New Federal Bill Takes Aim At Burdensome, Unnecessary Occupational Licensing Laws

Yesterday, Sens. Mike Lee (R-UT), Ted Cruz (R-TX), and Ben Sasse (R-NE), along with Rep. Darrell Issa (R-CA), introduced legislation that, if enacted, will create a framework for states across the country to reform burdensome and unnecessary occupational licensing laws.

The bill, titled the Restoring Board Immunity Act, responds to the Supreme Court’s 2015 decision in North Carolina Board of Dental Examiners v. FTC, which held that state licensing boards composed of industry insiders could potentially be liable for restraining competition under federal antitrust laws. The bill allows states to reduce this risk of liability, but only if they institute reforms designed to eliminate unnecessary licensing restrictions.

“Occupational licensing kills economic opportunity, hurts consumers, and raises prices,” said IJ Attorney Robert Everett Johnson, who previously testified in the Senate about the need for occupational licensing reform. “Yet, despite all that, licensing is on the upswing, with more and more Americans required to get a license to earn a living. This bill takes a creative new approach to that problem, in order to help reverse decades of licensing creep.”

The Supreme Court’s Dental  Examiners decision held that states can avoid antitrust liability if they “actively supervise” their licensing boards, but the decision did not define active supervision. The proposed legislation seeks to fill the gap left by the Supreme Court’s decision, and it does so in a way that aims to reduce the burdens associated with occupational licensing.

“The most important feature of this bill is its recognition that occupational licensing should be a regulation of last resort,” said Lee McGrath, legislative counsel at the Institute for Justice. “The bill identifies numerous less restrictive alternatives to licensing, and it urges state officials to consider those alternative before imposing licensing.”

Under the bill, states would have a choice between two alternative paths to reform. One path would charge state officials with reviewing new and existing licensing restrictions; if a state took this path, individuals charged with violating licensing laws would then be able to defend themselves in court on the ground that the licensing restriction is not truly necessary.

The second path, meanwhile, would charge state courts with reviewing licensing laws. If a state took this path, anyone subject to a licensing restriction could sue to challenge the restriction in court on the ground that the restriction is not necessary to advance a real and important government interest.

Occupational licensing has increased dramatically in recent decades. In the 1950s, only one in 20 U.S. workers needed the government’s permission to pursue their chosen occupation, whereas today that figure stands at almost one in three. A 2012 report by the Institute for Justice, License to Work, surveyed license requirements for 102 low- and moderate-income occupations and found that, on average, these licenses forced aspiring workers to spend nine months in education or training, pass one exam and pay more than $200 in fees.

Find out more about occupational licensing at OccupationalLicensing.com.

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