Virginia’s Senate Bill 826 would reduce uncertainty associated with occupational licensing approvals

Approximately one in five Virginia workers are required to hold an occupational license to do their job, yet the licensing requirements often present unnecessary barriers for prospective workers. For individuals with prior convictions, these barriers are compounded by uncertainty over whether their record might disqualify them from obtaining a license. Senate Bill 826 would build upon Virginia’s recent occupational licensing reforms and empower more Virginians to reenter the workforce. The legislation passed with unanimous support in both chambers of the Virginia General Assembly and is currently awaiting Gov. Glenn Youngkin’s signature. He should take the opportunity to sign the bill into law.

An occupational license is essentially a government-issued stamp of approval to work in certain regulated occupations, such as a barber, cosmetologist, real estate agent, or construction contractor. Obtaining an occupational license generally involves fulfilling training and education prerequisites, paying applicable fees, and formally applying to a licensing board for evaluation.

Occupational licensing is intended to protect consumers by setting minimum standards, but research suggests it often has little to no effect on quality. Instead, licensing can create arbitrary barriers to entry, limit the labor supply, and raise costs for consumers. While existing license holders may benefit from reduced competition, consumers and prospective licensees suffer from higher prices and reduced labor market fluidity.

Of course, an applicant’s prior convictions may be relevant to licensure decisions, but applicants shouldn’t be automatically disqualified because of a prior conviction that bears no relation to the duties and responsibilities of the occupation. The good news is Virginia law currently requires individualized consideration for each applicant to determine whether their conviction record is directly related to the occupation. This is broadly a fair approach, and most states have adopted similar frameworks.

But there’s a problem in Virginia: people with convictions don’t know if their record disqualifies them until they’ve completed all the licensing requirements and submitted their application. This uncertainty creates a barrier to entry and can waste applicants’ time and money.

If signed, Senate Bill 826, introduced by state Sen. Mamie Locke (D-23), would establish a process to determine eligibility before applicants complete their education and training. This is a common-sense reform to the license approval process that would improve the customer experience of license applicants. Twenty-five other states have already adopted predetermination processes like the one established in SB 826 to provide clarity to prospective applicants on the front end.

SB 826 passed in the Virginia Senate on Feb. 3 and passed in the Virginia House of Representatives on Feb. 18. It is uncertain whether Youngkin will sign the legislation, in part due to a fiscal impact statement indicating that “the bill will create additional expenditures for which the Department of Professional and Occupational Regulation (DPOR) is not currently appropriated.” However, the anticipated fiscal impacts are largely based on a questionable assumption that SB 826 would greatly add to the current workload of DOPR and other agencies. According to the fiscal impact statement:

DPOR may need to increase staffing levels to process the requests, support additional board meetings, and hold additional hearings depending on the number of predetermination requests. According to the agency, approximately 250 determination hearings are currently held on average for applicants across all the agency’s board [sic], which represents fewer than ten percent of all applicants with some form of criminal record. DPOR anticipates that as a result of this bill, that number would increase significantly because individuals would no longer have to complete the application process or pay application fees before requesting a determination.

Assuming the number of hearings doubles to 500, which the agency considers a low estimate, DPOR indicates that an additional three legal hearing officers, one administrative coordinator, one court reporter/transcriptionist, and one supervisor/presiding officer would be required at an annual cost of $740,000. Without these additional staff and a doubling of the number of hearings, DPOR estimates that the current backlog of 145 days to complete a hearing would extend to 280 days. Additionally, administrative and overheads costs associated with a hearing average approximately $800, resulting in an additional $200,000 annually.

DOPR’s projection that SB 826 could more than double the number of determination hearings is remarkably high, perhaps overly so.. Data from other states suggest more modest expectations are in order. For example, Ohio licensing boards received just 215 predetermination requests in the first two years of implementation, compared to the 293,551 license applications approved by Ohio boards over that period. While 215 predetermination requests might seem like a relatively low number, they provided valuable clarity to the people who submitted requests. Seventy-seven out of those 215 people were determined to have disqualifying records. Without the predetermination process, those 77 people would have otherwise needed to satisfy all the other requirements for a license and submit an application only to find out that their conviction record was disqualifying.

Rather than flooding DPOR with new requests, SB 826 would primarily shift the timing of the roughly 250 determination hearings that already occur each year. Because predeterminations made under SB 826 would be binding, subsequent hearings would not be required unless an applicant was convicted of another crime between their predetermination and applying.

Although a dramatic increase in determination hearings is unlikely, DPOR’s claim that 250 additional hearings would require six new employees and nearly $1 million annually suggests that Virginia’s process for reviewing conviction records is substantially more intensive and inefficient than in other states. DPOR currently holds 250 fact-finding hearings in cases where license applicants have a potentially disqualifying conviction record. DPOR says that 90% percent of applications that require a hearing are ultimately approved, suggesting that many of those hearings are not necessary.

SB 826 leaves DPOR with broad discretion regarding the details of implementation, so the agency has the flexibility to identify ways of streamlining the predetermination process. Nonetheless, the legislation could be amended to allow a small fee for predetermination requests. Among the 25 states with predetermination processes, 16 allow or require licensing boards to charge fees to cover administrative costs. These fees are most commonly capped at $25 but range from $5 to $100.

Reducing uncertainty for license applicants with criminal records would be consistent with. Youngkin’s broader efforts to expand the state’s workforce through reforms to occupational licensing and other regulatory approval processes. In 2023, Virginia became the 20th state to adopt universal license recognition, allowing people licensed in other states to receive expedited approval to work in Virginia. The reform has already helped over 500 workers with out-of-state occupational licenses join Virginia’s workforce. In a press release, Governor Glenn Youngkin praised universal license recognition, saying:

My administration has worked tirelessly, and we’ve been successful in bringing thousands of Virginians off the sidelines and back into the workforce. But what I hear from businesses of all sizes, large and small, is they need more, they need more workers. Universal license recognition will assist in resolving worker shortages while at the same time benefiting consumers through reduced costs of goods and services.

Youngkin took further action to reduce the burden of occupational licensing regulations in October 2024 by signing an executive order that directs state agencies to streamline regulatory approval processes “to reduce wait times, reduce costs and improve the permit, license, certification, and registration, application processes for Virginians.”

Virginia’s recent reforms are helping to alleviate labor shortages across the state. As the Virginia Department of Occupations and Professional Regulation director, Kishore Thota told Virginia Mercury last year:

One industry that has been particularly hurt by labor shortages is the waterworks and wastewater works operators…Over 10% of the licenses issued under [universal license recognition] have been waterworks operators and wastewater works operators. [Universal license recognition] will continue to provide an easier pathway for qualified operators to come and work in Virginia

However, there is still ample room to improve Virginia’s occupational licensing laws and regulations. Reforms that reduce licensing barriers for individuals with prior criminal convictions could further expand Virginia’s workforce while offering former offenders a second chance. In just the past decade, 40 states (excluding Virginia) have adopted reforms to empower people with prior convictions to pursue productive work in licensed occupations. SB 826 would bring Virginia’s licensing policies in line with the 25 other states that have adopted predetermination processes.

Successful implementation by 25 other states demonstrates that predetermination is a feasible, common-sense solution to the uncertainty associated with licensing decisions. Consistent with Youngkin’s priority of improving regulatory approval processes, SB 826 would save time and money and would reduce frustration for Virginians seeking government permission to work. 

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Source: https://reason.org/commentary/virginias-senate-bill-826-would-reduce-uncertainty-associated-with-occupational-licensing-approvals/