Nebraska Governor Signs Landmark Reform for Occupational Licensing

Nebraska Gov. Pete Ricketts signed the Occupational Board Reform Act on Monday afternoon, a landmark law that will systematically reduce the state’s burdensome and arbitrary licenses. Today, Nebraska has more than 170 different occupational licenses, which cover almost a quarter of the state’s workforce.

“Far too many workers are spending their time earning a license when they should be earning a living,” said Lee McGrath, senior legislative counsel at the Institute for Justice. “With this new law, Gov. Ricketts and the Nebraska Unicameral have transformed Nebraska into a national leader for slashing red tape and expanding economic opportunity. The Occupational Board Reform Act sets a landmark model for other states to follow.”

Sponsored by Sen. Laura Ebke, the new law (LB 299) establishes a review process that will use a two-step process to review existing regulations. First, there must be “present, significant, and substantiated harms” that warrant government intervention. Second, if such a problem exists, the legislators must first consider a regulation that is the “least restrictive” and imposes the lowest burdens and costs while still protecting consumers from the harm.

As part of the new law’s rigorous “sunset review” process, every year, legislative standing committees will examine one-fifth of the state’s occupational regulations to identify any rules or laws that should be repealed or modified so that they are the least restrictive. Similar bills are also under consideration in Colorado, Louisiana and Ohio.

“Regulation does not have to be a binary choice between licensing and no licensing,” McGrath explained. “A least restrictive framework grants policymakers a wider array of regulatory options including private certification, inspections, bonding, and registration. Occupational licensing should only be a policy of last resort.”

LB 299 also addresses how occupational licensing blocks upward mobility and re-entry for people with a criminal record. Under the bill, before applicants complete any required training, they will be able to petition an agency to see if their criminal history would be disqualifying. If denied, applicants will then be able to appeal that disqualification.

In 2016, almost 2,400 prisoners were released in Nebraska. But according to the American Bar Association, the state has over 450 occupational and business license restrictions on ex-offenders, many of which do little to protect public safety.

“An honest living is one of the best ways to prevent re-offending,” McGrath said. “But strict occupational licensing requirements make it harder for ex-offenders to find work.”

LB 299 earned the endorsements of the ACLU of Nebraska, the Platte Institute, and the editorial board for The Wall Street Journal, which praised the bill as “a model for licensing reform.” The Occupational Board Reform Act builds on previous deregulation efforts. Last week, Gov. Ricketts signed a bill that eliminates licensing requirements to massage horses, cats or dogs, while the state has also freed hair braiders from licensure.

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