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					FUNDAMENTALS OF MERIT SHOP
    BUSINESS PRACTICES
            Presented By:
            Attorney Jeffrey A. Risch
            Wessels Sherman
            2035 Foxfield Drive
            St. Charles, IL 60174
            (630) 377-1554 phone
            (630) 377-1653 fax
            www.wesselssherman.com
Associated Builders & Contractors of
Illinois

   About Us
    –   Established in 1975. We aggressively promote and protect
        the free enterprise system and the Merit Shop Philosophy.
    –   A construction trade association representing over 400
        member companies involved in the commercial and
        industrial construction markets in Illinois.
    –   One of 78 chapters of the national Associated Builders and
        Contractors, Inc. (ABC), one of the most influential merit
        shop trade associations in the United States.
Associated Builders & Contractors of
Illinois (continued)

   What We Do?
    Offer a voice with the legislative, executive and judicial branches of the
    federal government and with state and local governments.

    Advance the merit shop construction philosophy, which encourages
    open competition and a free-enterprise approach that awards
    contracts based on merit.

    Provide members with an organization to deal with issues on an
    industry-wide basis. (Examples: government regulation, legal
    advocacy, education, training, workforce development, technology,
    recognition through national and chapter awards programs, employee
    benefits, guidance on best practices).
The Merit Shop Contractor

   What is a “Merit Shop” Contractor?
    - It’s a belief…
       Construction projects should be awarded on merit to
       the most qualified and responsible low bidders.
Challenges of a “Merit Shop”
Contractor

   Project Labor Agreements
   Illinois Responsible Bidder Requirements
   Prevailing Wage Laws
   Industry Misconceptions & Myths
    - #1Challenge
Project Labor Agreements (PLA’s)

   What is a PLA?

    Generally… a project labor agreement is a “union-only” contract
    requiring contractors and/or subcontractors to sign collective
    bargaining contracts with labor unions as a condition of performing
    work on a particular construction project.

    Such contracts typically require the employer to subject its employees
    to exclusive union representation for all work performed on the project,
    to pay union wage rates and benefits, to adhere to union work rules
    and classifications, to utilize a union hiring hall, and to subcontract only
    with other union contractors.
PLA’s (continued)
   Are PLA’s Valid?

    The U.S. Supreme Court and the National Labor Relations Board have held
    that a union-only PLA is permitted on private projects under Section 8(e) of the
    National Labor Relations Act, so long as the signatory to the project agreement
    is a construction industry employer who is engaged in collective bargaining with
    the union.

    In the Boston Harbor case (1993), the U.S. Supreme Court held that
    government-mandated PLAs were not preempted by federal labor law, so long
    as the government involved was acting as a “market participant” and not a
    regulator.

    The majority view of the state courts seems to be that government-mandated
    union-only agreements are permitted under state and federal laws, provided
    that they are not "regulatory" in nature, that they are supported by studies
    demonstrating legitimate need for the type of construction at issue, and are
    tailored to meet legitimate procurement objectives.
PLA’s (continued)

   Are PLA’s Required?

    There’s no law that REQUIRES the use of PLA’s on all public or private
    projects. The CHOICE is up to the Developer, Builder, or Procurement Entity,
    Etc…

    EXCEPT: In May 2003, Illinois Gov. Rod R. Blagojevich (D) signed Executive
    Order 2003-13, “Executive Order on Project Labor Agreements.” --- On a
    project-by-project basis, a state department, agency, authority, board or
    instrumentality, which is under the control of the Governor, shall include a
    project labor agreement on a public works project….”

    Note: President Bush issued a federal Executive Order banning union-only
    PLAs from federally funded construction projects. Election ’08 could reverse
    this.
ABC’s Approach to PLA’s

   ABC’s Advocacy

    1. Education
    2. Media Campaigns
    3. Political Influence
    4. Legal Opposition
        Ex. ABC Northern Illinois v. Lavin, 7th
        Cir., No. 05-2174).
Illinois Responsible Bidder

   What is it?
    The Illinois Procurement Code sets forth certain requirements
    that a bidder on a State construction contract must comply with.
    As such, a bidder must be able to present evidence or documents to
    substantiate that it is a “Responsible Bidder.”

    The State (most State agencies) are required to procure services from
    “RESPONSIBLE BIDDERS” --- However, local public bodies are
    VOLUNTARILY adopting local responsible bidder ordinances.
Illinois Responsible Bidder (continued)

   What is a RESPONSIBLE BIDDER?

(1) The bidder must comply with all applicable laws re: conducting business in Illinois.

(2) The bidder must comply with all applicable provisions of the IL Prevailing Wage Act.

(3) The bidder must comply with all applicable EEO laws.

(4) The bidder must have a valid Federal Employer Identification Number or, if an individual, a
     valid Social Security Number.

(5) The bidder must have a valid certificate of insurance showing the following coverages:
     general liability, professional liability, product liability, workers' compensation, completed
     operations, hazardous occupation, and automobile.

(6) The bidder and all bidder's subcontractors must participate in applicable apprenticeship and
     training programs approved by and registered with the United States Department of Labor's
     Bureau of Apprenticeship and Training.
Illinois Responsible Bidder (continued)

   ABC’s Advocacy:

    1.   Establishing Strong Relationships with
         Insurance Brokers, Labor/Employment Law Firms
         (i.e. Wessels Sherman).


    2.   Establishing & Maintaining & Growing… Apprenticeship
         and Training programs approved by and registered
         with the United States Department of Labor's Bureau of
         Apprenticeship and Training.
Prevailing Wage Laws
   Federal Law: Davis-Bacon

    The Davis-Bacon Act establishes employment standards for
    laborers and mechanics working on public construction projects
    under federal contracts for amounts in excess of $2,000 (this
    amount pertains to the amount of the prime contract, not the
    amount of the individual subcontracts). If a contract is one that
    falls under the purview of the Davis-Bacon Act (and related
    laws), it must specify the minimum wages to be paid to the
    various classes of individuals working on the project. These
    wages may mirror area collective bargaining agreements (note:
    the prevailing rate is what’s prevailing amongst all contractors
    performing the work regardless of union affiliation).
Prevailing Wage Laws (continued)

   State Law: Illinois’ Prevailing Wage Act

    Generally speaking, the Illinois Prevailing Wage Act (820 ILCS
    130/0.01 et. seq.) (the “Act”) requires contractors and
    subcontractors to pay laborers, workers and mechanics
    employed on “public works” projects in Illinois no less than the
    general prevailing rate of wages (consisting of hourly cash
    wages plus fringe benefits) for work of similar character in the
    locality where the work is performed (note: union collective
    bargaining agreements set IL prevailing wages).
Prevailing Wage Laws (continued)

   ABC’s Advocacy:

    1.   Education!
    2.   Compliance Assistance.
         Example: ABC has established drug-free
         workplace programs designed to comply with
         new Illinois law concerning mandatory drug-free
         programs and testing on IL Prevailing Wage
         projects.
Industry Misconceptions & Myths
   #1 Challenge for Merit Shop Contractors

    Common Myths:

    Merit Shop Workers Are Not Skilled

    Merit Shop Workers Cannot Work Along Side Union Workers

    Merit Shop Workers Do Not Receive Adequate Training

    Union Workers Must Always Leave Jobsites When Merit Shop Workers Are
    Present

    Merit Shop workers are not safe
Industry Misconceptions & Myths
(continued)

   ABC’s Advocacy:

    1. Education (most common lesson…
       teaching others on how to deal with
       protests, pickets, strikes, boycotts, etc…)
Industry Misconceptions & Myths
(continued)

   The Rights of Employers and Employees during a Strike

    Just as employees have the right to strike, a struck employer
    has the right to continue to operate its business. While the
    employer may not discharge or take other adverse action
    against employees who participate in a strike, there is nothing
    to prevent an employer from hiring replacements and/or
    continuing to operate its business.

    No Strike Clauses???
Industry Misconceptions & Myths
(continued)

   General Notes of Interest:

    Labor problems are normally best handled with an all
    union or all "merit shop" project. But, business
    realities do not permit this luxury.

    Section 8(b)(4)(B) of the National Labor Relations
    Act makes it an unfair labor practice for a union to
    attempt to involve neutral parties in a dispute
    between the union and a particular employer.
Industry Misconceptions & Myths
(continued)

   General Notes of Interest (continued):

    A union must direct picketing, strike appeals, and other pressures solely upon the employer
    with whom the union has a primary dispute.

    The union must limit its picketing and other pressures in order in order to avoid, to
    whatever degree possible, involvement of other contractors and their employees.

    An attempt to enmesh other companies and their employees in a dispute the union may
    have with a single company is unlawful. This is the crux of a "secondary boycott.“

    Section 8(b)(4)(B) does not prohibit a union from taking direct action against a primary
    employer by appealing to its employees not to perform services in furtherance of a labor
    dispute with it.

    Section 8(b)(4)(B) does, however, prevent a union from indirectly pressuring the primary
    employer by bringing pressure on another employer commonly referred to as a secondary
    or neutral employer, to force that neutral employer to cease doing business with the
    primary employer.
Industry Misconceptions & Myths
(continued)

   General Notes of Interest (continued):

    Bottom Line: The union is permitted to
    picket a primary employer with whom it has a
    labor dispute but runs afoul of the law if it
    pickets a neutral employer with a proscribed
    object of enmeshing the neutral employer in
    a controversy not its own.
Industry Misconceptions & Myths
(continued)

   The Law Governing a Construction Jobsite Picketing:

    The NLRB has established special guidelines for picketing of a "common situs"
    location, such as construction jobsites. In common situs situations, the Board
    has set special standards for determining whether picketing is undertaken for a
    unlawful secondary object. These standards were adopted and described in the
    landmark case of Sailors Union of the Pacific (Moore Dry Dock Company), 92
    NLRB 547, 549 (1950):

    a.    The picketing is strictly limited to times when the dispute is located on a
          secondary employer’s premises;
    b.    At the time of the picketing, the primary employer is engaged in its normal
          business;
    c.    The picketing is limited to places reasonably close to the location of the primary
          employer’s business; and
    d.    The picketing discloses clearly that the dispute is with the primary employer.
Industry Misconceptions & Myths
(continued)

   Establishing A Reserved Gate System

    A reserve gate system is established by designating one gate for the
    sole and exclusive use of the picketed or primary employer’s
    employees, suppliers and visitors. Those persons must use that gate,
    and that gate only. Another gate or entrance is established for the use
    of all others not having any dispute with the picketing union.

    If one of the primary employer’s employees attempts to go through the
    neutral gate, he must be turned away and sent to the primary gate.

    If an employee of one of the neutral employers attempts to go through
    the primary gate, he can be sent away and told to go through the
    neutral gate.
Industry Misconceptions & Myths
(continued)

   Establishing A Reserved Time System

    The concept of a reserved time system is based on the first and second
    requirement of Moore Dry Dock: that the employer with whom the union has a
    dispute is located on the premises and is engaging in its normal business on
    the premises.

    Picketing directed against an employer when the employer is not scheduled to
    be actually performing work or making or receiving deliveries on a construction
    site may be unlawful secondary activity.

    Reserved time or work schedules are often utilized when one or more
    contractors on a mixed trade construction site are able to schedule working
    times different from those of the contractors who are not the object of any
    primary union dispute.
Industry Misconceptions & Myths
(continued)

   Establishing A Reserved Time System
    (continued)

    Because nonunion subcontractors enjoy more flexible work rules, it is often
    possible to schedule nonunion subcontractors for work at different times than
    the union subcontractors.

    Proper notice must be given to the trade union having a primary dispute with
    the picketed contractor that the contractor will not be present at the site at a
    certain time.

    Picketing which occurs or continues when the primary contractor is absent from
    the site is then unlawful. In the absence of the primary employer, picketing at
    the jobsite against the primary is a secondary boycott of the contractors present
    and working on the jobsite.
Industry Misconceptions & Myths
(continued)

   Pros & Cons of Establishing a Reserved
    Gate System (HINT: Picketing usually
    continues!)

   Pros & Cons of Establishing a Reserved
    Time System (HINT: Picketing usually
    ends!)
End of Presentation

Thank you!

 Any questions… please don’t hesitate to
 contact ABC’s Illinois Chapter Labor Attorney
 Jeff Risch at (630) 377-1554; or
 jerisch@stch.w-p.com.

				
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