Ohio House Passes Legislation to Eliminate Residency Requirements

During today’s voting session, the Ohio House of Representatives passed legislation that would prohibit local governments from imposing residency requirements when hiring contractors or design professionals. Residency requirements typically require contractors to hire a certain percentage of residents within a given geographic area for public works projects.

Because such requirements drive down the supply of contractors who are eligible for projects, they in turn drive up the costs of doing business for local governments, all at taxpayers’ expense. By eliminating residency requirements, Senate Bill 152 broadens the market for contractors to compete for city projects, which results in better-quality services at lower costs. The bill also prohibits a public authority from showing preference to a contractor that employs a given number of individuals who live within the public authority’s geographic or service area.

“I support this legislation because it is good public policy,” said Rep. Ron Maag, Chairman of the House State Government Committee. “Qualified individuals should not be discriminated against simply because they live in the wrong zip code.”

In 2009, the Ohio Supreme Court ruled that requiring employees to reside within a given geographic location violated employees’ rights that are protected under the Ohio constitution. SB 152 expands that principle to the hiring of third-party employees, such as contractors.

The US Constitution states that out-of-state employees cannot be discriminated against. Therefore, in many cases, a policy that is intended to help local residents find work ends up doing just the opposite by allowing local governments to pass them over for men and women from other states.

An amendment approved in the House State Government Committee allows the Ohio Department of Transportation to comply with federal regulations regarding a job-training program for women and minority contractors on the Opportunity Corridor project in Cleveland.

The committee also approved an amendment that prohibits a state agency from either prohibiting or requiring a contractor to enter into a project labor agreement (PLA). Mandatory PLAs essentially allow unions to control the competitive bidding process for all contractors by, for example, requiring the use of union hiring halls and payment to union benefit and pension funds. These added requirements often keep many companies from bidding on a particular project, which in turn decreases competition and increases costs.

The legislation is supported by the Greater Cleveland Chapter of the National Electrical Contractors Association (NECA), Allied Construction Industries in Cincinnati, the American Council of Engineering Companies of Ohio (ACEC) and the Association Builders and Contractors of Ohio (ABC), among others.