“We reject the contention that authority to provide for the comfort and general welfare of employees is limited to regulating the workplace environment or workplace conditions and hazards.”
Justice Kennedy, lead opinion
“In continuing to expand the scope of Section 34 in ways never countenanced by the people of 1912, this court is well on its way to transforming a coherent constitutional scheme into a confusing and unstable muddle.”
Justice DeWine’s opinion concurring in judgment only
“Interpreting R.C. 9.75 as the lead opinion instructs only restricts municipalities from taking proactive measures to provide employment for residents of our urban areas that have historically experienced underemployment. This cannot be the result the legislature envisioned.”
Chief Justice O’Connor, dissenting opinion
On September 24, 2019, the Supreme Court of Ohio handed down a merit decision in Cleveland v. State, 2019-Ohio-3820. In a plurality opinion, the court held that the state can prohibit a city from requiring that a certain percentage of jobs be set aside for city residents on public improvement contracts over $100,000. In doing so, the court struck down Cleveland’s Fannie Lewis Law. Justice Kennedy wrote the lead opinion, joined by Justices French and Fischer. Justice DeWine concurred in judgment only, with an opinion joined in part by Justice Stewart. Chief Justice O’Connor dissented, with an opinion joined by Justices Donnelly and Stewart. The case was argued March 6, 2019.
Case Background
In 2003, in an effort to help alleviate unemployment and poverty in Cleveland, and to correct the fact that too few employment opportunities on public improvements were going to city residents, the Cleveland City Council enacted the Fannie Lewis Cleveland Resident Employment Law (“Fannie Lewis Law”). This law mandates that all construction contracts over $100,000 with the city shall require at least 20% of the construction hours be performed by Cleveland city residents. If a contractor fails to comply with this requirement, a financial and/or future disqualifying penalty is imposed.
In 2016, the Ohio General Assembly enacted what is now R.C. 9.75, known as the residency choice law, which prohibits public authorities such as cities from requiring contractors who work on public improvement projects to employ certain percentages of laborers who reside in defined geographic areas. R.C. 9.75 effectively proscribes the mandates of the Fannie Lewis Law. The legislature found this to be a matter of statewide concern, affecting the general welfare of all employees, and the right to live wherever one wishes.
After the enactment of R.C. 9.75, the city of Cleveland brought an action seeking a temporary restraining order, injunctive relief, and a judgment declaring R.C. 9.75 to be an unconstitutional infringement on the city’s home rule authority. The trial court permanently enjoined the enforcement of R.C. 9.75, finding that it exceeded the authority given the legislature by Article II, Section 34 of the Ohio Constitution, and that it violated the Home Rule Amendment of Article XVIII, Section 3 because the statute limits the city’s exercise of local self-government.
The Eighth District Court of Appeals unanimously affirmed the trial court’s ruling, holding that Article II, Section 34 of the Ohio Constitution did not give the General Assembly power to enact R.C. 9.75 and that the statute infringed upon the municipal home-rule authority granted in Article XVIII, Section 3. The Eighth District reasoned that R.C. 9.75 was not related to the general welfare of employees, so it was not covered by Article II, Section 34 and was thus subject to home-rule analysis. The Eighth District found that R.C. 9.75 did not pass the home-rule test because the Fannie Lewis Law was an exercise of local self- government, not an exercise of police power, and R.C. 9.75 was not a general law.
Read the oral argument preview of the case here and an analysis of the argument here.
Key Precedent
Article II, Section 34 of the Ohio Constitution (Employee Welfare Amendment — “Laws may be passed fixing and regulating the hours of labor, establishing a minimum wage, and providing for the comfort, health, safety and general welfare of all employees; and no other provision of the constitution shall impair or limit this power.”)
Article XVIII, Section 3 of the Ohio Constitution (Home-Rule Amendment — “Municipalities shall have authority to exercise all powers of local self-government and to adopt and enforce within their limits such local police, sanitary and other similar regulations, as are not in conflict with general laws.”)
R.C. 9.75 (B)(1) (Residency-Choice Law) (“No public authority shall require a contractor… for the construction of a specific public improvement…to employ as laborers a certain number or percentage of individuals who reside within the defined geographic area or service area of the public authority.”)
C.C.O. Chapter 188 (The Fannie Lewis Law) (“[E]very Construction Contract shall…Require that one (1) or more Residents perform twenty percent (20%) of the total Construction Worker Hours…performed under the Construction Contract.”)
Rocky River v. State Emp. Relations Bd., 43 Ohio St. 3d 1 (1989) (Upheld a statute that mandated binding arbitration between a city and its safety forces in the event of a collective-bargaining impasse.)
Am. Assn. of Univ. Professors, Cent. State Univ. Chapter v. Cent. State Univ., 87 Ohio St.3d 55 (1999) (Upheld a state law regulating faculty labor hours at public universities.)
Canton v. State, 2002-Ohio-2005 (Home-Rule authority test: an Ohio statute overrides a local ordinance when (1) a conflict exists, (2) the ordinance is an exercise of police power, not local self-government, and (3) the statute is a general law. General law test: a general law must (1) be a part of a comprehensive enactment, (2) apply uniformly throughout Ohio, (3) do more than just grant or limit municipal power, and (4) prescribe a rule of conduct.)
Mendenhall v. Akron, 2008-Ohio-270 (“The Canton test should be reordered to question whether (1) the ordinance is an exercise of the police power, rather than of local self-government, (2) the statute is a general law, and (3) the ordinance is in conflict with the statute.”)
Lima v. State, 2009-Ohio-2597 (Upheld an Ohio law barring residency requirements for city employees, finding that the law provided for the comfort and general welfare of employees because it allowed “employees more freedom of choice of residency”; no home-rule analysis was needed.)
Toledo v. State, 2018-Ohio-2358 (The General Assembly has authority to enact any law that is not prohibited by the Ohio or United States Constitutions.)
Positions of the Parties
State
The state argues that in enacting R.C. 9.75, the legislature exercised the power granted to it by Article II Section 34 of the Ohio Constitution to pass laws for the comfort and general welfare of employees. The statute protects employees from a city’s preference for its own residents and makes sure that all employees can live wherever they want without losing out on the chance to compete for work in other parts of the state. Because R.C. 9.75 benefits construction workers throughout Ohio, it provides for the general welfare of employees, and prevails over an ordinance passed under home-rule authority. And because the statute is a general law, it supersedes conflicting ordinances and does not violate the Home Rule Amendment.
City of Cleveland
R.C. 9.75 does not provide for the comfort and general welfare of all employees. The Fannie Lewis law doesn’t tell anyone where they must live, but only provides a contractual provision between the city and its contractors relating how the city will spend its money. Additionally, R.C. 9.75 violates the Home Rule Amendment because providing the conditions under which the city will contract for public improvements is an exercise of local self-government.
State’s Propositions of Law Accepted for Review
No. 1
R.C. 9.75 is a valid exercise of authority under Article II, Section 34, because it provides for the general welfare of employees by protecting them from local preferences. Thus, no home-rule analysis is needed.
No. 2
R.C. 9.75 satisfies home rule. Cleveland’s ordinance is an exercise of police power designed to serve general-welfare interests by shifting work to local residents. The challenged law is a general law that counteracts the significant extra-territorial effects residency quotas have on Ohioans living outside the relevant local jurisdiction.
Are the State’s Propositions of Law Adopted?
The first one is, so the court has no need to address the second.
Merit Decision
Scorecard
The lead opinion adopts the state’s first proposition of law and finds R.C. 9.75 is a valid exercise of authority under Article II, Section 34, of the Ohio Constitution because it provides for the general welfare of employees by protecting them from local preferences. Thus, no home-rule analysis is needed.
In his concurrence in judgment only, Justice DeWine rejects the state’s first proposition of law. He would find that R.C. 9.75 is not authorized by Article II, Section 34, because it does not govern workplace issues, which means a home rule analysis is necessary. But he would also find that R.C. 9.75 was properly enacted, that it is a general law, does not violate home rule, and that it supersedes the Fannie Lewis Law.
The dissent would find that that R.C. 9.75 is not a valid exercise of the legislature’s authority under Article II, Section 34 and that it violates Cleveland’s home rule authority.
Analysis
Lead Opinion
Article II Section 34
This provision reads,
“Laws may be passed fixing and regulating the hours of labor, establishing a minimum wage, and providing for the comfort, health, safety and general welfare of all employees; and no other provision of the constitution shall impair or limit this power.”
Comfort? Welfare? Back to Webster’s Third New International Dictionary
Justice Kennedy has made it a stylistic hallmark to define everyday terms from Webster’s Third New International Dictionary. (See, e.g., the definitions of “rights” and “in” in Cheatham I.R.A. v. Huntington Natl. Bank; definition of “absence” and “no” in State v. Morgan ). Here, she uses the 1911 edition of the dictionary for the definitions of “comfort” and “welfare” (unchanged, as she notes, in the Third Edition) to show these everyday usages are clear and understandable, so there is no need to look to secondary sources like the constitutional debates or canons of construction like ejusdem generis, or other things we see in Justice DeWine’s opinion, to interpret the meaning of the language in Article II, Section 34. Nor has any caselaw suggested any ambiguity in this constitutional language.
Article II Section 34 Should be Read Very Broadly
The authority to provide for the comfort and general welfare of employees is not limited to regulating the workplace environment or workplace hazards and conditions. This broad interpretation is further boosted by the fact that Section 34 states that “no other provision of the constitution shall impair or limit this power.” And the comfort and general welfare of residents includes their choice of residency.
Caselaw since the adoption of Section 34 has consistently construed this provision as a broad grant of authority to fix the hours of labor, establish a minimum wage, and provide for the comfort, health, safety and general welfare of all employees. The court has consistently recognized that if a statue is enacted pursuant to this section, it is not limited by the Home Rule Amendment’s reservation of powers of self-government to municipalities.
R.C. 9.75 and the Fannie Lewis Law
These two are clearly in conflict. What happens then? The General Assembly wins. It has the power under Section 34 to pass laws fixing hours and minimum wage of workers, and providing for the health, safety and general welfare of all employees. Subsumed within that power is the power to regulate public-improvement contracts that impose terms that affect the employment of Ohio workers.
Where the Eighth District Went Wrong
The Fannie Lewis law does more than just set forth the terms on which the city is willing to bargain with contractors. It regulates the employment of workers hired under public construction contracts by setting aside work just for Cleveland residents.
“Protectionist city-residency regulations affect all Ohio construction workers, because every resident of a political subdivision is disfavored by the residency restrictions imposed by another political subdivision,” wrote Kennedy. R.C. 9.75 provides equal opportunity for those jobs, and thus provides for the comfort and general welfare of all who work in the construction trades.
Who Benefits From R.C. 9.75?
The lead opinion acknowledges the city’s argument that R.C. 9.75 benefits contractors, not employees, but concludes it’s the court’s job to interpret the statute as written, not second guess the legislature’s motivation.
The issue is whether Article II, Section 34 authorizes the legislature to regulate public-works contracts with residency requirements, and the answer is yes, no matter the percent of the set-asides or the penalties for failure to comply.
Bottom Line: R.C. 9.75 Trumps Fannie Lewis Law
“Accordingly, R.C. 9.75 is a valid exercise of the power granted by Article II, Section 34 of the Ohio Constitution, and it supersedes the Fannie Lewis Law, a local ordinance enacted by a municipality pursuant to its home-rule authority,” wrote Kennedy.
So, the injunction issued in the case is dissolved and judgment is to be entered in favor of the state.
Justice DeWine’s Opinion Concurring in Judgment Only
Unlike the lead opinion, Justice DeWine’s analysis does require a home-rule analysis. But he finds R.C. 9.75 to be a general law that supersedes the Fannie Lewis Law.
Part I
Article II, Section 34 Should Not be Read so Broadly
DeWine takes the position that the framers intended for this provision to be read narrowly. The structure, text and context of the Ohio Constitution and the historical record all show that this section is limited to laws that regulate work hours, set the minimum wage, and workplace conditions. Somewhere along the way, the court’s jurisprudence interpreting this provision has gone astray. Reading this provision as broadly as the lead opinion does, when combined with the “no other provision” clause can trump or eliminate every other state constitutional protection.
And it’s not just this lead opinion that reads this provision too broadly. To DeWine, much of the caselaw interpreting this provision has wrongly done so, as well. He gives a number of examples to support this position.
Textual Analysis Calls for Narrow Reading
Section 34 authorizes three types of legislative enactments: those that fix and regulate the hours of labor, those that establish a minimum wage, and those that provide for the comfort, health, safety and general welfare. Under the rule of statutory construction known as ejusdem generis, the general welfare catchall category was intended to authorize legislation of the same kind as the first two categories of regulating hours and minimum wages. Otherwise, the first two categories are superfluous because both promote employee welfare. So, the bottom line here is that Article II, Section 34 should be limited to laws regulating the workplace environment.
The historical backdrop during this section’s adoption illuminates the fact that its purpose was to protect workers from workplace hazards, which also supports his narrow reading, says DeWine.
“The comfort, health, safety, and general-welfare clause was originally understood as ensuring that the General Assembly had the authority to protect workers in their place of work. There is absolutely no evidence that it reached any further than this…,” he wrote.
Caselaw Has Wrongly Expanded the Scope of Section 34
Starting in 1967, in State ex rel. Police & Firemen’s Pension Fund Bd. of Trustees v. Police Relief & Pension Fund of Martins Ferry Bd. of Trustees, the floodgates opened when the court held that a state law transferring the assets of local firefighter pension funds to a state fund was authorized under Section 34. And DeWine gives several more examples of what he sees as a totally incorrect expansive interpretation of this section.
R.C. 9.75 Cannot Be Passed under Article II, Section 34
Why? Because it does not even govern the employer-employee relationship, let alone the workplace environment. Time for a mid-course correction in this area of jurisprudence, says DeWine.
Justice Stewart joined this part of Justice DeWine’s opinion
DeWine, Part II. Home Rule
Just because R.C. 9.75 cannot be enacted under Article II, Section 34 doesn’t mean it can’t be enacted at all. The Ohio legislature has the authority to enact any law that isn’t prohibited by the Ohio or the U.S. Constitution.
R.C. 9.75 Does Not Violate Home Rule
This is what the Home Rule Amendment says:
“Municipalities shall have authority to exercise all powers of local self-government and to adopt and enforce within their limits such local police, sanitary and other similar regulations, as are not in conflict with general laws.”
So, a state statute will supersede a local ordinance when the ordinance conflicts with the state statute, the ordinance is an exercise of the police power rather than a power of local self-government, and the state statute is a general law. Only two and three are involved here.
Local Self-Government or Exercise of Police Power?
The way to tell the difference is does the ordinance relate solely to the government and administration of the internal affairs of the municipality (local self-government) or aim to protect the public health, safety, morals or general welfare (police power).
Typical examples of local self-government powers are laws regulating the way the government organizes itself or elects its officials. Typical examples of the exercise of police power are ordinances that aim to control the behavior of third parties relating to health, safety or welfare, like banning concealed handguns in city parks or limiting the weight of vehicles on city streets.
Which is the Fannie Lewis Law? The city argues that it is not an exercise of its local police power because the ordinance governs the power to contract, a self-government power, namely, the power to spend its money as it sees fit. But to DeWine, it is clearly an exercise of the city’s police power. The law requires city contracts to include penalty provisions for contractors who do not employ a certain percentage of Cleveland residents on public construction projects. It imposes a penalty to control the behavior of third parties—clearly an exercise of police power.
“To pretend that the Fannie Lewis Law is not an exercise of the police power because it achieves its result through contract rather than direct regulation is a blinkered kind of formalism that ignores reality,” wrote DeWine.
R.C. 9.75 is a General Law
Part three of the home rule analysis is whether the state statute, namely R.C. 9.75, is a general law. In determining that R.C. 9.75 is a general law, the first thing DeWine would do would be to abandon the 4-part test of Canton v. State. He describes the court’s jurisprudence on what is a general law as a “confusing morass.” Here is a definition of a general law from a 1905 Ohio Supreme Court case that he likes:
“A law framed in general terms, restricted to no locality, and operating equally upon all of a group of objects, which, having regard to the purposes of the legislation, are distinguished by characteristics sufficiently marked and important to make them a class by themselves, is not a special or local law, but a general law.”
While the dissent would find R.C. 9.75 not to be a general law because it applies only to public authorities, to DeWine, a law is a general law if it applies to a particular identifiable subset of the population, which in this situation includes public authorities, who have a history of favoring local residents. So, because R.C. 9.75 is a general law, it prevails over Cleveland’s Fannie Lewis Law.
Chief Justice O’Connor’s Dissent
There are two points to the Chief’s dissent. The first is that R.C. 9.75 is not a valid exercise of the legislature’s authority under Article II, Section 34. The second is that R.C. 9.75 violates Cleveland’s home rule power.
R.C. 9.75 Not Authorized by Article II, Section 34
When Article II, Section 34 was proposed, wages, hours, and workplace conditions were what was on the minds of the members of the constitutional convention. And these have been the kinds of issues presented in laws upheld in past case precedent. But R.C. 9.75 is not about wages, hours, or workplace conditions. It only seeks to affect how a public authority does business with its contractors. And the only people protected by it are the contractors.
Distinguishing Lima
In Lima v. State, the court upheld a state law that prohibited a political subdivision from imposing a residency requirement on its employees. The court found the law validly enacted pursuant to Article II, Section 34 because it provided for the comfort and general welfare of public employees by letting them choose where they wanted to live. The local ordinance struck down in Lima was a residency requirement ordinance that operated as a complete bar to city employment unless the worker lived in the city. These local laws directly affected workers’ choice of residency; the Fannie Lewis Law does not. The Fannie Lewis law only applies to contractors on public construction contracts over $100,000. Those contractors can hire whomever they want. If they choose not to hire resident workers for at least 20% of the labor hours, the contractor forfeits part of the contract price, but does not lose the contract. The workers themselves can live wherever they want.
R.C. 9.75 is not a General Law
If it is not authorized by Article II, Section 34, R.C. 9.75 cannot stand if it violates a municipality’s home rule authority, and it does. To reach the conclusion that R.C. 9.75 is not a general law the Chief applies the test set forth in Canton v. State: A general law is one that (1) is part of a statewide and comprehensive legislative enactment, (2) applies to all parts of the state alike and operates uniformly throughout the state, (3) sets forth police, sanitary, or similar regulations, rather than purporting only to grant or limit legislative power of a municipal corporation to set forth police, sanitary, or similar regulations, and (4) prescribes a rule of conduct upon citizens generally.
The Chief would find R.C. 9.75 flunks 3 and 4 of the Canton test for a general law. She sees the purpose of R.C. 9.75 as limiting a municipality’s authority to establish certain contract terms with contractors on public improvements over a certain amount. So, no “police, sanitary, or other similar purpose” is met by the state law. Nor does the law prescribe a general rule of conduct for all citizens, just the contract terms between a public authority and a contractor on certain public improvement projects.
Dissent, Bottom Line
R.C. 9.75 is not a general law, so it cannot preempt the Fannie Lewis Law. It is an invalid limitation on Cleveland’s home-rule authority.
Justices Donnelly and Stewart joined this dissent.
Concluding Observations
After oral argument I wrote:
“This case revives a long-running debate about how broad the grant of legislative authority is under Article II Section 34… My sympathies are with the city, because I think the regulation of residency as part of the general welfare clause of Section 34 is a stretch, but this looks like a win for the state, although this is far from an easy call. It is clear that the Justices just do not all see this the same way… Justice Stewart was by far the most sympathetic to the Fannie Lewis Law as a proper exercise of local self-government and seemed to bristle at the notion that it was in any way discriminatory. I believe the Chief is sympathetic to the city as well.” (My student contributor, Ivy Charneski disagreed with me about which way the Chief was leaning. And ultimately, she thought the case could go either way, but ultimately also called it for the state).
I further noted that “Justice DeWine, who was a particularly active questioner, didn’t seem persuaded by the city’s argument that it was just enforcing a contract provision, not using its police power, and Justice French didn’t seem sympathetic to the city’s argument either.”
One more thing. Part I of Justice DeWine’s concurrence in judgment only, which deals with the history of Article II, Section 34, is exceptionally clear and well-written, and really could serve as a blueprint for state constitutional analysis. (I say this despite disagreeing with the analysis). And there is a certain irony in the more conservative justices (minus DeWine) endorsing such an expansive reading of the Employee Welfare Amendment.
Addendum
Here is an interesting editorial about this decision from the editorial board of cleveland.com and The Plain Dealer.