How Obama Affected the Construction Industry

Since I will be speaking to a group of NARI (National Association of Remodeling Industry) leaders about labor and employment issues since Obama took office, I was thinking about how his Executive Orders have impacted the construction industry more than probably any other industry.  Here is a brief recap of what those Orders are and how they affect the construction industry.

  • Federal contractors will no longer be reimbursed for educating their employees about the benefits and detriments of forming a union.  The Notification of Employee Rights Concerning Payment of Union Dues or Fees was revoked and replaced with Notification of Employee Rights under Federal Labor Laws.  Federal contractors are no longer required to post instructions on how employees could opt out of union dues earmarked for political purposes.  As such, the Office of Federal Contract Compliance Programs has discontinued onsite visits to union employers during compliance reviews.  These on site visits involved a review of required postings, contracts and purchase orders, facility accessibility for individuals with disabilities, veterans and disabled recruitment efforts and an I-9 inspection.  This rule effectively mutes contractors that only do federal construction projects because all of that contractor’s money is trailed back to the government.  This Order may face a constitutional challenge, especially since the intent of the National Labor Relations Act was to manifest a clear intent to encourage free debate on labor relations issues and because Congress explicitly intended for noncoercive employer speech to remain unregulated.


  • The Nondisplacement of Qualified Workers Under Service Contracts Order creates rights for employees of federal contractors when a  contract changes hands – which frequently happens.  Contracts must now contain a specific provision granting employees of a federal contractor that has lost the service contract the right of first refusal for employment with the successor contractor.  Essentially, the new contractor cannot hire hourly workers until all employees of the predecessor contractor have been offered employment, and if the contract goes from a unionized company to a non-union company, the non-union company must offer employment to all those union workers (and all of their added costs and restraints) first and has to bargain with the union even though it has not been certified as the employees representative.  Contractors who willfully violate this Order will be disbarred from federal contracts for 3 years.


  • Project Labor Agreements on construction projects costing more than $25M.  Obama’s Order overturned President Bush’s ban on the federal government requiring PLAs on such projects.  Whether a PLA was used would normally be wholly dependant on your town’s political make-up.  However, projects using some of the roughly $800M earmarked in the stimulus bill for federal construction will likely be PLA-only work.  PLA work typically adds 20% to the cost of the project.  PLA really means labor union-only work as unionized companies are typically  the only ones forced to abide by the PLA strictures.  And unionized construction companies make up less than 10% of construction companies, so effectively, this Order eliminates 90% of the companies from performing federally funded construction work.

One Response

  1. With these orders Obama has surely tried to revice the construction sector but I dont know how much he will be able to succeed. Nice description any ways

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