Key Notes:

  • House Bill 180 bars public authorities from using local hiring requirements on public projects
  • Bill passed the House and the Senate and heads to Governor’s office for signature
  • Senate rejected House amendment to prohibit project labor agreement requirements on state-funded projects

On May 11, 2016, the Ohio legislature passed legislation (House Bill 180) to ban residency requirements on public projects in Ohio. The bill was introduced in the House over a year ago on April 29, 2015, passed the House on June 30, 3015, and was finally approved by the Senate on May 11, 2016.

House Bill 180 is a companion bill to Senate Bill 152. On May 4, 2016, the Ohio House passed Senate Bill 152 with a controversial amendment designed to prohibit project labor agreement (PLA) requirements on Ohio public projects. The Senate refused to concur in the amendment and immediately moved forward with House Bill 180, without the PLA amendment.

House Bill 180 will proceed to the Governor’s office for final action.

Summary of Legislation

House Bill 180 and Senate Bill 152 are companion bills that bar public authorities (including the state of Ohio, political subdivisions and public agencies and instrumentalities) from requiring contractors on public projects to hire a certain number or percentage of local residents from defined geographical areas. The bills also prohibit the use of bid award bonuses or preferences as incentives to meet such goals.

Local hiring requirements are used in Ohio to encourage local employment on public works projects. For example, the “Fannie M. Lewis Cleveland Resident Employment Law” (Cleveland Code of Ordinances Chapter 188) requires 20 percent local resident participation on Cleveland-funded construction projects over $100,000.

The bills were introduced in the House and the Senate on April 29, 2015. They passed their respective chambers in the summer of 2015 but stalled in committee during the fall of 2015. Activity picked up again in May 2016 when Senate Bill 152 moved out of the House State Government Committee with a controversial amendment designed to limit the use of PLAs on Ohio public projects.

The amendment to Senate Bill 152 prevented state agencies from requiring or prohibiting contractors to sign a PLA before working on a public project. The amendment also prohibited the use of state dollars on public improvements by political subdivisions that required or prohibited PLAs on their public works projects. This language had been part of the Main Operating Budget for Fiscal Year 2016-2017 (House Bill 64), but was removed before passage.

PLAs are used on construction projects to set ground rules for cooperation and harmony between union and non-union contractors. They typically establish uniform working hour requirements, provide a method for resolving jurisdictional disputes and include a “no-strike” clause to prevent disturbances during a project.

The Ohio Revised Code prohibits PLAs on public projects, but the statutes are not enforced. Chapter 4116 of the Ohio Revised Code (“Unlawful Labor Requirements in Public Improvement Contracts”) prohibits “public authorities” (including the state of Ohio, political subdivisions and any institution supported by public funds) from requiring contractors to sign a PLA or join a union as a condition to working on a public construction project. In 2002, the Ohio Supreme Court (Ohio State Bldg. & Constr. Trades Council v. Cuyahoga County Bd. of Comm’rs, 98 Ohio St. 3d 214, 2002-Ohio-7213 (2002)) ruled that the National Labor Relations Act preempted Chapter 4116 and permits PLAs on public projects. Under the doctrine of preemption, the state of Ohio cannot regulate matters governed by federal law. However, the state can institute procedures to govern its own actions as an individual market participant.

The PLA amendment to Senate Bill 152 attempted to bring Chapter 4116 in line with the Ohio Supreme Court’s 2002 ruling by limiting Chapter 4116 to apply only to “state agencies” and by making PLAs “optional” on public projects (i.e., not required or prohibited). The amendment would have also prohibited the use of state funds on political subdivision projects that do not comply with the new law. It is unclear whether these provisions would have complied with the ruling established in Ohio State Bldg. & Constr. Trades Council v. Cuyahoga County Bd. of Comm’rs.

Current Developments and Next Steps

Senate Bill 152 passed the Senate on June 25, 2015 and was introduced in the House on June 26, 2015. The bill passed the House on May 4, 2016, with the PLA amendment included. However, the Senate immediately refused to concur in the amendment on May 4, 2016.

House Bill 180 passed the House on June 30, 2015 and was introduced in the Senate on July 1, 2015. The Senate Government Oversight and Reform Committee approved the bill on May 5, 2016, right after the Senate rejected the House’s PLA amendment to Senate Bill 152. House Bill 180 was debated in the Senate on May 11, 2016 and passed the same day. The bill will be sent to the Governor’s office for execution or veto.

It is not clear whether the PLA legislation will move forward – either in a revised version of Senate Bill 152 or through some other legislation.