A potential time bomb is ticking away for construction labor in the U.S. Court of Appeals in Richmond. At stake is union control of the manpower supply in the construction industry.
The case before the appeals court involves a lower court ruling in which the National Electrical Contractors Association and the International Brotherhood of Electrical Workers were convicted of price fixing under the Sherman Antitrust Act for requiring all contractors--even those who did not belong to the association--to pay a fee of one percent of the value of the construction contract for the use of IBEW labor.
The fee was to be paid into the National Electrical Industry Fund, which was set up by NECA and the IBEW as part of their national labor agreement. NECA is a management association that represents electrical contractors in labor negotiations with the union.
The lawsuit, which has pitted the industry's general contractors against specialty contractor groups, was filed by the National Constructors Association, which represents some of the nation's largest construction firms. Most NCA members do not belong to NECA because they negotiate labor agreements at the national level through NCA.
U.S. District Judge Herbert F. Murray ruled in Baltimore in September 1980 that NECA and the IBEW were guilty of price fixing as a result of the fee requirement.
Murray reasoned that while labor is exempt from antitrust actions, the money from the NECA agreement did not go to union workers and therefore the agreement amounted to price fixing. The contractor fees were paid directly to the electrical industry fund and were controlled by NECA.
The purpose of the NECA fund was to try to remove any edge nonmember contractors might have in bidding for work.
In ruling against NECA and the IBEW, Murray also certified the suit as a class action. Thus, under the treble-damage provisions of the antitrust laws, NECA and the IBEW could be liable for damages estimated to be as high as $120 million. To the extent that NECA could not pay any eventual damage awards, IBEW could be liable for the payment, according to attorneys involved in the case.
But the impact of a favorable ruling for the NCA is expected to go far beyond any punitive damages. "Union control of the labor market, that's what this case is really all about," said an attorney close to the case. He said the case also "delineates the extent of labor's antitrust immunity more than ever before."
In construction, unlike most other industries, the labor force is provided through union hiring halls. In addition, training for the various crafts is generally provided through union apprenticeship programs. It is the union that determines who is eligible for work at both the journeyman and apprentice levels.
Construction industry officials say that many unions in the industry have arrangements with employer groups similar to the one between NECA and the IBEW, particularly those building trades unions that participate with management in industry promotional funds. An adverse ruling for NECA and the IBEW, they argue, could force dramatic change on the union control of manpower in the industry.
"Right now," one management official insisted, "the IBEW can pick and choose who it wants to do business with. But as the open shop (non-union) movement grows you can't make it that way."
Another management official called the lower court ruling "the breaking of the sweetheart (contract) pattern" in the construction industry. He said the small, single-industry employer associations have become captives of their unions.
Although the appeals court has yet to decide the case, the suit already is having ramifications within the construction industry. "The battle between the employer associations has just about ruined relations within the industry," said a top construction official. "It's management versus management," another management official said. "It's the general contractor versus the specialty association."