Supreme Court of Ohio Delivers Another Pro-Business Ruling

In Cleveland v. State, a majority of the Supreme Court of Ohio justices held that the state legislature has the constitutional authority to enact laws prohibiting cities from requiring a certain number of municipal residents to work on public improvement projects. 

The Ohio Chamber of Commerce in our amicus brief advocated for this result because these residency restrictions impact our member companies’ ability to train and keep a stable workforce since the resident requirement essentially forces contractors to hire new workers for each project.

The residency requirement also makes it more difficult for companies to bid on a project, which results in fewer competitive bids and higher costs for taxpayers.

At issue in this case was a City of Cleveland Ordinance that required public construction contracts for over $100,000 to include a provision mandating that residents of Cleveland perform 20 percent of the total construction work hours on a project. This ordinance went into effect in 2003 and shortly after other cities followed Cleveland’s lead and passed similar ordinances to require public works contracts to have a residency requirement.

In response to these ordinances, the Ohio General Assembly enacted House Bill 180 in 2016. The bill banned cities and other political subdivisions from requiring contractors to employ local residents for a certain percentage of work done at a project. The Ohio Chamber of Commerce supported this legislation because it advanced our public policy position that a uniform statewide regulatory approach is preferable to a patchwork network of ordinances.

To prevent HB 180 from taking effect, the City of Cleveland filed a lawsuit and the city successfully sought a permanent injunction. The trial court and the Eighth District Court of Appeals both held that the statute enacted by HB 180 was outside the constitutional authority of the General Assembly and violated Ohio’s home-rule provision. However, in their decision released today, the Supreme Court of Ohio disagreed with the lower courts’ reasoning.

Justice Sharon Kennedy, writing for the majority, found that Ohio’s constitution vests with the General Assembly the legislative authority to regulate public improvement contracts. Her opinion stated that the state legislature can regulate a municipality’s contracting ability when terms of the contract directly affect the employment of Ohio workers because the state’s constitution gives the Ohio House and Ohio Senate the authority to enact laws providing for the comfort, health, safety and general welfare of all employees.

In order for the statute from HB 180 to go into effect, Justice Kennedy also remanded the case back to the trial court to dissolve the injunction.

Overturning the lower courts’ holdings is a victory for Ohio’s construction companies because they must no longer comply with a local government mandate on employment practices that drives up their costs and makes their bids less competitive.

At the Ohio Chamber, we will continue filing amicus briefs with the Ohio Supreme Court to advocate for the Ohio General Assembly’s ability to enact laws that create uniform statewide regulatory schemes because a combination of dissimilar local ordinances is a compliance nightmare for employers.