The city of Cincinnati can require companies with which it contracts to offer health benefits and job-training programs, the U.S. Sixth Circuit Court of Appeals ruled Jan. 4.
The ruling overturns an earlier decision by U.S. District Court Judge Mike Barrett on a 2014 lawsuit brought by Allied Construction Industries. Allied says the requirements, which apply to sewer projects, amount to a ban on non-union companies contracting with the city. The company could appeal the circuit court’s ruling.
The heart of the suit is a somewhat arcane debate over whether the city’s rules are preempted by a 1974 law called the Employee Retirement Income Security Act. That question in turn hinges on whether the city is acting as a regulatory body or a participant in the labor market when it sets stipulations on contractors. The earlier ruling from Judge Barrett said the city was acting in a regulatory capacity with the “responsible bidder” ordinance.
In the 2014 ruling, Barrett cited “the public interest in promoting fair competition and low costs for taxpayers” in his decision to impose a preliminary injunction on the rules.
In overturning that decision last week, the circuit court argued that the city is in fact acting as a market participant, not as a regulator.
“The City submitted evidence that many private parties utilize criteria similar to those that the City used in the Ordinance,” the decision reads. “For instance, some private owners impose project standards by contracting with companies under union agreements, requiring certain standards for labor safety, training, and wages. … Regardless of whether the preference is embodied in a bidding ordinance or an after-bid agreement, the City is acting as would a private party by seeking a contractor that meets certain specifications, aimed towards the efficient procurement of its own goods and services.”
Last week’s decision is the latest chapter in the long, contentious fight over the city’s rules, which apply to Greater Cincinnati Water Works projects. They may also apply to work done by the city and county on the massive $3.2 billion federal-court-ordered overhaul of the Metropolitan Sewer District so the system complies with the Clean Water Act. A magistrate in 2014 found that the county has the power to set policy for MSD, not the city, and the county opposed the “responsible bidder” requirements. But an agreement between the city and county forged last year now puts control of MSD in the hands of an independent commission. It’s unclear which approach they would favor.
The circuit court’s ruling is a victory for labor groups in the region and local Democrats who pushed the regulations through Cincinnati City Council in May, 2013. Councilman Chris Seelbach introduced the ordinance, often called “responsible bidder,” in an effort to increase training opportunities and jobs with health and retirement benefits for the region’s workforce. Council members Yvette Simpson, P.G. Sittenfeld, David Mann and Wendell Young joined Seelbach in voting for the ordinance. The rest of council at the time, as well as Mayor John Cranley, opposed the rules.
The rules require an employer working on city sewer projects to set aside 10 cents to an apprenticeship program per work hour completed. The rules also stipulate that every employer must have graduated at least one employee from the apprenticeship program every year for the last five years. Allied claimed that the only qualifying programs are union programs and that the rules thus exclude non-union workers, including the 580 it employs.
Proponents of the rules cheered the court’s decision last week.
“We can finally begin the greatest jobs program Cincinnati has ever invested in,” Seelbach wrote following the announcement. “With required pre-apprenticeship training targeted to veterans, women, people of color and those in poverty, paired with requirements for contractors to use genuine and successful Apprenticeship programs with a track record of graduating Journeymen, Cincinnatians will have a real path into the middle class.”
This article appears in Jan 3-10, 2018.
