“You know I always wanted to pretend that I was an architect.”¹ 

Throughout the run of NBC’s hit series Seinfeld, no one thought more highly of—or more frequently pretended to be—an architect than George Costanza. Thanks to a recent push in some state legislatures, George Costanza could finally realize his dream of being an architect without having to complete any of the requisite education, training or examinations. The threat of professional deregulation has loomed over professional and occupational licensing for the last several years with numerous bills being filed across the country. Tennessee was no exception to this push.

In 2020, two bills were filed in the Tennessee General Assembly seeking to remove the licensing requirements for more than 20 different occupations and professions in Tennessee, including architects, accountants and engineers.² These bills allowed for a member of the public to enter into an agreement for the completion of services that previously required a license as long as the customer acknowledged in the written agreement that the individual performing the work was an unlicensed individual. Additionally, the written agreement released the individual from all liability related to their work performance unless it was determined to be intentional, willful or malicious conduct.³ While these bills were not passed in Tennessee, similar deregulation bills are regularly filed throughout the country to either dilute licensure regulations or to outright remove them.⁴

Arguments have been made on both sides of the issue. Proponents of these bills argue that they would erase barriers to entry, promote greater licensure mobility and improve opportunities to women and minorities. Opponents argue that this legislation conflates occupational and professional licensing and would pose a threat, not only to the professions that are currently regulated by their respective state boards, but also to the public who may rely on the misrepresentations of an unqualified person to their own detriment. Additionally, opponents point out that some states who passed deregulation bills later returned to regulating those professions. Repeated turnabouts by the legislature are time consuming, a waste of resources and may lead to confusion among those seeking licensure and the public at large.

The History and Role of Professional Licensing Boards

Laws regarding professional licensure have existed in the United States since the late 19th century. In 1889, the United States Supreme Court decided the case of Dent v. West Virginia.⁵ In Dent, the State of West Virginia passed the Board Health Act of 1881, which required either a diploma from a medical college, a minimum of 10 years practice or the successful passing of a state administered medical exam.⁶ At the time the statute was passed, Frank Dent had been apprenticing with his father and grandfather for only six years.⁷ Following the passing of the statute, Dent supplied the state with a diploma from the American Eclectic Medical College in Cincinnati, Ohio, which was rejected by the board as not being reputable.⁸ Dent continued to practice medicine in spite of his rejected diploma and was ultimately tried and convicted of unlicensed practice.⁹ The case was eventually brought before the Supreme Court on the grounds that West Virginia had violated Dent’s 14th Amendment rights to Due Process.¹⁰

Dent established that a professional qualification must be determined by the “judgment of the state,” and held the state may set reasonable requirements for the practice of medicine. Justice Field, writing on behalf of the unanimous court stated:

[I]t has been the practice of different States, from time immemorial, to exact in many pursuits a certain degree of skill and learning upon which the community may confidently rely; their possession being generally ascertained upon an examination of parties by competent persons, or inferred from a certificate to them in the form of a diploma or license from an institution established for instruction on the subjects, scientific and otherwise, with which such pursuits have to deal. The nature and extent of the qualifications required must depend primarily upon the judgment of the State as to their necessity. If they are appropriate to the calling or profession, and attainable by reasonable study or application, no objection to their validity can be raised because of the stringency or difficulty.¹¹

Following the Supreme Court’s decision in Dent, the State of Tennessee formed its first licensing board in 1901, the Tennessee Board of Medical Examiners.¹² In the years that followed, numerous other licensing boards were created. To meet the standard established by Dent, Tennessee boards are comprised of licensed professionals, and typically a consumer member, who have been appointed by the governor to serve for a set term. Because these individuals are licensed in their respective profession, they have an intrinsic interest in seeing their board and profession thrive through the implementation of strict standards.

Nearly every licensing board today cites the protection, safety and welfare of the public as its primary purpose. This is the same purpose that was provided in Dent when the court stated, “The power of the State to provide for the general welfare of its people authorizes it to prescribe all such regulations as in its judgment will secure or tend to secure them against the consequences of ignorance and incapacity, as well as of deception and fraud.”¹³

Administrative boards accomplish this by establishing the minimum standards and regulation by which a licensee is expected to practice. These standards may include educational, experiential and examination requirements. As an example, the Tennessee Board of Accountancy requires the completion of 150 semester hours including coursework in specified topics as well as one year of experiential hours of practice in specified areas. Additionally, the Board requires a successful passing of the Uniform CPA Exam¹⁴ and obtaining a 90% on an ethics exam administered by the American Institute of Certified Public Accountants (AICPA) or the Tennessee Society of Certified Public Accountants (TSCPA).¹⁵  The completion of this rigorous coursework is designed to build confidence in the knowledge and skills of an accountant who is being entrusted with a fiduciary duty to adequately and lawfully protect someone’s financial interests.

In addition to the board’s role in establishing the guidelines for practicing in these professions, they also serve as the overseer and guardians of the profession. Within each board’s rules there are standards for practice that every licensee must maintain. In the event these standards are not met, a complaint may be filed, which will be investigated and, if necessary, prosecuted. Successful prosecutions will result in disciplinary action ranging from a reprimand or civil penalties for minor infractions to suspension or revocation for more serious offenses. This disciplinary process serves multiple purposes. It builds public trust in the board and the profession while also protecting the licensees from frivolous complaints by granting them an opportunity for due process in front of their respective licensing agency.

Dueling Arguments on Deregulation

There are multiple arguments to be made on either side of the licensing reform issue. Those in favor of licensing highlight the necessity of licensure to protect the public by increasing the standard for services that are provided. As originally stated in Dent, the protection of the public is a driving force for licensure and a chief interest of the state. In 1945, the United States Supreme Court said:

The modern state owes and attempts to perform a duty to protect the public from those who seek for one purpose or another to obtain its money. When one does so through the practice of a calling, the state may have an interest in shielding the public against the untrustworthy, the incompetent or the irresponsible, or against unauthorized representation of agency. A usual method of performing this function is through a licensing system … .Very many are the interests which the state may protect against the practice of an occupation ...  .¹⁶

Those who have pushed toward deregulation have claimed that licensure is, in essence, an overreach of the government to license occupations that need not be regulated. In support of this argument, critics of licensure point to the increasing number of workers who have obtained licensure. In 2021, approximately 25 percent of those in the workforce had obtained an occupational license.¹⁷ Additionally, critics claim that state licensure, which is presided over by active market participants, serves as a barrier to entry and restricts the competition in the market. The arguments surrounding barrier to entry and the composition of state boards have played a large role in recent state antitrust lawsuits and have contributed to substantial confusion about the scope of a licensing board’s authority.¹⁸ Critics also point to the financial burdens associated with licensure. To obtain licensure, applicants often need to complete educational and experiential requirements that come with significant costs. Applicants must also pass licensure examinations, which come with additional costs and the failure of which could leave someone without anything to show for their time, effort and financial investment. Critics further argue that the current regulatory framework does not promote higher wages and discriminates against women and minorities.

However, some recent economic research suggests that licensure reform would not create the benefits that are suggested by critics. In an opinion piece for Governing, Marta Zaniewski, citing research conducted by the Alliance for Responsible Professional Licensing and the international research firm, Oxford Economics, wrote that licensing results in “6.5% higher wages on average.”¹⁹ She continues to say “The report also found that women and minorities in job fields requiring advanced education and training (architects, CPAs, engineers, landscape architects and surveyors, among others) benefit significantly from licensing. For these workers, the results show that a license narrows the gender-driven wage gap by about one-third and the race-driven wage gap by about half.”²⁰

Additionally, proponents of deregulation often lump together professional licensure and occupational licensure into the same category when pointing to government overreach. However, as those in favor of licensure regulations would point out, this position overlooks a key difference between the two types of licensure. Occupations are, in essence, the means to earn wages and supports one’s livelihood. A profession, however, requires specialized education, training and skill in order to sufficiently perform the requisite responsibilities. It is a stark contrast to argue that professions like accounting or architecture belong within the same deregulation mindset as florists,²¹ upholsterers,²² bartenders²³ or shampooers.²⁴

With this is mind, arguments on both sides of the deregulation issue often overlook the importance of the judiciary in rendering judgments on where a state legislature has erred in its professional and occupational licensing. The role of the judicial review is not designed to render a decision on the “correctness of legislative judgments”²⁵ nor does it “prohibit legislatures from enacting stupid laws.”²⁶ Instead, the judiciary provides a review as to the rationale of the legislature in its passing of the law. In February 2022, the Sixth Circuit stated, “Courts have granted relief in the context of licensing laws that do not have a rational basis for the lines drawn or the burden imposed.”²⁷ On March 23, 2022, the Middle District Court in Tennessee granted a motion for summary judgment ruling that a Tennessee law requiring all auctioneers, including online auctioneers, to obtain licensure was unconstitutional.²⁸ The District Court stated that the licensure requirements for online auctioneers placed an excessive burden on interstate commerce and violated the Commerce Clause of the United States Constitution. While this ruling is limited in scope, it demonstrates that the judiciary is fully capable of halting government overreach when it comes to excessive regulation.

Despite this, some would argue that this level of review is too deferential to the legislature and should be abandoned in favor of a more stringent intermediate scrutiny in cases of occupational licensing.²⁹ The adoption of a stricter standard in cases of professional and occupational licensing would likely prevent the type of government overregulation that deregulators are advocating for while also protecting the public by also ensuring the regulation of professions that actually warrant regulation. This could provide a prudent middle ground for both sides.

A Trend Toward Deregulation and Failure of Previous Attempts at Deregulation

Between 2015 and 2020, seven different states passed deregulation bills, which resulted in the delicensing of 35 professions.³⁰ In the 40 years prior to 2015, the number of occupations in the United States that had been delicensed was eight.³¹ This suggests a trend among state legislatures of a growing interest in deregulation. Currently, there are several bills pending in state legislatures across the United States that are a part of this trend.

In some instances, professional licenses that were deregulated by the state legislature were later reregulated. In Alabama, for example, laws regarding the licensure of barbers were stricken in 1983 only 10 years after the initial licensure laws were passed. In 2000, the state attempted to reinstitute licensure laws for barbers, but the bill ultimately failed. Again, in 2012, the legislature attempted a bill requiring the licensing of barbers in the state. This time the bill was successful, and the licensure law went into effect in 2013. The sponsor of the bill, Rep. Kurt Wallace, said, “In a business where personal services are being administered, there is a duty to make those services safe and sanitary with the highest level of care.”³² Similarly, private investigators were relicensed in Colorado in 2011 following their deregulation in 1977 and attempts have been made to relicense neuropaths in Virginia following their deregulation in 1972.³³

These constant shifts in whether a profession or an occupation should require a license places a burden on the public who may have an interest in pursuing one of these callings as well as those who are seeking to utilize the skills of someone within the profession. The public should not be subjected to the shifting attitudes and whims of a fickle legislature.

Conclusion

In his essay “Resistance to Civil Government,” Transcendentalist philosopher Henry David Thoreau wrote, “That government is best which governs least.”³⁴ Thoreau’s argument is that governments often become corrupted and inefficient to the point that it no longer represents the will of the people. In the context of licensing, this is most evident in the overregulation of occupational licenses. However, in an effort to ensure a more efficient government, we should not immediately discard licensure regulations altogether simply because of a temporary shift in the legislative attitude towards professional and occupational licensure. A review of existing regulations calls for a fact-based approach to render a determination whether an occupation being licensed really warrants regulation.

While there has not been a replacement bill filed for Tennessee’s 2020 deregulation bills, the increase in the anti-regulatory mindset across the country would suggest that there is a shift in legislative attitudes toward both professional and occupational licensure. What remains to be seen is whether the trends of protecting licensure will outweigh the interests in the reduction of or, in some instances, the outright removal of regulations. To be certain, there is a fair amount of overregulating being performed across this country that should be addressed; however, this interest in removing excessive regulations should not come at the expense of public health, safety or welfare. |||

TODD PINCKLEY is a native of Huntsville, Ala. He relocated to Nashville after graduating from the Cecil C. Humphreys School of Law at the University of Memphis. He has held several positions within state and local government including advising professional licensing boards at the Tennessee Department of Health. Currently, he works at the National Association of State Boards of Accountancy (NASBA) providing internal legal assistance while also monitoring legislative changes to support NASBA’s 55-member accountancy boards.

NOTES

1. Seinfeld (NBC television broadcast Feb. 10, 1994).
2. H.B. 1945, 111th Tennessee General Assembly (2020); S.B. 1914, 111th Tennessee General Assembly (2020).
3. Id.
4. It is worth noting that while neither H.B. 1945 nor S.B. 1914 were passed, the Tennessee General Assembly did pass legislation in 2016 entitled the “Right to Earn a Living Act” (HB 2201), which was codified at Tenn. Code Ann. 4-5-501 et seq. This legislation, which went into effect July 1, 2017, requires each agency to submit for review a copy of its entry regulations for a determination of whether they meet established criteria, including whether they are necessary to protect public health, safety and welfare.
5. Dent v. West Virginia, 129 U.S. 114 (1889).
6. Id.
7. Id. at 117-118.
8. Id. at 118.
9. Id.
10. Id. at 121.
11. Id. at 122.
12. Tennessee Board of Medical Examiners, “About the Board of Medical Examiners,” www.tn.gov/health/health-program-areas/health-professional-boards/me-board/me-board/about.html (accessed April 1, 2022).
13. Dent v. West Virginia
14. For the full list of accountancy education, experience and examination requirements, see Tenn. Code Ann. §62-1-106.
15. Tenn. Comp. R. & Regs. 0020-01-.06(7); see also “What are the requirements to obtain a CPA license in Tennessee?,”  TN Commerce and Insurance Customer Service Center, https://tdcihelp.zendesk.com/hc/en-us/https://tdcihelp.zendesk.com/hc/en-us/articles/219989388-What-are-the-requirements-to-obtain-a-CPA-license-in-Tennessee- (accessed April 1, 2022).
16. Thomas v. Collins, 323 US 516, 547-48 (1945).
17. Labor Force Statistics from the Current Population Survey (2021), U.S. Bureau of Labor Statistics, www.bls.gov/ors/factsheet/credentials.htm (accessed April 1, 2022).
18. See N. Carolina State Bd. of Dental Exam’r v. FTC, 574 U.S. 494 (2015).
19. Zaniewski, Marta, “The Dangerous Push to Downgrade Professional Licensing,” Governing (March 14, 2022), www.governing.com/now/the-dangerous-push-to-downgrade-professional-licensing?_amp=true (accessed April 14, 2022).
20. Id.
21. The State of Louisiana licenses Retail Florists as a part of the Louisiana Horticulture Commission.
22. Ten states license upholsterers. See Upholsterer, Institute for Justice, https://ij.org/report/license-to-work-2/ltw-occupation-profiles/ltw2-upholsterer/ (accessed May 10, 2022).
23. Thirteen states license bartenders. See Bartender, Institute for Justice, https://ij.org/report/license-to-work-2/ltw-occupation-profiles/ltw2-bartender/ (accessed May 24, 2022).
24. Thirty-seven states license shampooers. Seven of these states issue a license specific to shampooers. See Shampooer, Institute for Justice, https://ij.org/report/license-to-work-2/ltw-occupation-profiles/ltw2-shampooer/ (accessed May 24, 2022).
25. Minnesota v. Clover Leaf Creamery Co., 449 U.S. 456, 464 (1981).
26. N.Y. State Bd. Of Elections v. Lopez Torres, 552 U.S. 196, 209 (2008), (Stevens, J., concurring) (Justice Stevens attributes the quote to his colleague, Justice Thurgood Marshall).
27. Tiwari v. Friedlander, 2022 U.S. App. Lexis 3977, 14 (6th Cir. 2022).
28. McLemore v. Gumucio, 2022 U.S. Dist. Lexis 52019 (M.D. Tenn 2022).
29. See Alexandra L. Klein, “The Freedom to Pursue a Common Calling: Applying Intermediate Scrutiny to Occupational Licensing Statutes,” 73 Wash. & Lee L. Rev., 411 (2016).
30. Kukaev et al., “The De-licensing of Occupations in the United States: An Update 1/4/2021, Table 2,” American Economic Association (Jan. 4, 2021), www.aeaweb.org/conference/2021/preliminary/paper/6AGniDti (accessed April 14, 2022).
31. Id. at 16.
32. Thornton, Robert J. and Edward J. Timmons, “The De-licensing of Occupations in the United States,” Monthly Labor Review, U.S. Bureau of Labor Statistics (May 2015),
https://doi.org/10.21916/mlr.2015.13 (accessed April 14, 2022).
33. Id.
34. Thoreau, Henry David, “Resistance to Civil Government” (1849). The attributed quote was paraphrased from the motto of The United States Magazine and Democratic Review. A similar statement also appears in the essay “Politics” by fellow Transcendentalist Ralph Waldo Emerson, who wrote “Hence, the less government we have the better… .”