The scale and speed of digital infrastructure investment are highlighting the potential role of organized labor in the development process. While building and construction trades unions may be an important source of skilled labor, availability is constrained in many markets. Depending on the market and project, owners and developers may have a range of available approaches to meet their workforce needs.
Those approaches can depend on local labor conditions, contractor availability and relationships, project schedules, applicable legal requirements, and the client’s broader development objectives.
For that reason, clients should consider labor strategy early while preserving flexibility to select an approach suited to the circumstances of a particular project. Labor issues can arise at multiple stages of a project, from evaluating the labor environment in a particular market and selecting contractors to considering whether a project labor agreement (PLA) or another labor arrangement is appropriate.
Addressing those issues early is not simply a matter of managing labor-law risk. Labor strategy can affect a client’s ability to enter a market, secure the workforce necessary to build a project, maintain its construction schedule, and execute a broader development pipeline.
SKILLED LABOR AS AN INFRASTRUCTURE CONSTRAINT
The development and maintenance of digital infrastructure depend on a broad range of skilled construction trades. Data center campuses require electricians, pipefitters, operating engineers, ironworkers, laborers, and other construction trades, while the generation, transmission, substations, and related infrastructure needed to serve those facilities add to the demand for skilled labor.
Data centers compete with energy, advanced manufacturing, grid modernization, and other major infrastructure projects for many of the same workers. Where multiple large projects are being developed simultaneously, skilled labor can become a constraint on development. That capacity cannot be added quickly; apprenticeship and training pipelines take years to develop.
Those conditions highlight the importance of understanding what sources of skilled labor are available in a particular market. Building and construction trades unions can be an important source of that labor in some markets. Through apprenticeship programs, hiring halls, contractor relationships, and national and local organizations, unions participate in the systems through which skilled construction workers are trained and deployed. In other circumstances, clients may have different contractor and workforce options available.
LABOR STRATEGY EARLIER IN THE DEVELOPMENT PROCESS
For owners and developers, the question of where to source workers should be addressed early in the process. During the site selection process, it is crucial to understand whether there will be enough skilled workers to support the project in a particular market, what other projects will compete for that labor, which contractors have access to the necessary workforce, and the extent to which union or nonunion labor may be available.
Apprenticeship and training pipelines may be particularly important where a developer expects to build multiple projects over several years.
For clients who are evaluating competing markets, workforce availability and the available approaches to meeting workforce needs can directly affect project feasibility. A market may offer attractive land, power, incentives, or other advantages, but those advantages may be difficult to realize if the client cannot secure the skilled workforce necessary to build on the required schedule.
Labor counsel can help evaluate the labor environment in a particular market as part of the client’s site-selection and development strategy, without assuming at the outset that any particular labor model is appropriate.
Labor considerations also can affect contractor selection and procurement. Prospective contractors may differ in their workforce models, relationships with local building trades, access to skilled workers, and experience operating under PLAs or other labor arrangements.
Those differences can affect whether a contractor can assemble the workforce needed to execute the project on schedule and without labor disruptions. Owner and developer clients should factor those considerations into the procurement process while preserving flexibility to select the approach that best fits the project.
In markets where building and construction trades unions have a significant presence, their role may also intersect with regulatory, permitting, workforce training, and other public-facing aspects of the development process. The significance of organized labor may vary by market and project. Understanding the local labor environment can help owners and developers evaluate whether engagement with organized labor is relevant to a particular project and, if so, how that engagement should fit into the project’s broader development strategy.
EVALUATING PROJECT LABOR AGREEMENTS AND OTHER LABOR ARRANGEMENTS
PLAs are one potential tool for addressing workforce and labor-relations issues on a construction project. PLAs typically contain referral procedures for labor from all of the relevant trades, and they also contain mechanisms for resolving disputes without strikes or other labor disruptions. On large projects operating under compressed schedules, those features may, depending on the project and market, help support workforce availability and construction continuity.
The business significance of a PLA can extend beyond avoiding a labor dispute. On a project involving multiple trades, contractors, and subcontractors, a PLA can provide a common labor framework designed to support workforce availability and training. It can also establish common work rules for contractors and subcontractors who are working on the project. The structure of those provisions can affect the client’s ability to complete the construction work on schedule and without labor disruptions.
Whether a PLA makes sense is a project-specific decision. A PLA is not necessarily the appropriate approach for every project. The decision should account for the labor market, available contractors and workforce, project schedule, contracting structure, cost considerations, development objectives, and applicable legal requirements. Owners and developers should evaluate those considerations before determining whether a PLA, another labor arrangement, or no project-specific labor agreement best serves the project.
There are also significant labor-law issues associated with the negotiation of a PLA. Owners and developers should not be parties to the PLA if they will not directly employ or manage the workers on the project. Instead, the contractors and subcontractors who will employ the labor should be the entities that sign the PLA with the building and construction trades unions.
But an owner or developer considering a PLA may want to evaluate that option before contractors are selected, in order to ensure that there will be a mechanism for securing the labor necessary for the project. Therefore, the process of negotiating a PLA on behalf of owners or developers must be carefully handled within the restrictions imposed by federal labor law.
That issue illustrates why labor counsel should become involved before the client commits to a particular labor approach. Counsel can help the client assess available options, understand the legal and practical implications of each option, and, where a PLA is selected, structure the negotiation process within federal labor-law requirements while preserving the client’s flexibility. Counsel can also help align the terms of the PLA with the project’s contracting structure, anticipated workforce needs, and construction schedule.
If a PLA or other labor agreement is ultimately used, labor counsel may also be needed during the execution and administration phase of the PLA. Questions may arise concerning referral procedures, application of the agreed work performed by contractors or subcontractors, disputes between certain contractors and unions, or other matters governed by the labor agreement.
Proper execution and resolution of labor-relations issues can prevent delays in completion, which is especially significant for projects that are expecting a return on a substantial capital investment.
LABOR STRATEGY ACROSS AN INFRASTRUCTURE PIPELINE
Organized labor’s role is also beginning to extend beyond individual construction projects.
Data centers increasingly sit within broader economic development and policy discussions involving power generation and transmission, public incentives, workforce development, community investment, tax revenues, and infrastructure expansion. As those projects attract greater public and political attention, building and construction trades unions can be important stakeholders in some markets—not only because of the jobs created by that investment but also because of their role in developing the workforce needed to support it.
For clients planning multiple projects or entering new markets, advance workforce planning can help address labor needs across multiple future projects rather than one project at a time. For those clients, labor strategy can become a portfolio-level business consideration. The appropriate strategy may vary by project and market, depending on workforce availability, contractor markets, union presence, regulatory environments, and project requirements.
Labor counsel can help clients develop those strategies across projects rather than address labor issues as they arise, preserving the ability to use different approaches where applicable rather than assuming a one-size-fits-all model.
INVOLVING LABOR COUNSEL IN THE PLANNING PROCESS
Rather than engage labor counsel only when labor issues arise, clients should involve labor counsel in the project planning and development process. Labor counsel can help evaluate available workforce and labor approaches in particular markets and assess the value of a PLA or some other form of labor agreement for that project. The objective is to identify the available options, understand their legal and practical implications, and help preserve the client’s ability to select an approach aligned with its business objectives.
But the role of labor counsel can extend beyond negotiating a PLA or addressing labor-law compliance. Depending on the project, labor counsel can help clients:
- Evaluate the labor environment as part of site selection;
- Identify labor considerations relevant to the procurement process;
- Assess relationships with relevant labor stakeholders;
- Determine whether a PLA or another labor arrangement can advance the project’s business objectives;
- Structure and negotiate those arrangements within applicable labor-law requirements; and
- Address labor issues that could affect execution during construction.
For clients who are pursuing multiple projects, counsel can also help develop a labor strategy that supports workforce needs and development objectives across a broader pipeline while accommodating differences among markets and projects.
These are business and investment decisions, not simply labor-law or compliance issues. As noted above, a client’s labor strategy can influence market viability, availability of required skills, and schedule adherence. For owners, developers, and investors deploying significant capital into digital infrastructure, those considerations can directly affect a project’s completion and whether it generates the anticipated return.
There is no single labor approach that can be applied to every project. Early evaluation of the relevant considerations gives owners and developers a greater ability to preserve their options and select the best strategy for the particular project, market, and business objectives at hand.
HOW WE CAN HELP
Our labor management relations team advises owners, developers, investors, contractors, and other stakeholders on the labor issues that can shape data center and other large-scale infrastructure projects—from workforce strategy and project labor agreements to union organizing and representation matters, collective bargaining, and labor disputes.
Working alongside the firm’s energy, infrastructure, real estate, and transactional lawyers, the team helps clients integrate labor considerations into project planning and execution, anticipate issues before they affect development, and pursue labor strategies aligned with their broader investment and business objectives.
