Occupational Licensure Facing Increased Scrutiny from Federal Government and Courts

Occupational Licensure Facing Increased Scrutiny from Federal Government and Courts

The U.S. professional engineering community is watching closely as federal scrutiny of occupational licensure by the states is intensifying.

In March 2017, the Federal Trade Commission (FTC) convened an Economic Liberty Task Force, which was tasked with reviewing and making recommendations on occupational licensing. An estimated 1,100 occupational licenses are now regulated by the states, and nearly 30 percent of U.S. jobs require some form of licensure today, a six-fold increase since the 1960s. Critics argue that licensure constrains job growth and increases cost to consumers without corresponding benefit. The Brookings Institution, for example, has estimated that licensure has resulted in 2.85 million fewer jobs and is costing consumers $203 billion annually. A 2006 study by Morris Kleiner put the cost then at $116 billion a year.

The FTC’s Economic Liberty Task Force released an initial report this September outlining “Options to Enhance Occupational License Portability.” The report concludes “there is little justification for the burdensome, costly, and redundant licensing processes that many states impose on qualified, licensed, out-of-state applicants.” The report calls for modifications to interstate compacts and model laws to promote nationwide license portability, easing barriers through mutual recognition and expedited licensure procedures, and efforts to harmonize licensure requirements. The report also addresses the problem of disciplinary action across state lines, and questions the need for licensure for certain occupations.

According to acting FTC Chair Maureen, “states often impose very different licensing requirements such as the number of months of training required. This uneven licensing of the same occupation and different requirements for the same license across states strongly suggests that many occupational licenses do not advance public health, safety, or other legitimate public protections.”

Among the specific problems highlighted in the FTC study were the difficulties experienced by teachers attempting to shift licensing between states, and the impact on military spouses unable to practice their occupations because of frequent relocations.

The FTC’s action occurs in the wake of congressional passage of the Strengthening Career and Technical Education for the 21st Century Act (Public Law 115-224), which, among its provisions, allows states to use federal education funds to review licenses or certifications that “pose an unwarranted barrier to entry into the workforce.” The authorization opens the door to formation of state commissions to study existing licensing requirements and possibly recommend occupational licenses that could be eliminated or curtailed.

Related bills are currently pending in Congress. Recent legislation by Sens. Marco Rubio (FL) and Elizabeth Warren (MA) would prohibit states from suspending or revoking occupational licenses of individuals who have fallen behind in repayment of student loans. Sens. Mike Lee (UT) and Ben Sasse (NE) are sponsors of a 2016 bill, Alternatives to Licensing that Lower Obstacles to Work Act (ALLOW), which would limit creation of new occupational licenses by the District of Columbia, empower federal district attorney generals to more closely supervise state licensing boards, and tap Congress’ authority over federal land as a basis for eliminate licensing requirements for national park guides and those working on military bases.

The issue has also found its way into the federal courts. In North Carolina State Board of Dental Examiners v. Federal Trade Commission, the North Carolina dental examiners’ board issued cease-and-desist orders to individuals offering teeth-whitening services without having a license to practice dentistry. The FTC filed a lawsuit claiming the restriction was anti-competitive based on the fact that North Carolina law requires that at least six of the eight members of the dental board be licensed practicing dentists. North Carolina claimed sovereign immunity from federal antitrust law, but the U.S. Supreme Court overruled that defense, holding that a state occupational licensing board that is primarily composed of persons active in the market it regulates is not immune from federal antitrust law unless it is “actively supervised” by the state.

Encouraged in part by this 2015 Supreme Court decision, more than a dozen lawsuits involving occupational licensing boards are currently pending in North Carolina, California, Connecticut, Georgia, Louisiana, Mississippi, Nevada, Pennsylvania, Tennessee and Texas. With more than 1,790 occupational licensing boards currently in operation in U.S. states and territories, fear of prospective litigation is on the rise.

Although engineering licensure has not been specifically targeted as a problem area to date, the National Council of Examiners of Engineers and Surveyors (NCEES), has engaged its participating organizations, including IEEE-USA, to discuss these issues at its Spring meeting in March 2019. In his invitation, NCEES President James Purcell, P.E. noted, “considering the current climate as it pertains to licensure and the pressure to deregulate,” there is a need to improve coordination and cooperation between the professional engineering societies.

IEEE-USA welcomes member feedback on the state of engineering licensure, and especially the desirability of potential reforms to harmonize licensure requirements between states, improve license portability and promote the interstate practice of engineering. You can send your feedback to president@ieeeusa.org.

You can review the FTC report at: https://www.ftc.gov/system/files/documents/reports/options-enhance-occupational-license-portability/license_portability_policy_paper.pdf


Leave a Reply