Examining Professional Licensure Risks

Brian Carnahan

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April 1, 2019



More than 30% of workers in the United States are required to have a government-issued license to practice their profession. These professionals range from accountants to hair stylists to social workers. In fact, few sectors of the economy are untouched by occupational licensure. While the public may benefit from these mandated professional standards, individuals and businesses employing such professionals are exposed to a number of risks related to licensure.

Occupational licensure exists ostensibly to protect the public from persons unqualified to practice a profession. This can be accomplished through practice protection, in which the law allows only licensed persons to perform certain work, or via title protection, where only certain persons may call themselves a practitioner of a profession. No matter the means of facilitating this public protection, occupational licensing ensures the professional in question follows a code of ethics, earns continuing education, and renews the license on a regular basis.

It is important to note that a license is different than a credential. A license is issued by a government agency and is required in order to practice certain professions. A credential is issued by a non-governmental body and is not legally mandated.

Given the prevalence of licensure, many businesses that employ licensees are exposed to risks that may go unmanaged or are managed in an ad hoc manner. Some of the risks related to licensure include:

  • License violations. Individuals can be disciplined for practicing without a valid license, or for violating the code of ethics. Violation of laws and rules related to scope of practice and license title can result in sanctions for the licensee.

  • Disqualified payments. In the health care setting, public and private insurers may disallow payments for services if it is determined the provider was not appropriately licensed.

  • Reputational issues. Investigations of licensees can lead to stories in the media coverage that do not portray the business in a favorable light. While the individual may be responsible for maintaining his or her license, the general public will want to know why a reputable company would allow unlicensed personnel to perform tasks reserved for licensed professionals and raise questions about the overall competence of the business. Such stories can also make it more difficult to recruit future qualified staff.

  • Legal action and related costs. Those who may have been harmed by unlicensed practice can seek relief through the courts. While such actions may not be successful, defending against such claims can be expensive, particularly as a licensee is often held to a higher standard.


Mitigating Licensure Risks


Businesses that employ licensed workers can take several steps to mitigate their risks. First, be clear on the law when hiring licensed professionals to do work. It is important to become familiar with scope of practice for each specific license type employed in the workplace. What may seem like a minor duty may actually violate the scope of practice of a profession, particularly in health care-related professions.

Exercise caution when selecting job titles. While a specific title may make sense for the job duties, calling someone a social worker who is in fact not licensed as a social worker can create legal issues.

Verify the license of all persons hired for a job requiring a license, and maintain a system for tracking licensure. Licenses generally must be renewed annually or biannually, which usually involves paying a fee, attesting that one is still qualified to practice (meaning they are not impaired or recently convicted of a crime, for example), and completing continuing education.

Establish internal policies for routine verification in conjunction with the licensing board’s renewal timeframes as well as intermittently. Several options exist to assist employers of licensed professionals. The business can rely on an internal process maintained through a compliance department or human resources department. This can either require submission of licensure by the licensee or internal verifications. Such compliance work can also be contracted out to a third party.

Ensure licensees maintain appropriate liability insurance. While determining who pays for such insurance is between the employee and employer, it can be helpful when a licensee faces a complaint and will require the services of an attorney to represent them. An important factor to consider regarding complaints is that a submitted complaint is not evidence of wrongdoing on the part of a licensee.

Partner with employees to meet their licensure needs. Many licensed professionals must earn continuing education. Doing so can involve spending time and money outside of work hours. Employers that wish to mitigate risks from licensure issues can help by supporting licensees in earning continuing education. This could involve hosting training, providing reimbursement or offering time off for training.

Recognize that licensees must work under a code of ethics that requires them not only to observe certain standards, but also likely mandates that they report other similarly licensed persons when they become aware of an ethical violation. Many codes of ethics also require self-reporting of violations. Since public exposure can create some issues internally as a company seeks to address concerns identified during reporting, consider an internal policy that requires self-reporting to human resources or a compliance department as licensing-related complaints are brought to the licensing agency by the public.

While professional licensure provides protection for the public, it can also create risks for employers and license holders. By being aware of these risks and implementing practices to mitigate them, employers can ensure licensed professionals remain a productive part of business operations.

 
Brian Carnahan is executive director of the State of Ohio Counselor, Social Worker, and Marriage and Family Therapist Board.