By: Andrew Ford
Somewhere between one-fifth and a quarter of all jobs in the United States require some sort of occupational license. By contrast, in the 1950s, only five percent of jobs required occupational licenses. Because occupational licensing takes place at the state level, different states can have vastly different standards for licensing. Additionally, some of these licensing requirements seem to be little more than arbitrary barriers to entry into the workforce, and licensing entities are often comprised of individuals who benefit most from barriers to entry in the workforce, raising antitrust concerns.
Pennsylvania Act 41 of 2019
Luckily, there is a continuing national, bipartisan movement to streamline occupational licensing generally, with the greatest momentum to make it easier for would-be employees to enter the workforce and easier for would-be employers to hire said employees. Pennsylvania, for example passed Act 41 of 2019, allowing licensees from other states to obtain “licensure by endorsement” in Pennsylvania without having to restart the licensure process in Pennsylvania, so long as the latter state’s licensure requirements are “substantially equivalent or exceed the requirements established in” Pennsylvania. Additionally, Act 41 allows state licensing boards to award provisional licenses to licensees from states with less stringent requirements than Pennsylvania while provisional licensees are working toward meeting the full requirements to obtain a Pennsylvania license.
In short, Act 41 provides a pathway for an entrepreneur-manager to recruit employees from out of state, while allowing an owner-operator to locate more easily if they or their spouse are forced to relocate due to circumstances. This can be especially helpful for military families.
requirements for licensure by endorsement under act 41
Despite extending parity to out of state licensees, Act 41 does not create a shortcut around Pennsylvania’s licensing requirements, as workers must still satisfy four conditions in addition to the requirement that the latter state’s licensure is substantially equivalent or exceeding the Pennsylvania requirements.
The first of these additional requirements is that the putative licensee must demonstrate competence in his or her field through standards determined by the licensing board or commission, including having completed continuing education in the field or having experience in two of the five years proceeding an application under Act 41. Following the effective date of Act 41, licensing boards and commissions received 18 months to promulgate rules to implement Act 41’s requirements.
The second additional requirement is that the applicant has not committed an act that would result in “refusal, suspension, or revocation” of a license unless the licensing board or commission decides that such an act “would not be an impediment” to granting a license.
Similarly, the third additional requirement is that the applicant is in good standing in the jurisdiction that issued their initial license, but the licensing body again has the discretion to grant a disciplined applicant a license by endorsement notwithstanding.
The fourth and final additional requirement is that the applicant pays any fees necessary to achieve licensure in Pennsylvania.
Generally speaking, the policy aims of Act 41 appear to be to empower licensing boards and commissions to have the discretion to grant the broadest possible relief to workers. This is evidenced by the fact that state licensing boards and commissions have the discretion to grant exceptions in two of the five requirements for licensure by endorsement. Also notable is the fact that there is no requirement that an out of state licensee seeking licensure in Pennsylvania move to Pennsylvania or begin working Pennsylvania before seeking a Pennsylvania license. This allows a Pennsylvania-based entrepreneur to recruit workers from out of state, allowing an out of state licensed employee to seek licensure by endorsement or a provisional license, increasing an employer’s geographic reach in hiring. It also reduces the startup time for an employee who comes into Pennsylvania without being recruited, making Act 41 a law that is beneficial for both management and labor.
more reforms in the works?
Pennsylvania Governor Tom Wolf has made occupational licensing reforms a priority of his administration. In addition to signing Act 41—a crucial first step—Governor Wolf has proposed a variety of changes, including eliminating licensing requirements in 13 different professions including barbers, repealing an automatic ten-year ban that 13 different state licensure boards have on granting licenses for people with drug felony convictions, reducing training and education requirements to more manageable levels, and speeding up the licensure process to require processing of applications in ten days or less absent extenuating circumstances. Of course, these are all proposals, and still subject to the political process, but the momentum toward fewer barriers to work and hiring is a positive step that should be celebrated by business owners and workers alike.
The purpose of this blog post is to summarize the very exciting changes underway in Pennsylvania as a result of Act 41 and other Pennsylvania legislation. Before making any business decision with significant regulatory consequences, such as hiring workers or seeking to assist a worker with licensure burdens a business owner should seek the sound legal advice of an attorney licensed to practice in Pennsylvania. This blog post is not legal advice nor is it a proper substitute for legal advice.
This post was originally written on March 18, 2020.
Andrew Ford is a recent graduate of Penn State’s Dickinson Law and currently working as a Judicial Law Clerk at the U.S. Department of Justice, Executive Office for Immigration Review in Falls Church, VA.
Sources
- Aaron Edlin & Rebecca Haw, Cartels by Another Name: Should Licensed Occupations Face Antitrust Scrutiny?, 162. U. Pa. L. Rev. 1093 (2014)
- Act of July 1, 2019, No. 41, 2019 P.L. 292 (2019).
- Ryan Nunn, The Future of Occupational Licensing Reform, Brookings, (Jan. 30, 2017), https://www.brookings.edu/opinions/the-future-of-occupational-licensing-reform/
- Edward Timmons, More and More Jobs Today Require a License. That’s Good for Some Workers, but Not Always for Consumers, Harv. Bus. Rev. (Apr. 26, 2018), https://hbr.org/2018/04/more-and-more-jobs-today-require-a-license-thats-good-for-some-workers-but-not-always-for-consumers
- Press Release, Pa. Governor Tom Wolf, Governor Wolf Proposes Job Licensing Reform to Cut Red Tape, Strengthen Workforce (June 14, 2018), https://www.governor.pa.gov/newsroom/governor-wolf-proposes-job-licensing-reform-cut-red-tape-strengthen-workforce/
