Massachusetts: Set Aside for Local Residents Struck Down as Unconstitutional
June 2, 2003
Municipalities across the country have in recent years
increasingly required that contractors constructing public projects set aside
a percentage of construction jobs for local residents. Such set asides have
been struck down as unconstitutional in Massachusetts.
In 1984 the City of Worcester enacted a residency
requirement ordinance (RRO) that mandated 50 percent of man-hours be set aside
for all construction contracts in excess of $25,000. The RRO provided that
the city would include language in construction contracts mandating that the
general contractor and any sub-contractors comply with the RRO. In the event
of noncompliance, the city had a selection of penalties it could impose
including suspension of the project, withholding payment, or removing the
offending contractor from the project.
In the fall of 2002, the plaintiffs in Utility
Contractors Association et al v. City of Worcester, Civil Action 02-11877
(December 23, 2002), including a regional contractor association, filed suit
to block enforcement of the RRO on the grounds that it was unconstitutional.
The plaintiffs requested a temporary restraining order to prevent the city
from mandating enforcement of the RRO in connection with a large school
project that was being bid.
The critical issue before the court when it decided the
motion for a temporary restraining order was whether the Privileges and
Immunities Clause contained in the United States Constitution barred
enforcement of the RRO. The purpose of the Privileges and Immunities Clause
is to protect the rights of citizens to pursue their respective occupation, to
hold and dispose of property, and to petition courts in states in which they
do not reside. The city did not dispute that enforcement of the ordinance
raised a constitutional issue because the ordinance discriminated against
citizens who were not residents of Worcester.
The defense raised by the city was that there was
substantial justification for the ordinance that allowed for its lawful
enforcement. The city offered evidence that its tax base had eroded and that
it was struggling with various economic and social problems. The city further
claimed that the RRO served an important role by creating and preserving jobs
for low-income residents. While acknowledging that the city had presented
substantial evidence of its economic decline, the court rejected the
contention that this evidence justified discrimination against the plaintiff
contractors. The Court reasoned that the plaintiff contractors were not
responsible for the ills identified by the city and that the RRO had not
solved the city’s problems despite being enacted in 1984. The court ruled for
the plaintiff contractors and held that the RRO was unconstitutional.
This case is significant because it may spark a greater
willingness on the part of contractors to challenge local ordinances that
place them at a competitive disadvantage. With an increasing number of
municipalities enacting so-called “responsible contractor” ordinances,
contractors affected by these laws may choose to litigate the legality of
local mandates. n
For more information, call William E. O’Gara, toll free,
at 1-888-688-8500.