lawsuit.

Effective on May 31, the final rule will allow employees to choose a third-party representative, such as an outside union representative or community organizer, to accompany an OSHA safety inspector during site inspections, regardless of whether the workplace is unionized or not.

Now, construction employees and employers could face serious safety concerns because the final rule has the potential to allow anyone on a jobsite. There simply is no business case for this final rule and no benefit during a compliance inspection.

By allowing outside union agents access to nonunion employers’ private property, OSHA is injecting itself into labor-management disputes and casting doubt on its status as a neutral enforcer of the law. This final rule negatively impacts the rights of employers while simultaneously ignoring the rights of the majority of employees who have not authorized a union to represent them. OSHA’s rule also poses unnecessary risk to the individual joining the inspection and others on the jobsite if the authorized person is not trained to safely walk a construction jobsite. The rule does not include any requirement that the authorized person be equipped or conduct themselves to the same standards as OSHA safety inspectors. Further, the final rule fails to answer who is legally responsible if the third party gets injured during the inspection or harms someone else.

In addition to the lawsuit, on May 17, ABC, as a steering committee member of the Coalition for Workplace Safety, and 57 other employer organizations sent a letter to members of the U.S. House of Representatives urging them to pass Rep. Mary Miller’s, R-Ill., Congressional Review Act resolution to nullify the final rule.

The CWS letter states, “The resolution is vital to safeguarding the mission of workplace health and safety inspections. Without this legislation, OSHA CSHOs will be forced into an impossible position of policing labor disputes, for which they are simply unequipped. It would protect employers against individuals looking to further their own agendas and safeguard their property rights. It would also protect workers’ right to have their voice heard when determining workplace representation.”

In a strong and clear decision, the Hampden Superior Court has issued an injunction preventing the Springfield Water and Sewer Commission (SWSC) from imposing a union-only project labor agreement on the construction of the West Parish Water Treatment Plant. In a decision issued on 5/16/24, Justice Michael K. Callan Wrote: "The public benefits from an open, fair, competitive and robust bidding process. The PLA requirement unnecessarily curtails that without legal justification." The legal challenge was brought by several merit shop plaintiffs, including Wayne J. Griffiin Electric, Inc. and ABC MA who were represented by atty. Chris Whitney of Pierce Atwood LLP.

"This is a great victory for open competition that benefits our members and the taxpaying public," said ABC MA President Greg Beeman. In response to the ruling, SWSC issued an addendum on 5/20 removing the PLA requirement and extending the bid dates to 6/4 for sub bids and 6/13 for GC bids.. ABC MA and the other plaintiffs are reviewing this addendum and extension to determine if it is adequate. The SWSC has scheduled a meeting in Executive Session on 5/21 to discuss the court decision.

In his decision, Judge Callan, wrote:

“The evidence before the court is that the PLA poses such a significant disadvantage to open shops as to render a competitive bid impossible. Certainly, in theory, Griffin and others can bid on the Project, but it is bidding blindly, and utterly defies common sense and logic to think that it is a real chance on "equal footing." No reasonable, otherwise highly qualified contractor or subcontractor would entertain such a colossal risk. For all intents and purposes, the PLA excludes open shops from bidding, as it essentially requires bidders to execute an agreement to use union laborers on the Project.”

There had been a lot of activity around this PLA leading up to this decision. Atty. Chris Whitney filed the request for an injunction against the imposition of the PLA on April 23. Plaintiffs are Wayne J. Griffin Electric, General Mechanical Contractors and ABC MA and the Merit Construction Alliance. In related good news, our application to the National ABC Construction Legal Rights Foundation has been approved in the amount of a $30,000 match. That is for the injunction stage – if there is an appeal phase, we could do another application.

In its 4/11/24 editorial, written before the lawsuit was filed, the Republican/MassLive wrote: “So far no party has sued to enjoin the use of the PLA. The project will likely move forward- under an agreement we consider to be based on flimsy grounds that do not meet the rigorous test set by the SJC in the Malden case.” Now that we have this court injunction, we can say that the court agrees.

In a 5/19/24 editorial, the Republican/MAssLive wrote: “ It is always refreshing to see the judiciaryperform its function correctly, as was the case with Judge Callan’s ruling, because in court cases, agencies such as the commission can’t skate by on speculative rhetoric and fear-mongering. They need to support decisions based on facts and evidence. The commission’s worry about labor unrest wasn’t based on facts or evidence, but stemmed, in our view, from being lobbied.”