In state capitals across the country, a new year signals the start of a new legislative session. And this opens the door to new rules affecting state regulatory and occupational licensing boards and the practitioners they regulate. Although the legislative process has a reputation for moving slowly, that isn't always the case. To make sure your occupational licensing board and industry stakeholders aren't caught off-guard at the start of the year, consider tracking and preparing for these ten anticipated trends in the current state legislative session.
1. Worker Mobility Legislation: Consider Interstate Practice and Reciprocity Frameworks
In July 2021, President Biden signaled a renewed focus on occupational licensing requirements through Executive Order 14036, Promoting Competition in the American Economy. The EO aims to facilitate a more competitive marketplace and improve consumer choices, services, and prices by examining requirements that may impede the ability of workers to find and switch jobs and move between states, such as overly burdensome occupational licensing requirements, among many other directives. As one way to address the impediments to worker and economic mobility, for example, the Federal Trade Commission is "encouraged" to exercise its rulemaking authority to ban "unfair occupational licensing restrictions." But this is an issue larger than just one agency. The EO specifies a "whole-of-government approach" to address unfair competition in the marketplace.
Although the EO directives primarily affect federal agencies, state legislatures may also consider changes to their occupational licensing regimes to meet this objective. This may mean closely examining professions or occupations that are not regulated consistently across all 50 states, because this makes it harder to for people to move between states, and even proactively advancing legislation to relax some licensing requirements to promote interstate mobility. To anticipate areas ripe for legislative action, state regulatory bodies and national associations for those professions should examine whether their professions' rules are relatively uniform across the United States. Furthermore, this is the time to consider whether existing reciprocal licensure provisions truly facilitate interstate mobility for licensees, or how industries can coalesce around improving this framework on a multistate basis.
2. Antitrust Concerns: State Regulatory Boards Comprising Active Market Participants Should Heed N.C. Dental
Increased federal antitrust enforcement may also be on the horizon. Because antitrust is inherently a cross-state issue, this should be a state-level concern, too. The EO reiterates the Biden administration's priority of enforcing antitrust laws "to combat the excessive concentration of industry, the abuses of market power, and the harmful effects" of industries or markets where limited numbers of buyers and/or sellers have concentrated power.
Extrapolating from this, the Biden administration may set a renewed (or continued) focus on how occupational licensing regimes may contribute to the consolidation of market power. State licensing boards' actions came under judicial scrutiny most prominently in North Carolina State Board of Dental Examiners v. Federal Trade Commission (2015). However, the FTC has not given up this cause, and as recently as September 2021, the agency secured a settlement from the Alabama Board of Dental Examiners for fairly familiar reasons. Thus, state licensing bodies, especially those that have members who are market participants, may consider reviewing their structure, level of state supervision, and adherence (or not) to express state policies to help guide their legislative priorities and advocacy in 2022.
3. Diversity, Equity, and Inclusion: Time to Reflect and Act
The Biden EO also notes that "many occupational licenses are critical to increasing wages for workers and especially workers of color," while in the same paragraph raising the administration's concerns with worker mobility and the purported role that occupational licensing plays in market consolidation. Outside of the federal context, industry groups, professional associations, and other interested parties are seizing the moment to consider how eligibility rules, educational requirements, and other licensing criteria may unfairly limit the entry of otherwise qualified workers into a licensed field. Legislative, regulatory, or industry-wide responses to these issues may be prudent. In an era of increasing worker bargaining power, those disenfranchised by seemingly antiquated requirements (e.g., only certain traditional education pathways; accepting training only when performed under the supervision of particular persons who may not work within a geographic area; etc.) may find their voice to challenge certain licensing requirements as arbitrary or overly burdensome. To get ahead of the issue, state boards and professional organizations should consider, with open eyes, whether the requirements of the status quo truly—and narrowly—serve their purported purposes.
4. Repeal of COVID-19 Modifications Affecting Occupational Licensing: What to Toss
State legislatures and regulators worked quickly to make necessary changes to professional and occupational licensing regimes in response to the challenges presented by the COVID-19 pandemic. Some states and professional boards implemented virtual licensure testing systems, postponed license expiration dates, and waived license renewal fees because of COVID-19 hardships for certain practitioners. But as the country strives to return to "normal," these changes—which were, in many cases, intended merely as stopgaps—may be rolled back.
Some rollbacks will be straightforward. Various states implemented pandemic-specific rules with predetermined sunset provisions or termination dates, such as those tied to the expiration of gubernatorial emergency orders or other preset dates (e.g., a few years out into the future, like this Pennsylvania law affecting liquor license eligibility in response to the unique struggles of the restaurant industry during the pandemic). Other rollbacks will stem from present, affirmative decisions of legislatures to target and repeal pandemic-specific policies without established sunset dates.
5. Permanent Adoption of Select COVID-19 Changes: What to Keep
Although some COVID-19 accommodations may be retired, the reverse may also be true. Some pandemic-inspired changes may prove to be commonsense solutions that will improve efficiencies and safety for practitioners and/or their clients in a post-pandemic world. As a result, legislators may introduce measures to make certain changes permanent. Though not related to occupational licensing, a now-permanent change to New York's not-for-profit corporation law may serve as a blueprint for temporary-made-permanent COVID-19 accommodations (the state legislature initially authorized not-for-profit corporations to hold virtual membership meetings only until the end of 2021, but new legislation has removed the sunset provision, making this change permanent). State regulatory bodies and their associations may consider identifying COVID-19-specific rules they like, or dislike, to shape their focus in 2022.
There is one licensing regime in particular that may garner more discussion in statehouses and has an uncertain future: telemedicine. Telemedicine involves remote consultation with patients, which is, by almost all accounts, a marked improvement for patients. But this has forced lawmakers and regulators to grapple with the geographical limitations of applicable licensing rules. When a medical professional consults across state lines, it can create licensing confusion, which some states have enacted emergency regulations to address (more on that below). Stakeholders with a newfound need or ability to practice their professions remotely should anticipate legislation and debate over this issue in the upcoming legislative session.
6. Shifts in Emergency Authority: Be Wary of Competing Authorities
In 2020 and 2021, various states passed legislation radically reapportioning emergency rulemaking authority. Some curtailed their governors' ability to make emergency rules, while others expanded gubernatorial authority and oversight over emergency decisions. We may see similar trends in the 2022 legislative session. Regardless of whether these changes directly focus on occupational licensing, stakeholders should be wary of unintended consequences that may result from large-scale shifts in emergency rulemaking authority, because, in part, regulatory boards with emergency rulemaking authority may find that broadly worded emergency authority statutes could subject certain board decisions to gubernatorial oversight, even if these consequences are unintended. Stakeholders should therefore review emergency authority statutes with an eye to future regulatory board autonomy. Next year may also present an opportunity for state regulatory bodies to reevaluate their own rulemaking authority to identify areas where they may have to seek new legislation or where there may be latitude to implement changes without legislative action.
7. Universal Licensing Proposals Are Likely to Continue: Be Prepared to Respond
Many state legislators and interest groups have proposed and considered one-size-fits-all reciprocity bills to address calls to improve interstate license mobility. These proposals, commonly referred to as "universal licensing" bills, generally overlay uniform reciprocal licensure criteria on existing licensure requirements for numerous regulated professions, regardless of each profession's respective educational, examination, and experiential requirements, or their existing reciprocity rules. This trend is not likely to subside in 2022.
A new, universal reciprocity pathway can be a double-edged sword. It may ease interstate mobility for occupations or professions that do not already have relatively uniform and well-functioning reciprocal licensure rules. But in many cases, a universal licensing regime may complicate, duplicate, or dilute existing rules by layering an untailored licensure pathway on top of reciprocity criteria carefully developed by licensing boards with refined expertise. In some cases, these rules' one-size-fits-all nature can render them simultaneously overinclusive and underinclusive, keeping out some qualified applicants while requiring boards to grant licenses to unqualified or underqualified applicants. Interested parties should monitor their statehouses for these proposals and reflect on their own processes, to be prepared to respond with edits to fine-tune these measures.
8. Scope-Dependent License Portability Proposals: Watch for Undercutting
Some reciprocal licensing proposals include portability requirements that compare the scope of practice authorized by an applicant's existing license in another state, instead of comparing the applicant's specific credentials (i.e., education, examination, and experience). Ideally, reciprocity rules will be appropriately tailored to allow qualified professionals to transfer licenses to new states while ensuring that those professionals are qualified to provide their services in their new state.
However, these scope-based proposals force state regulatory boards to grant reciprocal licensure to applicants merely because they hold a license in another state in a similar profession, even if the other state has more lenient requirements to obtain the "equivalent" license. Scope-focused reciprocity may endanger the public's health, safety, and welfare if unqualified or underqualified individuals are granted a license to practice. It may lead to forum shopping for those underqualified applicants. Licensing boards and stakeholders should analyze proposals that tie reciprocal licensure to the applicable scope of practice, rather than to concrete qualifications, and carefully consider whether such a regime is appropriate, considering the technical expertise required for their respective professions and occupations, or necessary to protect the health, safety, and welfare of citizens employing those professionals.
9. Sunset Provisions: Stay Apprised of Upcoming Deadlines Affecting Your Profession
In addition to sunset provisions embedded in pandemic-specific measures discussed above, new sunset legislation, whereby regulations automatically expire after a certain date or are possibly repealed after mandatory, periodic reviews by government authorities, should be top of mind for licensing boards. Regulatory boards rely on statutory authority to make and enforce their rules. Thus, regulatory boards should remain aware of legislation that threatens to sunset occupational licensing rules and, if these types of rules are already in place, thoroughly analyze whether any important provisions may expire in the coming year(s). Depending on the provisions to be sunset, licensing boards may wish to seek legislative remedies to extend or eliminate these sunset provisions—or create a contingency plan in case legislative deadlock causes an expiration of an important statutory provision.
10. Be Careful What You Wish For!
A legislative session can be a convenient time to modernize licensing statutes by fixing lingering issues, correcting drafting quirks, or conforming licensing requirements to those set by standard-setting bodies. But stakeholders should carefully consider the decision to propose amendments to licensing statutes. Proposing a statutory change may be the only way to address certain statutory problems, but stakeholders should be wary of "unfriendly" amendments, which might create more problems than were originally present. Turning a licensing statute into a legislative issue may invite unwelcome solutions that could jeopardize licensing board autonomy.
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Venable attorneys have unmatched experience navigating the issues addressed here for our clients. For more information or specific advice for your organization, please contact the authors.