SAN FRANCISCO—San Francisco is preparing to implement what is billed as the nation’s toughest local hiring ordinance, over the concerns of some neighboring communities and union officials.The law, which takes effect March 25, establishes strict requirements for how many work hours on city-funded projects must be completed by city residents, starting with 20 percent this year and rising incrementally to 50 percent. It also requires that a certain percentage of work hours be performed by economically disadvantaged residents.

The mandates apply to construction projects worth more than $400,000 within 70 miles of the city.

Supporters say the law will create jobs and promote equitable labor practices.

But critics say those benefits will come at the expense of jobs in nearby counties, where the majority of San Francisco’s construction workers live.