Lawsuit Will Determine Whether CRE Firm May Dictate Use of Union Contractors

A new lawsuit raises the question of whether an office building tenant should get to choose whether to use union contractors for its space, or whether the decision should be left up to the building’s manager.

The federal lawsuit filed against real estate giant Jones Lang LaSalle by a Chicago company for allegedly illegally blocking it from using nonunion labor for improvement projects at its downtown Chicago office calls out a supposed “conspiracy” with local labor unions.

According to representatives for the tenant, the firm has prevented hundreds of Chicago tenants from hiring nonunion contractors for jobs ranging from move-ins to office construction to maintenance. Rather, it has insisted tenants hire union workers who typically ask for higher pay. The tenant argues that compelling tenants at buildings it runs to employ union labor is a violation of federal labor law.

The lawsuit rears its head during a time when construction costs are rising and there has been a labor shortage affecting buildouts and other work at office properties.

A U.S. District Court will determine whether a union-only policy by the firm is acceptable. The tenant alleges that nonunion workers that show up on-site are reported to local union officials, who in turn call property managers to demand their removal and threaten a work stoppage or picketing display if they don’t agree.

If true, the policy would constitute a “hot cargo agreement” between the firm and three of the unions that have supposedly prohibited tenants from employing nonunion workers, which would violate the National Labor Relations Act.