As government construction contractors are keenly aware, on January 30, 2022, a White House executive order that took effect requiring federal contractors in new or extended contracts to pay a minimum wage of $15 per hour, with further increases to be determined annually by the Secretary of Labor beginning in 2023.

Changes to government construction projects do not, however, end there. On Friday, February 4th, during a visit to Ironworkers Local 5 in Upper Marlboro, Maryland, President Joe Biden signed an executive order requiring the use of collective bargaining agreements on federal construction projects costing more than $35M. The order titled “Executive Order on Use of Project Labor Agreements for Federal Construction Projects” is effective immediately. Executive Order.

The order could affect as much as $262B in federal government construction contracting and nearly 200,000 workers on such projects, the White House estimates, based on fiscal 2021 figures.

This new executive order requires that contractors on such projects have project labor agreements in place to set wages, employment conditions and the terms of dispute resolution on a given project.

According to this executive order "Such agreements avoid labor-related disruptions on projects by using dispute-resolution processes to resolve worksite disputes and by prohibiting work stoppages, including strikes and lockouts.” Additionally, "They secure the commitment of all stakeholders on a construction site that the project will proceed efficiently without unnecessary interruptions."

The new order doesn't apply to projects funded by federal grants to nonfederal agencies, but it will apply to other federal spending on major projects, including those funded under the recently enacted infrastructure bill. [See PLG’s ongoing alert series on what is in the ILJA for government contractors, including constructors.}

Biden’s executive order expands upon President Barack Obama’s 2009 executive order [EO 13502] urging executive agencies to consider requiring the use of collective bargaining agreements for large-scale construction projects.

More information concerning the impacts of this new executive order will be issued as PLG continues to monitor the order and the associated rulemaking.

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