In a breakthrough appellate court ruling, Iron Worker Union officials can now be sued under anti-trust laws for running a union kickback scheme known as "job targeting" which has diverted $500 million in workers wages over the past 5 years.

Job targeting schemes are primary tools used to secure a Big Labor cartel over billions of taxpayer dollars used in federal contracting (as well as many private construction projects). They are used to freeze non-union contractors out of getting work, while lining the union bosses’ pockets with the wages of construction workers.

Attorney Mike Avakian, General Counsel of the Center for National Labor Policy, brought the cutting-edge suit for several New England companies, and National Right to Work Foundation attorneys submitted an amicus curiae (.pdf) brief because job targeting schemes severely undermine non-union employees’ interests. Here’s a quick preview from the Daily Labor Report, a subscribers-only service:

Five nonunion steel erector companies in New England may proceed with their claims that a job targeting fund run by the Iron Workers and other activity in conjunction with union contractors violated federal antitrust and labor laws, the U.S. Court of Appeals for the First Circuit ruled Aug. 1 (Am. Steel Erectors Inc. v. Local 7, Int’l Ass’n of Bridge, Structural, Ornamental & Reinforcing Iron Workers, 1st Cir., No. 07-1832, 8/1/08).

. . .

The Iron Workers created a job targeting program called the Market Recovery Program (MRP) to help mitigate the disadvantage for union contractors. The union targets certain construction projects and offers a subsidy to signatory contractors bidding on the project. When a signatory contractor wins a contract on a targeted project, the union and the contractor execute an agreement specifying the terms and the amount of the subsidy. The MRP is funded by money withheld by union contractors from union members’ paychecks.

In other words, job targeting schemes enable union officials to seize and funnel part of workers’ paychecks back to the union contractors, enabling such firms to undercut competitors’ bids by artificially lowering operating costs (through kickbacks of artificially high forced union dues). Meanwhile, the workers receive lower wages in effect.

The case also alleges that these funds were used to bully businesses to renege on agreements with nonunion companies by targeting them for picketing, harassment, and intimidation.

All in all, a pretty sordid tale. On appeal, the U.S. Court of Appeals for the First Circuit determined that the union was not exempt from federal anti-trust law, allowing the plaintiffs to proceed with their suit in U.S. District Court. Key quote from the decision (.pdf – emphasis mine):

Nonetheless, unions, particularly when acting in concert with non-labor groups, are not given carte blanche to engage in anticompetitive activities. As the Supreme Court has explained, "[i]t would be a surprising thing if Congress, in order to prevent a misapplication of [antitrust] legislation to labor unions, had bestowed upon such unions complete and unreviewable authority to aid business groups to frustrate its primary objective."

Shamefully, the U.S. Department of Labor has been totally AWOL on the job targeting issue even though DOL’s official position is that it violates the Davis Bacon Act. This deliberate enforcement failure has given union bosses a green light to exploit this lucrative and corrupt practice at workers’ and taxpayers’ expense.

In fact, high-level DOL officials — including Secretary Elaine Chao herself — rebuffed direct requests to get involved in this very case which has the potential to mop up billions of dollars in corruption occurring right under DOL’s nose. Even as the seminal case is now breaking the plaintiffs’ way, Bush’s DOL is still sitting on its hands. (Why do these people even bother showing up for work?)

The plaintiffs’ lawsuit is resulting in a major step forward for taxpayers and for high-quality, lower-cost non-union firms and their workers who are effectively blackballed from performing federal contracts, project labor agreements, and other constructions jobs.