Examining Professional Licensure Risks.

AuthorCarnahan, Brian

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...

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