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In a 4-3 decision issued earlier today, the Supreme Court of Ohio held R.C. 9.75 to be constitutional, overturning an Eighth District Court of Appeals decision. The court found that R.C. 9.75 does not violate the “home rule” authority of local municipalities and, therefore, precludes local governments from enacting public contracting laws with local preference provisions.

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In 2016, the Ohio General Assembly passed <a href="http://codes.ohio.gov/orc/gp9.75" target="_blank" rel="noopener">R.C. 9.75</a>, prohibiting the use of local hiring requirements on public projects in Ohio. More specifically, R.C. 9.75 states that no public authority shall require a contractor to employ a certain percentage of laborers who reside within the public authority’s territory and does not allow a public authority to award a bonus or preference to a contractor whose bid includes the use of laborers from within the public authority’s boundaries.

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R.C. 9.75 challenges local ordinances like the <a href="http://library.amlegal.com/nxt/gateway.dll/Ohio/cleveland_oh/partoneadministrativecode/titlexvpurchasesandcontracts/chapter188-fanniemlewisclevelandresident?f=templates$fn=default.htm$3.0$vid=amlegal:cleveland_oh$anc=JD_Chapter188" target="_blank" rel="noopener">Fannie M. Lewis Cleveland Resident Employment Law</a> (frequently referred to as the Fannie Lewis Law), which requires at least 20% of construction hours to be performed by Cleveland residents and 4% of that work to be done by residents considered low-income for all city-funded projects costing $100,000 or more.

In August 2016, <a href="http://www.cleveland.com/metro/index.ssf/2016/08/city_of_cleveland_sues_state_o.html" target="_blank" rel="noopener">the city of Cleveland sued the state of Ohio</a>, claiming that R.C. 9.75 violated the Ohio Constitution and the city’s home rule powers. On December 7, 2017, the Eighth District Court of Appeals <a href="http://www.supremecourt.ohio.gov/rod/docs/pdf/8/2017/2017-Ohio-8882.pdf" target="_blank" rel="noopener">upheld a lower court ruling</a> granting a permanent injunction against the state of Ohio prohibiting the state from enforcing the new law.

The Supreme Court of Ohio overturned the Eighth District’s ruling and instructed the trial court to dissolve the injunction and enter judgment in favor of the state of Ohio. The court held that the state of Ohio acted constitutionally in passing R.C. 9.75 under Article II, Section 34 of the Ohio Constitution, which authorizes the General Assembly to pass laws regulating public improvement contracts when necessary to provide for the comfort and general welfare of Ohio employees. The court found that R.C. 9.75 provides for the comfort and general welfare of all citizens working in the construction trades 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 court further held that the Fannie Lewis Law “is not enforceable against contractors on the city of Cleveland’s public-employment projects.” The court determined that the Fannie Lewis Law “directly impacts hiring, the most basic condition of employment, for workers on public-improvement projects” and that the city of Cleveland “has legislated within a field subject to regulation by the General Assembly pursuant to Article II, Section 34.” R.C. 9.75, accordingly, supersedes the Fannie Lewis Law and prohibits the city of Cleveland from imposing local hiring requirements on public improvement projects.

For additional details, please see our previous publications: “<a href="https://www.thompsonhine.com/publications/ohio-appellate-court-affirms-injunction-on-local-hire-law" target="_blank" rel="noopener">Update: Ohio Appellate Court Affirms Injunction on Local Hire Law</a>,” “<a href="http://www.thompsonhine.com/publications/ohio-legislature-passes-ban-on-local-hiring-requirements" target="_blank" rel="noopener">Ohio Legislature Passes Ban on Local Hiring Requirements</a>,” “<a href="http://www.thompsonhine.com/publications/new-law-bans-local-hiring-requirements-on-ohio-public-projects" target="_blank" rel="noopener">New Law Bans Local Hiring Requirements on Ohio Public Projects</a>,” “<a href="http://www.thompsonhine.com/publications/court-grants-preliminary-injunction-in-local-hire-lawsuit" target="_blank" rel="noopener">Court Grants Preliminary Injunction in Local Hire Lawsuit</a>” and “<a href="http://www.thompsonhine.com/publications/update-court-grants-permanent-injunction-in-local-hire-lawsuit" target="_blank" rel="noopener">Update: Court Grants Permanent Injunction in Local Hire Lawsuit.</a>”

Jeffrey R. Appelbaum 216.566.5548 <a href="mailto:Jeff.Appelbaum@ThompsonHine.com">Jeff.Appelbaum@ThompsonHine.com</a>

Daniel M. Haymond 216.566.5896 <a href="mailto:Dan.Haymond@ThompsonHine.com">Dan.Haymond@ThompsonHine.com</a>

Erin Luke 216.566.5762 <a href="mailto:Erin.Luke@ThompsonHine.com">Erin.Luke@ThompsonHine.com</a>

Stephanie Schmalz 216.566.5943 <a href="mailto:Stephanie.Schmalz@ThompsonHine.com">Stephanie.Schmalz@ThompsonHine.com</a>

This advisory bulletin may be reproduced, in whole or in part, with the prior permission of Thompson Hine LLP and Project Management Consultants LLC and acknowledgment of their source and copyright. This publication is intended to inform clients about legal matters of current interest. It is not intended as legal advice. Readers should not act upon the information contained in it without professional counsel.

This document may be considered attorney advertising in some jurisdictions.

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Update: Supreme Court of Ohio Upholds Local Hiring Ban

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