FHWA, FTA Open Door to Mandated Hiring Preferences

What happened: The Federal Highway Administration (FHWA) and Federal Transit Administration (FTA) announced the week of Feb. 7 they will no longer require state and local agencies to seek pre-approval for initiating hiring preferences on federal-aid projects. Citing a provision in the Infrastructure Investment and Jobs Act (IIJA), FHWA (Feb. 11) and FTA (Feb. 10) indicated they are rescinding pilot programs launched in May 2021 that allowed such hiring preferences, but required agencies to clear them in advance and under certain parameters. Instead, the two federal agencies say that going forward, the IIJA allows state and local agencies to initiate these hiring preferences without the extra layer of approval.

In addition, current appropriations legislation for the U.S. Department of Transportation put limits on hiring preferences approved by the federal agencies, requiring that they do not increase costs or displace existing workers, and must draw on a demonstrable pool of available job candidates. In their recent announcements, FHWA and FTA stated their interpretation that the IIJA no longer requires hiring preferences to comply with those parameters.

Why It matters: Under a hiring preference, a state or local transportation agency mandates the contractor to employ a certain number or percentage of personnel based on residence, economic status or other factors. The preference may apply to a particular project, or more widely. ARTBA has long opposed hiring preferences on federal-aid projects because of the potential for limiting competition, increasing costs, and compromising safety practices on the jobsite. Longtime federal policy prohibited hiring preferences on federal-aid projects because of their anti-competitive effect. ARTBA and its chapters have argued that incentive-based hiring programs are more effective. A May 2021 group letter to Transportation Secretary Pete Buttigieg detailed the shortcomings of these mandates.

What’s next: It is important to note that state and local agencies will have the option of initiating hiring preferences, but they are not required to do so under the IIJA or any other federal policy. The IIJA provision also states that such an initiative must comply with state and local ‘laws, policies and procedures.’

ARTBA will stay in regular communication with FHWA and FTA about industry concerns with these mandates. We will also track any such initiatives around the country and encourage members to share information about them. Please contact ARTBA’s Rich Juliano or Nick Goldstein with any questions or comments.