What is a Professional License?
A professional license is a government-issued authorization to a qualified person to practice a particular trade within a jurisdiction. The United States Bureau of Labor Statistics estimates that more than 43.7 million Americans currently possess an active professional license. In many instances, these professionals also possess a separate business license, which is usually a requirement for conducting business in a specified geographical area. State and local government authorities typically mandate licensing of professionals within their jurisdictions to regulate the activities of these individuals and also to protect local consumers from unscrupulous or fraudulent professionals.
Consequently, it is important before hiring an individual to require and verify their professional license and business license numbers. For example, according to the New York Post, one in every three American homeowners have fallen victim to unverified professionals, losing an average of $12, 434 to such contract scams. Note, hiring someone without the appropriate license may not only save you the financial liabilities of being scammed but also civil liability from being sued by injured workers on your site.
Why Is a Professional License Important?
Over 1,100 occupations require licenses in at least one state in the US. The issuance of professional licenses is an important regulatory function of government authorities to standardize the practice of any profession in their jurisdiction. By this, they ensure only qualified individuals who have successfully completed specific education, exams, and years of work experience, are allowed to offer their services to the public. By ensuring that only qualified professionals are issued licenses, these government authorities protect members of the public from any liability that may arise from working with untrained individuals who are not conversant with established principles of their trade.
Note that some categories of professionals may obtain certifications and other additional credentials to further demonstrate competence or specialized knowledge in a specific trade. While licensing and certification are both important professional regulatory tools, the key difference between the both of them is that licenses are typically issued by governmental agencies while certifications are typically issued by nongovernmental bodies. As such, certifications are usually not mandatory, and professionals without them can still legally provide their services to members of the public, except in certain situations where the professional provides a service that has a significant impact on public health and safety. For example, asbestos professionals and lead-related professionals are both statutorily required to undergo approved training and accreditation.
When licensing professionals, government authorities seek to achieve these three main functions, which are:
Regulation: is the primary reason government authorities license professionals within their jurisdictions. Through licensing, government authorities can keep track of these professionals, make sure that they comply with the regulatory requirements of their respective professions, and weed out unqualified individuals.
Safety: Safety is another key reason for the licensing of professionals. It is estimated that approximately 340 million occupational accidents occur globally every year, with about 2.3 million of these accidents resulting in fatalities. In the United States alone, the Bureau of Labor Statistics estimates that about 2.8 million non-fatal work-related injuries and 5,333 fatal work-related injuries occurred in 2019. Mandating professionals to have a minimum level of education or training before providing their services to members of the public ensures the safety of consumers. For example, construction-related professionals are required to be knowledgeable about all relevant federal, state, or local building codes in their areas of practice. These professionals are usually tested on their knowledge of these codes and other building technicalities before being issued licenses.
Consumer Protection: Having the right education and work experience for a specified trade is not enough to ensure satisfactory service delivery. Professionals must also interact with consumers honestly, fairly, and within a specified code of ethics. To this end, licensing authorities in every jurisdiction typically require these professionals to be knowledgeable in consumer relations, business ethics, and best business practices of their professions. This knowledge is also tested during licensing examinations, and professionals that are subsequently issued licenses are required to retain the lessons and utilize them when dealing with clients. Failure to do this can result in several disciplinary actions and penalties, such as citations, fines, license suspensions, and license revocations.
Other benefits of professional licensing to members of the public include:
- It provides a level of assurance in the qualification and skill set of the professional.
- It reduces the risk of physical and financial liabilities on the part of the consumer. This is because licensed professionals are typically more trained and experienced than unlicensed professionals and are also more likely to be insured and bonded.
- It ensures that professionals stay up to date with the latest developments in their respective fields through methods like periodic license renewals and continuing education requirements
- It increases the chances of recourse in situations where the professional fails to provide the agreed-upon service
How Are Professional Licensure
The licensing and regulation of professionals in the United States is generally handled at the state and local government level by relevant authorities - usually the licensing boards. These licensing boards are authorized to set the standards of practice for admission into specified professions. These standards include the minimum qualifications for practicing a profession and the requirements that must be met by individuals that wish to obtain and maintain licenses for these professions. Note that certain industries, such as alcoholic beverage, aviation, fish and wildlife, and agriculture-related industries are regulated at the federal level, and professionals in these industries are required to obtain licenses from relevant federal agencies in addition to any required state or locally-issued licenses.
The level of regulation and the specific requirements for obtaining a professional license is primarily dependent on the profession in question and the location of the applicant. For example, professionals like accountants and lawyers, as well as health and lifestyle-related professionals like physical therapists, psychologists, and automobile repair and maintenance professionals, are typically regulated at the state level across the United States. These professionals are typically required to have a minimum number of years of education and pass requisite examinations before obtaining licenses. For instance, lawyers are required to have a combined total of no less than seven years of education and pass a state-administered bar examination before being issued licenses. Similarly, clinical psychologists are required to have a minimum education qualification of a doctoral degree and pass the Examination for Professional Practice in Psychology administered by the Association of State and Provincial Psychology Boards before they can obtain licenses.
On the other hand, the regulation of professionals in the construction industry is a bit trickier. In some states, such as Illinois, Missouri, and New York, construction-related professionals are regulated at the local level, while states like California, Florida, and Michigan have state-level licensing boards that regulate the activities of these professionals. Likewise, some states like Texas, Oklahoma, and Iowa have multiple licensing boards for different categories of construction professionals, while others like Tennessee, North Dakota, and Mississippi only require the licensing of construction professionals that handle jobs worth a particular amount of money.
Some licensing boards also issue different categories of licenses to professionals within the same occupational group. This is usually evident in the construction industry, where licensing boards typically issue licenses based on the type of work to be done. The categories of professional licenses issued by construction-related licensing boards can be grouped into the following broad classifications:
- General Contractor License: This type of license is typically issued to construction professionals that are responsible for overseeing the day-to-day running of construction projects and the management of other subcontractors. In many cases, individuals that wish to obtain this classification of license are not required to sit for technical examinations.
- Subcontractor License: This type of license is typically issued to construction professionals that are hired to perform a specific job. This includes carpenters, painters, solar panel installers, masons, and concrete contractors.
- Specialty License: While this license category is sometimes used interchangeably with subcontractor licenses, specialty licenses are usually issued for construction-related professions that require specialized knowledge and skills. Specialty license issuance requirements are usually more stringent than those of general contractor or subcontractor licenses. Examples of construction professionals that usually require specialty licenses include electricians, HVACR contractors, and plumbers.
Because professional licensing is usually the purview of state and local governments, professionals that are licensed in one jurisdiction will typically have to undergo separate licensing if they wish to practice in a different jurisdiction. However, some jurisdictions have reciprocity agreements that allow professionals licensed in a particular area to practice in certain specified areas without having to obtain a separate license from the relevant licensing board of that jurisdiction. Note that the requirements for these licensing reciprocity arrangements vary widely and are determined by the licensing boards and professions involved. For example, the New York State Board of Law Examiners has a reciprocity arrangement that allows for the admission of lawyers from over 30 states into the New York State Bar without requiring them to pass its state-administered bar exam. Likewise, the California Contractors State Licensing Board has a reciprocity program that allows certain types of construction professionals with valid licenses obtained in the States of Arizona, Louisiana, or Nevada to apply for professional licenses in California without writing the trade portion of the state’s licensing exam.
Finally, it should be noted that professional licenses typically have expiration dates, after which they must be renewed to remain valid. The validity of a professional license generally depends on the profession in question and the licensing authority that issued the license, and it can range from one year to three years or more. Also, some professionals will be required to complete mandatory continuing education related to their fields and show proof of this completion before their licenses can be renewed. This is typically done to ensure that professionals remain up to date with the latest developments in their respective fields, thereby ensuring that consumers continue to receive optimal service delivery. You can contact your local consumer protection agency to get information on license reciprocity, license renewals, and other licensing-related matters concerning professionals in your area. Queries can also be directed to the licensing board that oversees the activities of the professional of interest.
How to Check a
It is always in your best interest to verify the licensing status of any professional that you intend to hire before concluding any payment agreements with this individual. Licensed professionals are better trained and skilled than their unlicensed counterparts, and are also typically bonded and insured. All these increase the chances of a successful outcome to your project while also ensuring that you are financially protected in the event of unforeseen occurrences during the course of said project.
Professionals are typically licensed at either the state or municipal level, depending on your location and the type of professional. Regardless of this, licensing boards at both levels generally provide various options through which interested members of the public can verify the licenses of the professionals regulated by them. These options include, but are not limited to, phone numbers and emails that verification requests can be directed to, and online search tools that can be utilized to confirm the licensing status of these professionals. For example, members of the public that wish to retain the services of lawyers can confirm that their intended lawyers have been duly licensed to practice in their state of residence by contacting the appropriate state bar association. Similarly, residents of California can verify the licenses of professionals in the state by utilizing the DCA online license search tool provided by the California Department of Consumer Affairs, while interested parties in New York State can confirm professional licenses via the state’s Office of the Professions’ online verification search portal.
If you are unsure about the licensing board responsible for regulating the activities of your intended professional, you should consider contacting your state or local consumer protection agency to provide you with information on this board. These agencies can also direct you to available online resources that you can utilize to confirm the licensing status of professionals in your area of residence.
What Are the Penalties for Operating a Business Without a Professional License?
Practicing a profession or operating a business without obtaining or maintaining an appropriate license is against the law in the United States and offenders can face a range of consequences, including criminal and civil penalties. Some of these consequences include:
- Administrative fines
- Arrests and incarceration
- Cease and desist orders and forced business closure
- Probations and suspensions
- Loss of reputation
- Restitution to consumers
Note that the exact nature and severity of these consequences are typically dependent on the jurisdiction where the offense occurs, the profession in question, and the applicable laws in this jurisdiction. For example, in New York State, practicing without an appropriate state-issued license is a class E felony, while the unauthorized use of a professional title is a class A misdemeanor. Both of these offenses are punishable by civil penalties of up to $5,000 per violation, as well as other criminal penalties. Similarly, individuals that advertise themselves as Certified Public Accountants in Washington State without having first obtained a license from the state’s Board of Accountancy can face a penalty of up to $30,000 in fines, imprisonment of up to six months, or a combination of both. In California, construction professionals that operate without a valid license can face a misdemeanor charge, which is punishable by a penalty of up to $5,000 in fines, six months in jail, a combination of both, and administrative fines of $200 - $15,000. Repeat offenders face a more severe penalty of a mandatory 90-day jail term and a fine of either $5,000 or 20% of the total cost of the project that was worked on without a license.
Note that in areas where professionals are licensed and regulated at the municipal level, local licensing boards may also stipulate additional penalties for practicing without a license within their respective jurisdictions. As such, it is advisable to contact your local consumer protection agency to get information on the penalties for unlicensed professional and business practices in your area of residence. You can also report suspected violations of your state or local licensing laws to these agencies.
Professional Licensesby States
- New Hampshire
- New Jersey
- New Mexico
- New York
- North Carolina
- North Dakota
- Rhode Island
- South Carolina
- South Dakota
- West Virginia