Controversial Baltimore City Local Hiring Ordinance is Enacted

Baker Donelson
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A controversial new law is set to take effect soon. Legislation was introduced in the Baltimore City Council that requires employers benefitted by city contracts and subsidies to take measures to hire Baltimore City residents. Identified as “Finance and Procurement - Local Hiring” (Bill 12-0159), it applies to all city contracts over $300,000 as well as city-subsidized projects receiving assistance over $5,000,000. The City Solicitor’s office opined, however, that the law would be unconstitutional. The solicitor commented that laws similar to the proposed hiring ordinance have been struck down in other jurisdictions when challenged. The City Council President disagreed, and the legislation moved forward. The Council approved the bill in early June, 2013, and Mayor Stephanie Rawlings-Blake allowed the bill to become law without her signature, after a six-month delay. The law takes effect, therefore, in December 2013.

Under this new law, those who are awarded such contracts and subsidies must perform an “employment analysis” for the Mayor’s Office of Employment Development (“MOED”) before any funds are disbursed. The analysis determines how many jobs will be required to complete the contract or project, and how many of those jobs will require new hiring. The proposed ordinance requires that all new jobs be posted through MOED for a period of seven days before they are publically advertised. It mandates that Baltimore City residents fill at least 51% of all new jobs required to complete the contract or project.

Additionally, in each month of the contract or project, the beneficiary must submit a report to MOED that details the following: (1) the number of employees needed for the contract or project; (2) the number of current employees transferred; (3) the number of new job openings created; (4) the number of job openings listed with MOED; (5) the total number of Baltimore City residents hired for the reporting period and the cumulative total number of Baltimore City residents hired; and (6) the total number of all employees hired for the reporting period and the cumulative total of all employees hired. For each new hire during the reporting period, the report must disclose the new hire’s name, social security number, job title, hire date, residence, and referral source. Nothing in the bill says that payments may be withheld if the monthly reports are not submitted. However, regulations may address this issue.

If the Board of Estimates determines that a beneficiary intentionally violated the ordinance, no contract may be awarded to that beneficiary or any firm, corporation, or partnership in which the beneficiary has an interest, for one year. Furthermore an intentional violation of the ordinance is a misdemeanor and subjects the beneficiary to a maximum fine of $500 for each offense.

There are limited exceptions to the 51% requirement. MOED may waive or lower the requirement, on a case-by-case basis, if it finds any of the following: (1) that the beneficiary made a good faith effort to comply; (2) that the beneficiary is located outside of the Baltimore Standard Metropolitan Statistical Area and that none of the contract work is performed inside of such area; (3) that the beneficiary has entered into a special workforce development training or placement arrangement with MOED; or (4) that there are insufficient numbers of Baltimore City residents in the labor market who possess the skills required by the new jobs needed for the contract or project.

Contractors should expect increased difficulty in administering city contracts or subsidies in large projects. As a preliminary hurdle, Baltimore City will not disburse any funds until the employment analysis is completed. This poses an administrative burden on contractors at the outset, and the monthly reporting requirements only increase the burden. New job postings will originate with MOED, and even after subsequent public advertisements, the contractor must hire at least 51% Baltimore City residents.

Although the City Solicitor’s office questions the constitutionality of this new law, until it is challenged, contractors seeking public funds in Baltimore City should prepare themselves for local hiring.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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