Local Preferences

The testy economy has produced another United States Supreme Court decision affecting the construction industry. The decision upholds an executive order by the mayor of Boston requiring that 50% of the workers on that city's construction contracts be Boston residents on a craft-by craft basis.

The Massachusetts Council of Construction Employers challenged the executive order all the way to the highest court in the land. The Council succeeded in convincing the highest court of Massachusetts that the executive order violated the Commerce Clause of the U.S. Constitution, because of its claimed interference with the free flow of workers in interstate commerce.

However, the U.S. Supreme Court, over two dissents, held that the City of Boston was not regulating the market with its executive order. The Court ruled that Boston was a participant in the market itself, and therefore had the right to favor its residents' opportunities for employment on is public works projects-even those receiving federal funding.

That decision is now the law of the land. Its affect on the construction industry will naturally depend upon the laws of any particular state or governmental entity and the extent to which those bodies may take advantage by adopting local preference laws. Most states and some local governmental entities do have some preference laws, but usually not as restrictive as the Boston Executive Order. The Supreme Court decision is likely to invite more such legislation and probably more litigation as well.

Governmental reactions to unemployment and underemployment, coupled with pressures from local contractors, may bring about a groundswell of local preference laws. Whether such laws make sense is certainly debatable, but at least the legality question now appears settled-for the time being

1 White v. Massachusetts Council of Construction Employers, Inc., 460 U.S. 204, 75 L. Ed. 2d (1983).