Enforceability of a state statute barring cities from imposing residency requirements on contractors’ employees. City of Cleveland v. The State of Ohio. Supreme Court of Ohio (2019), by Hugh Anderson

Summary: In 2003 the City of Cleveland concluded that relatively few city residents were employed on public works projects funded by the city. Cleveland therefore passed an ordinance requiring that 20% of the total construction work hours on major municipal construction projects be performed by city residents. Public works contracts were required to specify penalties against the contractor for not meeting this mandate, including reduction of the contract price, termination, and disqualification from future bidding on City of Cleveland contracts.

In 2016 the Ohio state legislature enacted a law that banned local ordinances (such as Cleveland’s) that favored the employment of local residents. The state law was based on Article II, Section 34 of the Ohio Constitution, which allows the legislature to pass laws that “provide for the comfort, health, safety, and general welfare” of all employees. The city contested the validity of the 2016 legislation, contending that the home-rule powers granted to Cleveland and other cities in the Ohio Constitution shielded the city from legislative interference in the city’s contracting practices, and also that Article II, Section 34 of the state constitution was intended to give authority solely for laws that directly impact workers by regulating workplace conditions. The clash between the city and the state eventually reached the Supreme Court of Ohio.

Decision: The high court upheld the 2016 state legislation, thus dismantling the City’s ordinance that had channeled work to city residents. The court confirmed precedential cases in which the court had recognized that if a statute is enacted under Article II, Section 34 of the state constitution, then the statute is not limited by the home-rule powers granted to cities elsewhere in the state constitution. The court also took a broad view of Article II, Section 34, concluding that it allowed for legislation that went beyond improvement of workplace conditions:

“By providing an equal opportunity for Ohioans to compete for work on public-improvement projects both inside and outside of the political subdivisions in which they reside, [the statute] provides for the comfort and general welfare of all citizens working in the construction trades.”

Comment: Disputes of this type generally have underlying political dimensions. The Ohio Supreme Court acknowledged “the city’s assertion that the true motivation of the legislature in enacting [the 2016 statute] was to benefit contractors, not employees,” but stated that the court’s “job is to interpret the statute as written, not to puzzle over motivations.”

The published decision does not explore the impact of the ruling on existing City of Cleveland construction contracts that contain the resident-favoring quota clauses.