Ohio Governor Signs Landmark Reform of Occupational Licenses

Ohio Gov. John Kasich signed a sweeping overhaul of Ohio’s occupational licensing laws on Friday, which govern nearly one-fifth of the state’s workforce. By limiting the ability of otherwise qualified people to work in a given field, licensing laws limit competition and drive up prices for consumers. One study published by the Institute for Justice found that licensing costs the Buckeye State nearly 68,000 fewer jobs and over $6 billion.

“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. “Thanks to Gov. Kasich’s signature, this licensing reform has the potential to create more economic opportunity and save Ohioans billions of dollars.”

Sponsored by Sen. Rob McColley and Rep. Ron Hood, the new law (SB 255) mandates that all licensing boards expire every six years unless the legislature explicitly reauthorizes them. Before its expiration date, a board will have to demonstrate “a public need for its continued existence” before legislative standing committees. In turn, those standing committees may consider over two dozen criteria in its decision, including if the board is “necessary to protect the health, safety, or welfare of the public” and if its regulations are the “least restrictive” form possible. These “sunset” reviews will evaluate one-third of Ohio’s boards every two years.

Meanwhile, the Legislative Service Commission will issue a report on each bill introduced in the House or Senate that either proposes a new occupational regulation or would “substantially change” an existing one. As with the sunset reviews, the Commission’s “sunrise” reviews will also consider a regulation’s cost-effectiveness, how other states regulate the occupation at hand, and rely on a “least restrictive” framework for analyzing regulations.

“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.”

In addition, SB 255 exempts makeup artists from the state’s cosmetology license, which takes at least 1,500 hours of coursework. The law also lets applicants petition a licensing board to see if their criminal history would be disqualifying, before they complete any required training.

Ohio’s reform follows Nebraska, Oklahoma, and Louisiana, which all enacted sunset reviews last year, and Colorado and Vermont, widely regarded as national leaders for their sunrise reviews.