Labor and Employment

Local Hire Laws Good Intentions Illegal Means

What can you do if you're a city official, the national economy is sluggish, and unemployment rates in your city continue to rise, or at least don't go down? You try to help your citizens, of course.

Local Hire Laws

Faced with unemployment rates up to 15 percent in some areas of the city, a San Francisco official wants to help city residents get back to work. Under a local hire law he wants to pass, when contractors are awarded city contracts on public-works projects - building roads, schools, etc. - half of the workers have to be city residents.

Under the city's current law, contractors only have to show they made a good faith effort to have San Franciscans make up at least half their work force.

Not So New

Local or resident hire laws aren't new. Many cities have them. For example, Kotzebue, Alaska and Stockton, California laws require contractors to make good faith efforts to have 50 percent local hires.

There's usually no problem with these laws - and San Francisco's current law. There's no formal, strict hiring quota or requirement. And that's where the new San Francisco law may run into problems.

Good Intentions, but Illegal

The proposed San Francisco law faces some legal obstacles. Local hire laws in Cleveland, Ohio and the state of Washington faced some of the same obstacles and were declared illegal. Both laws required contractors to hire a certain percentage of residents.

The one major problem is the Privileges and Immunities Clause in Article IV of the US Constitution. This means if you're a Nevada citizen in California, you get the same rights California residents have. So, laws like San Francisco's proposed law probably interfere illegally with the rights of out-of-state workers and contractors.

Other likely issues involve illegal obstruction with the competitive bidding systems used in awarding government contracts. It's possible these laws could still run contrary to state and federal affirmative action laws. After all, what's a contractor to do if there aren't enough minorities in the city's available work force?


Rather than requiring a fixed percentage of local hires, offering a reward may seem like a good idea instead.

San Diego, California is a good example. The city considered a local hire law giving contractors a 20 percent bid discount for making good faith efforts to hire 80 percent local residents, with at least 10 percent being disadvantaged or minority workers.

This reward system possibly still violates the Constitution because it works like a punishment on contractors who don't or can't meet the 80/10 percent goals.

What You Can Do

Whatever your thoughts about the issue, call your state and local lawmakers and let them know. Take some time to research these types of laws and consider some of the pros and cons:

  • Contractors may not be able to hire the best qualified and experienced workers for a job
  • Agencies may have higher administrative costs and expenses in following the law
  • The city collects more in local payroll taxes

Wanting city residents get work in tough economic times shows hearts are in the right place. It's a goal worth working for. Lawmakers need to make sure their plans are legal, otherwise there's no help at all - just good intentions.

Questions for Your Attorney

  • As a contractor, am I protected in hiring under these laws from discrimination claims?
  • Does this apply to both federal jobs and private company contracts?
  • If these laws are illegal, are residency requirements for city cops and firefighters illegal too?
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