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New State Law Disallows Local Government Hiring Preference

Posted on July 06, 2016

Last month, Ohio Governor John Kasich signed into law House Bill 180, a law prohibiting local governments from imposing residency requirements on contractors and design professionals. Many Ohio municipalities, including Cleveland and Akron, have passed laws requiring contractors constructing public improvements to employ a certain number or percentage of laborers from municipalities’ geographic area.  In addition to striking down residency requirements, the Bill prohibits local governments from giving preference to contractors that employ a certain number or percentage of local laborers

For example, Cleveland’s “Fannie Lewis” law required that local residents perform 20 percent of work on all city construction projects costing $100,000 or more.  Under Akron’s ordinance, contractors were forced to hire 30% of their workers on a project from the City limits.  That percentage was set to increase to 50% by 2018.

According to the Bill’s sponsor, Rep. Ron Maag, “Residency requirements increase project costs by restraining competition, as fewer contractors will bid projects with unknown labor costs brought about by labor constraints.

Contractors, particularly those specializing in skilled construction trades, have long criticized these types of ordinances as impractical: that is impossible to cull 30% of one’s workforce from a locality when the contractor’s employees are highly skilled. Moreover, the ordinances are costly to taxpayers because they discourage out of town bidders or force the bidder contractor to increase its bid in anticipation of having to train unskilled local workers.

For questions regarding the provisions of HB 180, or any other aspect of Ohio’s construction law, please contact the attorneys at Harpst Ross, Ltd.Business Lawyers for the Construction Industry®, at (330) 983-9971.

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