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U.S. Constitution & Public Construction
Why Courts Strike Down Schemes to Lock Out Merit Shops

In order to reduce competition, organized labor may try to block merit shop contractors from being invited to bid and work on a public projects.  These schemes take many forms, but two of the most common are residency requirements and project labor agreements.  There is considerable case law against using either scheme, and government agencies are best served by following public bidding laws. 

Residency Requirement

  • Usually in the form of a city ordinance

  • Requires a percentage of workers on a project be residents of the city.

  • Popular with politicians because they appear to be champions for “local jobs”

  • Totally impractical and unfair for merit shops whose workers are full-time, year-round employees and not hired for only one specific job.


Legal Issues

Federal courts have repeatedly struck down residency requirements. They violate the U.S. Constitution’s Privileges and Immunities Clause, “which guarantees every citizen of the country all the rights and privileges enjoyed by every other citizen,” the court ruled.

In a nut shell, City A cannot stop residents of neighboring City B from crossing the city line to work. Residency requirements have been struck down in at least:

  • Fall River

  • Quincy

  • Worcester


While residency requirements may be on the books in other cities, they are typically not enforced because city leaders understand they are legally indefensible.

Policy Issues

Aside from the legal issues, residency requirements are bad public policy for a variety of reasons:

  • An employee of the lowest, qualified bidder should not be prohibited for working on a project for failure to live in the city.

  • It is not the role of government to dictate who is hired by private companies.

  • In the vast majority of cases, public construction is funded by a mix of sources – federal, state and local.  Taxpayers who live outside a city often contribute to the construction of facilities inside that city.  Those taxpayers have the same right as city residents to work on a project. Residency requirements basically say, we are glad to have your tax dollars to build our public facility, but you are not welcome to bid and work on it.

  • If you carry residency requirements to their logical conclusion, and every municipality adopted residency requirements for all work within its borders, an individual will only ever be allowed to work in their own city or town. This would result in economic gridlock.



A smarter solution is to focus on improving educational programs that teach reading, math and construction trade skills to residents.They also teach so-called “soft skills” that include the importance of reporting to work on-time and ready to work.In addition, they teach the importance of being able to pass pre-hire drug screenings because construction is a profession with zero tolerance for drug and alcohol misuse. 


By giving residents the skills to work in the construction industry, city leaders would be equipping their constituents for full-time employment with a merit shop contractor.The residents would be able to work not only on a job in their city, but on all the projects awarded to their employer.

Project Labor Agreements

  • A PLA effectively blocks merit shops from bidding because it requires them to use union labor and not their own employees. 

  • PLAs amount to job discrimination by denying access to qualified construction workers who choose not to join organized labor.

  • PLAs create a monopoly for union labor and greatly reduce competition to the benefit of union contractors.


Legal Issues

In 1999, the state’s Supreme Judicial Court branded PLAs “anti-competitive” and ruled they are not justified “in all or even most circumstances.” Further, the SJC ruled that “… the building of a single school will not in and of itself, justify the use of a PLA.” 

State and federal laws govern construction sites with statutes and regulations regarding rates of pay, insurance coverage and workplace safety.


Policy Issues:

  • The true purpose of the PLA is to reduce competition in bidding, and the result is higher construction costs.

  • No one would ever suggest banning union labor, so why is it OK to ban merit shop workers? 

  • Merit shop workers account for more than 83% of the Massachusetts construction workforce.  It makes no sense to deny a project access to the vast majority of the industry.

  • The actual language in PLAs often fails to include the policy arguments proponents use to promote them.

  • PLAs do have language prohibiting strikes and setting a process for dispute resolution, but those are solutions to union-caused problems.  Merit shop employees do not strike and work cooperatively to finish the job on-time and on-budget.  Merit and union shops often work seamlessly, side by side on projects fairly and competitively awarded under the state’s public bidding laws. 



A former pro-union mayor of Fall River once conceded, “With more bidders, you tend to get a better price.”  The best, responsible course is to follow federal and state laws regarding construction.

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