Smaller construction projects covered under San Jose labor agreement

San Jose is expanding a labor agreement to smaller public works projects, raising questions about how the city measures worker protections against business interests.

The City Council voted last week 8-3 to approve amendments to San Jose’s Project Labor Agreement (PLA), which applies rules about working conditions and the type of labor that can be used on public works projects. The city made several amendments, but the most important is a reduction in the dollar threshold for projects that will fall under the PLA from $3 million to $1 million, which means it will apply to more projects.

By lowering the threshold, the PLA will cover more small projects like roads, sewers and some building renovations. It will also apply stronger oversight to those projects, like making sure union compliance staff have access to work sites.

“It improves protections for workers on the projects, so there’s more oversight on preventing wage theft and ensuring workers are getting their full wages and benefits, as well as training and supervision,” Louise Auerhahn, director of economic and workforce policy at Working Partnerships USA, told San José Spotlight. She added it also creates opportunities for new people to come into the construction industry through apprenticeship opportunities and targeted hiring.

The PLA, adopted in 2019, has only applied to about a dozen projects. Public Works Director Matt Cano said he anticipates the amendment won’t significantly increase the number of projects covered. Still, lawmakers who proposed the amendment say covering more workers under the PLA is worthwhile.

“That was really the goal of this—to have more projects apply and allow more workers to benefit from the working conditions guaranteed by the project labor agreement,” Councilmember David Cohen told San José Spotlight.

Some opponents of the PLA expansion say it will harm small businesses by effectively excluding them from bidding on small public works projects given the extra cost of hiring union labor and complying with other provisions of the agreement.  

“The kind of companies that tend to go after that type of work are not the big mammoth 200 or 500 person companies,” Christian Malesic, president and CEO of the Silicon Valley Central Chamber of Commerce, told San José Spotlight. “They tend to be the mom and pop shops that got big enough to start hiring some employees.”

It may also negatively affect the ability of local companies to work on public projects. In a letter to the City Council, Malesic cited the example of a San Jose-based company, QLM, Inc., that placed the lowest bid on the Pellier Park Project. A lower threshold for the PLA would potentially make it harder for small local companies to afford to bid on similar projects.

During the meeting, Councilmember Maya Esparza pointed out the $1 million threshold is in line with cities like Sacramento, San Leandro and Alameda County, and it’s still higher than PLA thresholds in Long Beach and Los Angeles.

The council meeting also revealed some city enforcement mechanisms have been rarely used. Cano said the city can debar companies for labor violations, but has only done so once in the past 20 years.

The city is currently investigating labor violations at three housing sites built by subcontractors for Habitat for Humanity. The public works department demanded more than $319,000 in restitution for workers, which the subcontractor is contesting.

Councilmember Sylvia Arenas asked Cano if the department would be able to get payments to workers before Christmas. He said no, and that it was hard to give an estimated timeline for when the cases would resolve. Arenas asked Cano about the possibility of enrolling wage theft-affected families in a Christmas giving program. He discouraged this idea, noting that having the city arrange gifts for the affected workers could potentially complicate the case.

“I understand. But those are families that potentially have children,” Arenas said. “If we didn’t have a couple of our paychecks, we would be impacted certainly.”

Contact Eli Wolfe at [email protected] or @EliWolfe4 on Twitter.