Eighth District Court of Appeals Upholds Cleveland's "Fannie Lewis Law"

For now, Ohio contractors must continue to comply with local hiring requirements. This follows the decision of an appeals court to block state legislation that would prohibit such requirements. Broadly, the fight highlights ongoing battles in the areas of home rule and affirmative action.

On December 7, 2017, the Eighth District Court of Appeals (based in Cuyahoga County) upheld a decision that enjoined the State of Ohio from enforcing the statute that prohibited local hiring requirements on certain public construction contracts. Cleveland v. State, 2017-Ohio-8882 at ¶ 44. The Eighth District held that this statute, found at Ohio Revised Code (“ORC”) § 9.75, unconstitutionally infringed upon the City of Cleveland’s municipal home-rule authority.

In 2003, the City of Cleveland passed the Fannie Lewis Law. It compels contractors to use city residents to complete at least 20% of total construction work hours on the city’s projects and that low-income persons complete at least 2% of the resident hours. The law imposes monetary fines on contractors that do not comply.

The Ohio General Assembly passed ORC § 9.75 in response to the Fannie Lewis Law and other similar municipal ordinances. Section 9.75 prohibited public authorities from requiring contractors to employ a certain percentage of individuals who reside in a defined geographical area. It also barred public authorities from awarding bid bonuses or giving preference to a contractor who committed to hiring a certain number of local workers. The General Assembly cited Article II Section 34 of the Ohio Constitution as its rationale for enacting the law. This section gives citizens the unalienable right to choose where to live. The City of Cleveland sued the State of Ohio, arguing that the law infringes upon the home-rule authority given to it by the Ohio Constitution.

The trial court (based in Cuyahoga County) granted the City of Cleveland’s request for a permanent injunction, and the Eighth District affirmed. In its decision, the Eighth District rejected the State of Ohio’s argument that § 9.75 was constitutional. The court found that the prohibition did not relate to the right of an individual to choose where to live. Instead, the court held that § 9.75 simply limited the contracting powers of local authorities on public improvement projects.

The court also held that § 9.75 infringed upon Cleveland’s home-rule authority. Home-rule authority gives municipalities the right to exercise all powers of local self-government within their limits that are not in conflict with general laws. Applying a three-part test, the Eighth District found that the Fannie Lewis Law was an exercise of local self-government, and § 9.75 unconstitutionally infringed upon the right to home-rule.