Developer Related's Lawsuit Marks New Crisis for New York Construction Unions
Last summer, building trades agreed to key concessions sought by employers
First it was interior construction. Then it was midblock hotels and high-rise apartment buildings. For years, especially during the slow years after 2008, control of all types of private commercial construction work had been slipping from the grip of the building trades unions in New York City.
Under pressure from union contractors, unions this past summer agreed to tiered wage systems, higher apprentice to journey-level ratios and relaxed work rules.
Now the construction unions' struggle to hold on to non-government work in New York City has entered a new phase centered around the massive Hudson Yards development on Manhattan's West Side.
The Related Cos., the developer, apparently gave up on its negotiation with the building trades over terms of a new project labor pact and has filed a lawsuit in state court in Manhattan claiming that the unions routinely violated the 2013 pact covering work on the project's first phase.
Its concessions by the unions this past summer to union contractors all over the city presaged some of what was agreed to this past summer among many contractors and unions.
Now the Hudson Yards project pact is an unanswered question mark. According to the lawsuit, the concessions were pushed aside as unions arranged for no-show jobs and padded hours that cost the developer "in excess of $100 million" in additional wages, benefits and insurance costs.
The current conflict follows months of protests and picketing by the unions at Hudson Yards.
Crain's New York Business reported March 11 that Related Cos. Chairman Stephen Ross wanted to pick the union trades for Hudson Yards' next phase and mix union and open-shop subcontractors, but Gary LaBarbera, president of the Building & Construction Trades Council of Greater New York, insisted on negotiating as a bloc.
Related Cos, in a statement, said that it is one of the biggest employers of union construction labor in New York City and that it will continue to seek trade labor agreements or continue existing agreements. "Mr. LaBarbera and the BCTC are doing a disservice to individual unions and their members who want to work on future phases of the project by attempting to prevent them from negotiating in good faith with us," the statement said.
"The BCTC does not create jobs, we do," it added.
The allegations in Related's lawsuit include a detailed discussion of how the 2013 project labor pact was intended to initiate "a new era of modern and transparent labor relations," but that, on the unions' part, allegedly devolved into corrupt practices. Those included allowing union members to work less than a full day, violations of safety standards and failing to provide agreed apprentice to journey-level worker ratios and discounted labor rates.
Instead, the allegations state, the unions conducted a campaign of protests and defamatory hand-billing that "bilked" Related Cos. of $100 million.
Wage concessions promised by the unions never were delivered, the lawsuit claims, because they supplied less-skilled workers to the project for the lower-paying work or the unions demanded standard pay rates from contractors despite the terms of the pact.
The lawsuit names both LaBarbera and the council as defendants.
Union Campaign Includes @Countmein
In addition to demonstrating and picketing outside Hudson Yards for months, the building trades unions launched a twitter hashtag, @Countmein.
The unions say they have been trying to prevent Related from building the project's next phase using nonunion employers. "This lawsuit is clearly in retaliation," the building trades council said in a statement.
Singling out LaBarbera falsely places him in a position of responsibility for what is in reality the actions of a disparate collection of unions, the building trades reply in a statement on the council website.
According to the statement, the developer is contending that "Mr. LaBarbera had the obligation to be Related's police dog on its project. The complaint is an attempt to make Mr. LaBarbera and the council responsible for the entire NYC construction Industry" and hold the union chief responsible "for every act, every union, every tradesperson and every alleged disappointment" of Related and its affiliate building Hudson Yards.
The fact that the project was built and all the alleged corrupt practices went unspoken for so long shows that the claims are false, the unions stated.
Related and its affiliate for the project "have not filed any grievances under the PLA over the past six years even remotely suggestive of overpaid "coffee boys," "no-show" jobs or "unsafe workers," the unions' statement says. "Instead, Related and its affiliate lays that responsibility squarely at Mr. LaBarbera's feet. To claim that Mr. LaBarbera is responsible for any of its allegations is so absurd that it is simply not to be believed."
Concessions Secured From Construction Unions
The breakdown in the relationship comes amid a period of easing tensions between the building trades council and its key employers in New York City.
Last summer, Louis Coletti, CEO of one major association for city union construction contractors, the Building Trades Employers Association (BTEA), said in private comments leaked to Politico that the group might be forced to open its membership to contractors that operate open shop, depending on how negotiations proceeded with the building trades.
Coletti has since confirmed the accuracy of his private remarks but says that the crisis has passed and that BTEA's standard remains for members to have at least one contract with the unions.
A number of the city's traditionally union construction managers and contractors already operate separate nonunion companies. The situation in the city is fluid, with open-shop CMs and general contractors sometimes employing union subcontractors.
But the concessions organized labor made this past summer have allowed union contractors to close the price gap with nonunion competitors.
Private developers seeking the lowest possible construction costs have led the drive in New York City away from union construction to nonunion workers, whose pay and benefits can be 40% lower but whose productivity generally lags the most experienced union journey workers.