In the construction field, contractors face different constraints with publically funded construction projects. One of the limitations of city-funded projects is a local hiring requirement where a predetermined percentage of a project’s workforce must come from the surrounding geographic area to promote the local economy.
When creating a bid or reviewing a contract for a publicly funded construction job, check for any hiring restrictions.
Currently, Los Angeles does not have a local hiring ordinance in effect, but the implementation of the Far Chance Initiative for Hiring this summer is a step in that direction. Based on previous enactments elsewhere in the nation, local hiring ordinances have been favorably looked upon by municipal governments.
Since 2011, San Francisco has had a local hiring ordinance in place for city contract construction projects over $600,000 or on public land. The ordinance requires contractors to have at least 30 percent of their work hours, per each trade, performed by residents of San Francisco. In addition, at least half of the 30 percent must be enrolled in an apprenticeship program.
Before 2011, contractors only had to make a “good faith effort” to hire 50 percent of their workforce from local areas. In order to ensure the ordinance is feasible, the city of San Francisco works provide contractors with qualified employees for each trade. The city targets the ZIP codes of poorer neighborhoods for workers to enter into city-sponsored workforce development programs.
Issues with local hiring requirements
The purpose of local hiring ordinances is to assist low-income individuals to find a job located near their home to promote the local economy. The practice is beneficial for long-term employment positions, such as civil servants. However, by their very nature, construction projects are not long-term and local workers face unemployment once the project is finished. Additionally, tradesmen do not always live in the communities where the construction is taking place, it may be too expensive and then the hiring requirement is in effect for no reason.
In order to balance the cost of sourcing local laborers, contractors can add the labor cost into their bid. Or, if a contractor will not be complying with the hiring ordinance, they may add the penalty for non-compliance into their bid.
Contractors and construction companies seeking work in the Los Angeles area should be on the lookout for any local hiring initiatives as the mid-term elections approach.