Could Nashville's voter-approved local-hire amendment force contractors to use 40% Davidson County workers on city construction jobs?

Plain-English summary

On August 6, 2015, Davidson County voters approved Amendment 3 to the Metro Nashville charter (the "local hire amendment"). It required that on any Metro construction project of $100,000 or more, exactly 40% of "Total Construction Work Hours" worked by construction craft workers be performed by Davidson County residents. Hours worked by non-Tennessee residents were excluded from the total, producing the odd result that a contractor staffed entirely with Kentucky residents had no local-hire obligation, while one staffed with workers from Tennessee's Montgomery County did. Representative Glen Casada asked Attorney General Slatery whether the amendment conflicted with state law.

The AG concluded it did. Tennessee's Contractors Licensing Act, Tenn. Code Ann. §§ 62-6-101 to -521, broadly required contractors to be state-licensed. Section 62-6-111(i)(2)(C) specifically forbade counties and municipalities from imposing on state-licensed contractors any "additional requirements," and from discriminating against them on the basis of "nonresidency within the county or municipality." The Metro amendment did exactly both of those things. By requiring 40% Davidson County residency, it added a requirement state law did not impose, and it discriminated against non-Davidson-County contractors, which is the precise discrimination the Act prohibited.

The AG concluded Amendment 3 was invalid to the extent it conflicted with the Act, citing the longstanding rule that municipalities cannot enact ordinances that conflict with state statutes (Shore v. Maple Lane Farms).

Currency note

This opinion was issued in 2015. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Q: Did the AG conclude the entire Amendment 3 was void?
A: The AG said Amendment 3 was invalid "to the extent that it contravenes the general law of the State of Tennessee." That formulation does not strike the whole amendment. It targets the conflict, which was the residency-based local-hire requirement applied to state-licensed contractors.

Q: Why did the Contractors Licensing Act preempt the amendment?
A: The Act expressly forbade counties and municipalities from imposing "additional requirements" on state-licensed contractors or from "discriminat[ing] against the state licensee or its employees on the basis of the licensee's nonresidency within the county or municipality." Tenn. Code Ann. § 62-6-111(i)(2)(C). A local-hire mandate is both an additional requirement and discrimination against non-residents on its face.

Q: Why did the AG flag the Kentucky/Montgomery County example?
A: To highlight an irrationality in the drafting. Because non-Tennessee work hours were excluded from "Total Construction Work Hours" entirely, a contractor staffed only with Kentucky residents had no obligation, while one staffed with workers from another Tennessee county did. The example illustrated how the residency rule operated and is part of the AG's case that the rule was a "discrimination on the basis of nonresidency" within the meaning of § 62-6-111(i)(2)(C).

Q: Could the legislature have authorized local hire requirements?
A: Yes. The conflict was statutory. The Act preempted local hire rules because the General Assembly chose to. The General Assembly could repeal or carve back § 62-6-111(i)(2)(C) and allow such rules. Until then, the statute controlled.

Background and statutory framework

The Tennessee Contractors Licensing Act of 1994 was a comprehensive statewide licensing regime. The Tennessee Supreme Court read "contracting" under the Act to encompass "all stages and activities of a construction project" (Kyle v. Williams). To keep that regime uniform across the state, § 62-6-111(i)(2)(C) preempted three categories of local action against state-licensed contractors: (1) requiring local tests or examinations, (2) imposing "any additional requirements," and (3) discriminating based on nonresidency.

Amendment 3 to the Metro Charter created a new compliance obligation tied to the residence of a contractor's workforce. Although structured as a procurement condition, the AG read it as imposing a substantive requirement on state-licensed contractors and as a discrimination against non-resident contractors, both of which the Act prohibited.

The opinion applied the conventional rule that local ordinances yield to conflicting state law (Shore v. Maple Lane Farms; City of Bartlett v. Hoover; 421 Corp. v. Metro), without need to reach broader home-rule or constitutional issues.

Citations and references

Statutes:

• Tenn. Code Ann. §§ 62-6-101 to -521 (Contractors Licensing Act)
• Tenn. Code Ann. § 62-6-102(3), (4) (definitions of "contracting" and "contractor")
• Tenn. Code Ann. § 62-6-103 (licensure requirement)
• Tenn. Code Ann. § 62-6-111(i)(2)(C) (preemption of local additional requirements and nonresidency discrimination)

Cases:

• Kyle v. Williams, 98 S.W.3d 661 (Tenn. 2003) (scope of "contracting" under the Act)
• Shore v. Maple Lane Farms, LLC, 411 S.W.3d 405 (Tenn. 2013) (local governments may not nullify state law)
• City of Bartlett v. Hoover, 571 S.W.2d 291 (Tenn. 1978) (state-law conflict rule)
• 421 Corp. v. Metropolitan Gov't of Nashville and Davidson Cnty., 36 S.W.3d 469 (Tenn. Ct. App. 2000) (conflicting local ordinance invalid)

Source

• Landing page: https://www.tn.gov/attorneygeneral/opinions.html
• Original PDF: https://www.tn.gov/content/dam/tn/attorneygeneral/documents/ops/2015/op15-69.pdf

Original opinion text

STATE OF TENNESSEE
OFFICE OF THE ATTORNEY GENERAL
October 1, 2015

Opinion No. 15-69

Conflict Between State and Local Law

Question

Does Amendment 3 (known as the "local hire amendment") to the Charter of the Metropolitan Government of Nashville and Davidson County conflict with Tenn. Code Ann. § 62-6-111(i)(2)(c)?

Opinion

Yes. Amendment 3 conflicts with the Contractors Licensing Act of 1994 (the "Act") which prohibits municipalities and counties from imposing on contractors licensed by the State any requirements in addition to those imposed by the Act and which prohibits municipalities and counties from discriminating against contractors licensed by the State "on the basis of the licensee's nonresidency within the county or municipality." Tenn. Code Ann. § 62-6-111(i)(2)(c). Amendment 3 is therefore invalid to the extent that it contravenes the general law of the State of Tennessee.

ANALYSIS

On August 6, 2015, the voters of the Metropolitan Government of Nashville and Davidson County, Tennessee, ("Metro") approved Amendment 3 to the Metro Charter. Effective October 1, 2015, Amendment 3 imposes certain "local hire" requirements for contractors and their employees who work on Metro construction projects of $100,000 or more.

The full text of Amendment 3 as it appeared on the August 6, 2015, ballot is as follows:

The Charter of the Metropolitan Government of Nashville and Davidson County, Tennessee, is amended by adding a new paragraph at Section 9.109, Function of division of purchases, as follows:

"In order that local taxpayers are protected and local Davidson County residents have opportunity to work on taxpayer-funded projects, the division of purchases, when expending funds or other resources of the metropolitan government in the amount of One Hundred Thousand Dollars ($100,000.00) or more on a project for the building, altering, repairing, improving or demolishing any public structure or building or other public improvements of any kind to any public real property, but excluding professional services, shall require that one (1) or more residents of Davidson County perform Forty Percent (40%) of the Total Construction Work Hours worked by construction craft workers on each project whether workers are employed by a contractor or any subcontractor, and shall require that a significant effort be made to ensure that no less than Ten Percent (10%) of the Total Construction Worker Hours are performed by low income residents of Davidson County. In determining the Total Construction Worker Hours for each project, there shall be included the number of hours worked on all customary construction activities, but shall exclude the number of hours of work on the project performed by workers who are not residents of Tennessee. A procedure for reporting Total Construction Worker Hours and a penalty for failure to comply with this requirement may be provided by ordinance or by the division of purchases consistent with ordinances, and all reports will be made available to the public."

Amendment 3 requires any contractor working on a Metro public building project on which $100,000.00 or more is expended to ensure that "one (1) or more residents of Davidson County perform Forty Percent (40%) of the Total Construction Work Hours worked by construction craft workers on each project." The number of hours of work on a project performed by workers who are not residents of Tennessee are excluded in calculating "Total Construction Work Hours." Accordingly, for example, a contractor licensed in Tennessee who employs only Kentucky residents is not required to meet the 40% local-hire requirement in order to work on Metro construction projects, but a contractor whose employees are all residents of Montgomery County, Tennessee, located just south of the Kentucky border, must satisfy the 40% Davidson County local-hire rule to be eligible to work on a Metro construction project.

The Contractors Licensing Act of 1994, codified at Tenn. Code Ann. §§ 62-6-101 to -521, requires any person or entity who is engaged in "contracting" to be licensed by the State of Tennessee, with some limited exceptions not applicable here. Tenn. Code Ann. § 62-6-103. The interrelated statutory definitions of "contracting" and "contractor" are very broad. See Tenn. Code Ann. § 62-6-102(3) and 102(4). The term "contracting" under the Act encompasses "all stages and activities of a construction project." Kyle v. Williams, 98 S.W.3d 661, 666 (Tenn. 2003). The Act "expressly requires persons engaging in any of these activities to be licensed" so as "to ensure that the person is qualified to perform the work required to fulfill the terms of the contract." Id.

The Act further provides that, once a contractor is licensed by the State of Tennessee, then

"[n]o county or municipality shall require the state licensee or its employees to pass any county or municipal test or examination; nor shall a county or municipality impose any additional requirements upon the state licensee or its employees, nor in any way discriminate against the state licensee or its employees on the basis of the licensee's nonresidency within the county or municipality."

Tenn. Code Ann. § 62-6-111(i)(2)(C) (emphasis added).

Amendment 3 directly contravenes Tenn. Code Ann. § 62-6-111(i)(2)(c). Most, if not all, contractors bidding on or procuring public building project work for Metro would be required to be licensed contractors under the Act. Metro is prohibited by the Act from imposing any additional requirements on such state licensees or their employees and Metro is prohibited by the Act from discriminating against licensed contractors because they are not Metro residents. But that is what Amendment 3 does: it imposes additional requirements, namely residency requirements, on licensed contractors and it discriminates against non-resident contractors. Thus, Amendment 3 conflicts with a state statute.

Tennessee law has long held that a municipality may not enact a law or regulation that conflicts with a State statute. Shore v. Maple Lane Farms, LLC, 411 S.W.3d 405, 426 (Tenn. 2013) (local governments cannot effectively nullify state law by enacting laws that ignore applicable state law, that grant rights that state law denies, or that deny rights that state law grants); City of Bartlett v. Hoover, 571 S.W.2d 291, 292 (Tenn. 1978); 421 Corp. v. Metropolitan Gov't of Nashville and Davidson Cnty., 36 S.W.3d 469, 475 (Tenn. Ct. App. 2000). Amendment 3 is, therefore, invalid to the extent that it conflicts with the Act.

In sum, Amendment 3 to Metro's Charter conflicts with Tennessee's Contractors Licensing Act by imposing on contractors licensed by the State residency requirements in addition to those imposed by the Act and by discriminating against contractors licensed by the State on the basis of the licensee's nonresidency within Metro. Amendment 3 is therefore invalid because it contravenes the general law of the State of Tennessee.

HERBERT H. SLATERY III
Attorney General and Reporter

ANDRÉE SOPHIA BLUMSTEIN
Solicitor General

WILLIAM E. YOUNG
Associate Attorney General

Requested by:
The Honorable Glen Casada
State Representative
25 Legislative Plaza
Nashville, Tennessee 37243