New Bill Would Overhaul Licensing Laws in Washington, D.C.

Arlington, Va.Yesterday, July 12, 2016, Sens. Mike Lee (R-UT) and Ben Sasse (R-NE) senator-mike-leeintroduced sweeping legislation that takes aim at occupational licensing in Washington, D.C. If enacted, their bill, the ALLOW Act, would greatly expand economic opportunity in the nation’s capital and would create a model for states to follow.

“Occupational licensing has exploded in recent years,” said Robert Everett Johnson, an attorney at the Institute for Justice who previously testified before Congress on licensure. “Back in the 1950s, only one out of every 20 American workers needed a license to do their jobs. Today, almost one-fifth of the District of Columbia’s workforce is licensed.”

As explained in a recent White House report, many occupational licenses do not protect the public, but instead enrich industry insiders. The threats to consumers and workers are only magnified when these licensing laws are enforced by self-interested regulatory boards, as the U.S. Supreme Court ruled last year in North Carolina State Board of Dental Examiners v. Federal Trade Commission.

Under the proposed bill, regulators in the District of Columbia must adopt the “least restrictive regulations necessary to protect consumers.” Licensing alternatives range from market competition and industry or consumer-created reviews and ratings as the least onerous to bonding, government registration and voluntary certification as the most restrictive. Regulators should adopt occupational licensing only when all of these alternatives prove inadequate.

Importantly, the bill does not direct officials in Washington, D.C. to eliminate any particular occupational license or to adopt any particular form of regulation. Instead, in order to create a framework for locally-driven reform of the city’s occupational licensing laws, the bill would:

  • Establish an independent oversight office that would review and approve or reject rules, policies, enforcement actions and other regulations by licensing boards. Residents in Washington, D.C. may file complaints with this office about regulatory actions.
  • Create a vigorous sunrise review process under which members of the City Council would scrutinize proposed occupational regulations to determine if they would be the least restrictive. This review process would also examine the regulatory impact on worker opportunities and consumer choices and costs.
  • Similarly, starting in 2018, the bill would begin a sunset review process by members of the City Council. Each year thereon, about one-fifth of all of the city’s occupational regulations would be evaluated to see if they comply with the new law.
  • Allow workers to assert an “affirmative defense” if they have been subject to occupational regulations that “substantially burden” them. The government then must show that the regulation advances an “important government interest” and that the regulation is in fact “the least restrictive means” to further that interest.

Outside of Washington, D.C., the bill would also allow licensed individuals to work across state lines on federal military installations, provided their license has not expired or been revoked or suspended. This would better promote interstate mobility and would particularly benefit military spouses.

“If an occupation must be regulated, lawmakers have many regulatory alternatives to licenses,” said Lee McGrath, legislative counsel at the Institute for Justice. “Similar to speech regulations, legislators and licensing boards should choose the least restrictive regulations to protect consumer health and safety.”

A 2012 report by the Institute for Justice, License to Work, found that the average license for low- and moderate-income occupations in the District of Columbia requires $240 in fees, 311 days of training and education and passing one exam. In the nation’s capital, interior designers, HVAC contractors, midwives, barbers, manicurists and massage therapists all need more training for their licenses than emergency medical technicians do.

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