On Sept. 24, in a 4-3 decision, the Ohio Supreme Court upheld ABC-supported legislation passed by the Ohio Legislature that prohibited residency requirements for contractors working on public construction projects.
The City of Cleveland was challenging a state law, HB 180, which was passed by the state legislature in 2016 in response to numerous municipalities across the state implementing various employment quotas on government contractors. The city had passed an ordinance in 2003, the Fannie Lewis Law, mandating that at least 20% of the workers on any city contract of $100,000 or more be Cleveland residents.
Local-hire requirements typically require a certain percentage of a project’s construction workforce to reside in the locality where the project is being financed or built, and the scope of these requirements may apply to specifically to minorities, women, veterans or other underrepresented populations in the construction workforce and community. While often well-intentioned, these policies usually create unintended negative consequences, including increased construction costs, decreased productivity, and, as was the case in the Cleveland vs. State, costly litigation.
“If communities are serious about developing their local construction workforce, they should partner with proven construction craft trainers, like ABC, and work to promote careers in construction, recruit interested individuals and then support their enrollment in U.S. Department of Labor-certified apprenticeship training programs,” said ABC of Ohio’s Government Affairs Director, Bryan C. Williams, testifying in support of HB 180 before the state House of Representatives Commerce and Labor Committee in May, 2015. “Until then, a local hiring mandate will not be achievable.”
The City of Cleveland’s challenge centered on a section of the Ohio Constitution, Article I, Section 34, that states “laws may be passed … providing for the comfort, health, safety and general welfare of all employees.” Justice Sharon Kennedy disagreed with the City of Cleveland’s assertation in her opinion, stating, “By reserving work for Cleveland’s residents, the Fannie Lewis Law directly impacts hiring, the most basic condition of employment, for workers on public-improvement projects…In doing so, the City of Cleveland has legislated within a field subject to regulation by the General Assembly pursuant to Article II, Section 34.”
Local hiring mandates have also been challenged in several jurisdictions under the protection of the U.S. Constitution. Applying the Privileges and Immunities Clause, state hiring preferences have been declared unlawful in Alaska, Illinois, Massachusetts, Missouri, New Hampshire, New Jersey, New York, Pennsylvania and Washington, while local hiring preferences have also been struck down for the same reason. Additionally, residential hiring preferences have also been found to violate the Commerce Clause of the Constitution where they have been enacted outside the government’s role as a market participant.