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On Oct. 9, the Honolulu City Council passed a highly contentious ordinance that will require the city to negotiate a “community workforce agreement” with the Hawaii Building and Construction Trades Council, the Hawaii Construction Alliance and their affiliated labor unions for certain public works projects. The city says the ordinance will apply to “critical city projects” in which the city has a particular interest in timely and cost-efficient project completion. The CWA will largely apply to critical road, wastewater, drainage and park improvement projects.

The CWA, which is also referred to as a project labor agreement, is a collective bargaining agreement between the City of Honolulu and local labor unions that governs the terms and conditions of employment on all eligible projects. Bill 37 defines eligible projects as “any large-scale public works project, including any road, wastewater, drainage, building infrastructure or park improvement project, in which there is a contract for construction procurement in excess of $2,000,000.”

Effectively, Bill 37 will prevent nearly two-thirds of the licensed contractors in the State of Hawaii from using their own skilled workforce to fulfill projects covered by the City of Honolulu’s ordinance. In fact, merit shop contractors will likely refrain from bidding on projects covered by the legislation, which will drive up the cost of publicly funded projects. Research conducted by the Beacon Hill Institute consistently demonstrates that mandating CWAs and PLAs drives up the cost of construction projects by 12-18%.

Although the ordinance is expected to be signed by Mayor Kirk Caldwell, questions remain over the legality of Bill 37. In testimony, opponents of the bill noted that the ordinance may violate both state and federal laws. Representatives from ABC Hawaii questioned whether the city’s ordinance would violate the Hawaii Procurement Code, and at the federal level ABC Hawaii argued that the law would infringe on a 2018 decision by the U.S. Supreme Court in Janus v. AFSCME, which states that public sector union fees violate employees’ First Amendment right to free speech.