Battle Lines Drawn Over Federal Construction Labor Policies as Trump Reverses Biden Orders

“President Trump’s elimination of President Joe Biden’s failed policies is a win for America’s taxpayers and construction industry,” said Ben Brubeck, ABC Vice President of Regulatory, Labor and State Affairs. According to ABC, government-mandated PLAs increase construction costs by 12% to 20% and reduce competition from qualified contractors.

However, Stan Kolbe, Executive Director of Government and Political Affairs at SMACNA, offers a markedly different perspective.

“While many groups hyperventilate over the PLA issue, we see PLAs as the owner’s insurance, their preferred option for how they wish to select higher quality contractors and verify labor quality,” Kolbe stated. He emphasized that PLAs are particularly valuable for complex, high-stakes projects where “highly skilled contractors and extremely skilled workforces shine and profit.”

The controversy extends beyond just PLAs to include apprenticeship programs. Labor Secretary Lori Chavez-DeRemer, known for her strong support of Department of Labor’s registered apprenticeship programs (RAPs), has previously characterized these programs as the “gold standard” in workforce development.

The construction industry’s divide on these issues reflects broader questions about how best to address skilled labor shortages while maintaining project quality and cost-effectiveness. Kolbe points out that “most construction owners and developers regret the historical failure by far too many contractors and organizations to invest in and produce a sufficient highly skilled labor force.”

ABC, while supporting government-registered apprenticeship programs and operating over 450 through its chapters, argues against mandates that they say “undermine the voluntary nature of the system that is already failing to keep up with industry demand for labor.”

President Trump’s policy reversal affects multiple Biden-era executive orders, including EO 14126 on American worker investment, EO 14119 on apprenticeships, and EO 14026 on federal contractor minimum wages. The impact of these changes will likely be felt across thousands of construction projects nationwide. But notably, President Trump left President Barack Obama’s EO 13502, which requires agencies to consider PLAs, in place throughout his Presidency. President Trump declined to revisit EO 13502 despite calls to do so.

The debate over PLAs has deep roots, with proponents arguing they were originally created to protect owners’ investments from less experienced contractors. While federal use of PLAs has been limited — averaging just one project annually over the past decade — thousands of such agreements exist across private, state, and local projects.

The economic implications of these policy changes are hotly contested. ABC estimates that eliminating Biden’s pro-PLA policies could save taxpayers $10 billion annually, pointing to what they describe as systematic wage issues. According to Brubeck, PLA mandates can result in a loss “of up to 34% of workers’ compensation unless they join a union and vest in union benefits plans.”

Pension Liability Creates Contractor Concerns

The root of the spike in compensation costs that then detract from take-home pay lies in multi-employer pension plan obligations that contractors must take on when signing PLAs. These pension commitments create what ABC’s Brubeck describes as a “Hotel California” scenario – once contractors check in, they can never leave without incurring massive withdrawal liabilities that can exceed three years of net profits.

The issue gained additional complexity following the American Rescue Plan Act’s $100 billion bailout of multi-employer pension plans. While this federal intervention provided relief to the pension plans themselves, Brubeck argues it did nothing to address the underlying structural issues, or provide relief to employers. Critics argue that without fundamental reforms, these same pension plans could face similar crises within the next 15 years.

The pension obligations create particular challenges for non-union contractors considering PLA projects. Even on single projects, courts have consistently ruled that any contribution to these pension plans creates permanent liability obligations. A notable New Jersey case affirmed this principle even when a PLA explicitly included language attempting to limit such liability.

For workers, the pension system creates its own set of complications. Non-union employees working under PLAs often see their benefit contributions directed to union pension funds, but they can’t access these benefits unless they join the union and become vested.

“This is a textbook definition of wage theft,” Brubeck argued, drawing a distinction from the commonly prosecuted form of wage theft, the misclassification of employees as independent contractors. “This is a windfall for the Union plans and a loss for the workers unless they go join the union.”

Some contractors attempt to address this by double-paying benefits – maintaining their existing programs while also contributing to union pension funds – but this strategy significantly increases project costs and reduces competitiveness.

“A lot of the companies that are doing public work have 401ks that are portable for the employee that follow them from job to job,” Brubeck explained. “Those workers carry that around them from employer to employer, and that that’s the future of how the retirement system is going to work … You have something more concrete that follows the worker around. It’s good for them, because a lot of the employees may not meet the number of hours to vest in these plans.”

Private Sector Adoption Shows PLA Value

Kolbe presents a sharply different view of the economic equation. He said one often-overlooked aspect of PLAs is their role in preventing worker misclassification, a practice that costs an estimated $12.8 billion annually in avoided taxes and premiums. According to industry analysis, construction companies that misclassify workers as independent contractors gain a 20-30% labor cost advantage over law-abiding competitors.

He said the debate over PLAs extends well beyond government contracts, with major private sector companies increasingly embracing these agreements for their most critical projects. Shell’s Beaver County Cracker Plant, completed under a PLA in 2016, required 6,000 construction craft workers. More recently, Micron Technology agreed to a PLA for its state-of-the-art $15 billion Idaho microchip manufacturing facility, incorporating provisions for workforce training and local hiring.

“The evidence from private sector adoption is compelling,” Kolbe said. “When companies are spending their own shareholder dollars on complex, mission-critical projects, they’re choosing PLAs because they work.”

Other notable examples include the Oregon Clean Energy Center, where North America Project Development utilized a PLA to construct an 869 MW natural gas-fired power plant requiring approximately 1,500 skilled workers. The project’s successful completion demonstrates how PLAs can effectively coordinate large-scale industrial construction efforts.

“Look around and see where the mega project private market is going,” he noted. “The standards are exceptionally rigorous and a lot of familiar names from our ranks of members are on the contracts, for obvious reasons.”

He emphasizes that developers of major infrastructure projects, CHIPS manufacturing facilities, and nuclear power plants consistently demand uncompromising workforce quality — a requirement that he argues PLAs help ensure. TerraTherm just signed a PLA with contractors for its Natrium reactor in Wyoming for example, the first of its kind.

“Today’s signing of the Project Labor Agreement with TerraPower for its Natrium reactor marks a massive step forward for America’s nuclear industry,” said North America’s Building Trades Unions (NABTU) President Sean McGarvey.

These debates take on added significance as the nation faces unprecedented construction challenges. Modern infrastructure and technology projects demand increasingly specialized skills and reliable execution.

“Our firms know well from extensive experience on the majority of the complex mega projects, that developers demand uncompromising workforce quality now and will do so in the future,” Kolbe concluded, arguing that there are “no shortcuts to recruiting, training and retraining the super skilled workforce we need for the growing number of mega projects ahead.”

Timeline for Rescinding Executive Orders

The March 14 executive order from Trump revoked 19 Biden administration actions, including three key orders that had significant impact on the construction industry:

• Executive Order 14126 (“Investing in America and Investing in American Workers”), signed September 6, 2024, which had pushed PLAs and other union policy priorities on federally assisted construction projects funded by taxpayers
• Executive Order 14119 (“Scaling and Expanding the Use of Registered Apprenticeships in Industries and the Federal Government and Promoting Labor-Management Forums”), signed March 6, 2024, which had mandated government-registered apprenticeships on federal and federally assisted construction projects
• Executive Order 14026 (“Increasing the Minimum Wage for Federal Contractors”), signed April 27, 2021, which had established higher minimum wage requirements for employees working on federal contracts

While President Trump has rescinded these orders, Biden’s Executive Order 14063, which mandates PLAs on federal construction projects of $35 million or more, remains in effect following a U.S. Court of Federal Claims decision that upheld the mandate despite ABC members’ legal challenge. The ruling did, however, invalidate PLA requirements for the specific 12 bid protests that were filed against three federal agencies. While limited in scope, the decision has prompted contractors to file additional bid protests, potentially setting up broader challenges to the mandate. The Department of Defense has already withdrawn PLA mandates from military construction projects following the court’s ruling, and the Department of Veterans Affairs has followed suit.

The impact could be substantial. Prior to the Biden administration’s rule, the federal government had mandated PLAs on just 12 out of 3,222 federal construction contracts of $25 million or more. But regardless of mandates, Kolbe said PLAs are growing more popular, as Blue states and cities nationwide are increasingly adopting their own PLA requirements and allowances for using PLAs on public projects as the skilled workforce crisis grows in magnitude coast to coast. They are growing in popularity in the private sector too.

“The major CHIP, pharma, energy and auto corporations avoid a long list of risks by bidding and building with private PLAs, in most every case,” Kolbe concluded. “In the private sector market, major corporations use PLAs for building in less than friendly to labor Red states, without existing labor relationships or interest in a union operation. But they build with PLAs to lock in an organized, highly skilled RAP / JATC trained workforce, because it best meets their exceedingly high standards. That really says it all.”