Nebraska Legislature Sends Landmark Licensing Reform to Governor

The Nebraska Legislature voted 45-1 on Wednesday to approve the Occupational Board Reform Act, which would allow state legislators to systematically reduce the state’s burdensome and arbitrary licenses. According to a report by the Institute for Justice, on average, a license to work for lower-income occupations requires completing 118 days of education and experience, and passing an exam.

In fact, occupational licensing is now one of the biggest barriers to finding jobs, with almost 1 in 3 workers in Nebraska either licensed or certified. The bill now heads to Gov. Pete Ricketts, who has previously called on the state to reform its roughly 200 occupational licenses.

“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. “If the governor signs this bill, Nebraska would become a national leader in licensing reform and set a landmark model for other states to follow.”

Sponsored by Sen. Laura Ebke, the bill (LB 299) would establish a review process that would use a two-step process to review existing regulations. First, there actually have to be “present, significant, and substantiated harms” that warrant government intervention. Second, if such a problem exists, the regulation must be the “least restrictive” form that imposes the lowest burdens and costs while still protecting consumers from harm.

As part of the bill’s rigorous “sunset review” process, every year, legislative standing committees would examine one-fifth of the state’s occupational regulations to identify any rules or laws that should be repealed or modified so that they are the least restrictive.

“Regulation does not have to be a binary 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.”

The Occupational Board Reform Act also addresses how occupational licensing sets up barriers for people with a criminal record. Nebraska alone has over 450 occupational and business license restrictions on ex-offenders, according to the American Bar Association. In 2016, almost 2,400 prisoners were released in Nebraska.

“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.”

Under the bill, before applicants complete any required training, they would be able to petition an agency to see if their criminal history would be disqualifying. If denied, applicants would then be able to appeal that disqualification. Similar reforms were recently signed into law by Republican governors in both Arizona and Indiana.

LB 299 has earned the endorsement 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.”

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