After more than a year of debate, Ohio Governor John Kasich has signed a measure to prohibit state and local governments from imposing residency requirements on contractors and design professionals. House Bill 180 was signed on May 31, 2016, and becomes effective on August 29, 2016. The bill also prohibits bid award bonuses as incentives to employ laborers residing within the defined geographic area or service area of the public authority.

The debate on the legislation was fierce at times:

Opponents argued:

  • City employment quotas on public projects were a positive way to create jobs for urban residents with tax dollars paid by local citizens.

Supporters countered:

  • The construction industry's mobile workforce needs jobs that span many jurisdictions.
  • Residency mandates limit that mobility and discriminate against tradespeople living in the wrong zip code or just outside the city limits.
  • Requirements to hire city residents often lead to lower quality workforces, due to lack of training, and in turn to higher job costs.
  • Residency requirements did not apply to out-of-state companies, disadvantaging in-state companies and workers.

The language of the bill itself is rather straightforward. It repeals sections of the Ohio Revised Code which mandated the following of local resident employment regulations for stateadministered building construction projects and state-administered road or highway projects. House Bill 180 enacts new Ohio Revised Code 9.49, which provides in part, that:

  • No public authority shall require a contractor, as part of a prequalification process or for the construction of a specific public improvement or the provision of professional design services for that public improvement, to employ as laborers a certain number or percentage of individuals who reside within the defined geographic area or service area of the public authority.
  • No public authority shall provide a bid award bonus or preference to a contractor as an incentive to employ as laborers a certain number or percentage of individuals who reside within the defined geographic area or service area of the public authority.

The legislation also includes language that states that it was enacted under Article II, Section 34 of the Ohio Constitution, which empowers the General Assembly to enact laws on employment matters. Article II, Section 34 specifically states that no other section of the Constitution shall impair the General Assembly's rights under that section - which has traditionally been read to mean that home rule powers are trumped by Section 34. The Ohio Supreme Court's ruling against municipal residency requirements for municipal employees is a recent application of this principle. However, whether this legislation will withstand a challenge based on municipal home rule remains to be seen.