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Project LAbor Agreements in Michigan struck down

Sixth Circuit lifts injunction on key Michigan Labor Law and frees Michigan businesses

In 2011 the Michigan legislature passed, and Governor Snyder signed into law, a bill (amended in 2012) prohibiting the State of Michigan and its local governments from signing strict labor agreements with construction contractors, also known as project labor agreements ("PLAs"). Opponents of PLAs believe the agreements, which favor unionized contractors, can add significant costs to construction projects. The law is called the Fair and Open Competition in Governmental Construction Act (the "Law").

Two trades councils subsequently sued and the Hon. Victoria Roberts of the U.S. District Court for the Eastern District of Michigan entered an injunction prohibiting the enforcement of the law. The State of Michigan appealed, and on Friday, September 6, the U.S. Court of Appeals for the Sixth Circuit lifted the injunction and upheld the Law in a 2-1 decision.

Among the arguments made by the unions were that PLAs are beneficial because they include terms and conditions such as no-strike provisions, as well as preemption arguments based on the fact that federal labor laws permit PLAs. The Sixth Circuit disagreed: "The act furthers Michigan's proprietary goal of improving efficiency in public construction projects, and the act is no broader than is necessary to meet those goals. Thus, the law is not preempted by the NLRA." The Sixth Circuit's opinion can be found here.

In response to the ruling, Michigan Attorney General Bill Schuette issued the following statement: "The public contract bidding process should be open and fair for all of Michigan's builders and contractors," said Schuette. "Encouraging robust competition and free enterprise will improve efficiency and save hard-earned taxpayer dollars." According to the State of Michigan's website, 18 states have enacted similar laws prohibiting government-mandated PLAs.

Note: Foster Swift’s Frank T. Mamat was Special Counsel to the Attorney General during various stages of the legislation.

 

 

Frank T. Mamat

fmamat@fosterswift.com

248.539.9919

 

Michael R. Blum

mblum@fosterswift.com

248.785.4722 

 

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