The Senate Committee on Business and commerce heard invited testimony regarding interim charges related to monitoring legislation to deregulate occupational licensing, review of licensing requirements and fees, and social media access.

This report is intended to give you an overview and highlight of the discussions on the various topics the committee took up. It is not a verbatim transcript of the hearing, but is based upon what was audible or understandable to the observer and the desire to get details out as quickly as possible with few errors or omissions.

 

Interim monitoring charge on the implementation of legislation to deregulate occupational licensing.

 

Brian Francis, TDLR

  • 56 initiatives in 2016 included many deregulations
    • many deregulations have already happened but are on the cusp of many more
  • deregulations came out of strategic planning process which include input from many stake holders
  • 22 license types have been deregulated
  • Related to fee changes – $20 million in fee reductions have been implemented
  • Hancock – how many new regulations have been implemented?
    • 19 programs since 2016 – mostly related to health and human services
  • Low-cost, quality enforcement is a goal of the agency
  • Have been working to clarify regulations
  • Recommends
    • Deregulation of mold program – better suited to go back to DSHS
    • Driver education program should not require brick and mortar building
    • Potential dual license for cosmetology and massage
    • Opportunity to streamline in areas that can be moved to an online based system (getting rid of paper versions of notarized forms)
  • Hancock – regarding mold, that was implemented related to insurance requirements and what would the impact be?
    • The impact is an area that would need more evaluation but there is opportunity to make that easier
  • Hancock – noted potential connection to mold remediation

 

Greg Conte, Texas Comptroller’s Office

  • Responsible for SB 2065 implementation

 

 

 

Interim Charge on Licensing and Fees: Review licensing requirements and fees imposed on entities within the committee’s jurisdiction. Make recommendations for state licenses and fees that should be reduced, repealed or transitioned to private-sector enforcement.

 

Matt Mitchell, Mercatus Center – George Mason University

  • Academic economists and others agree that occupational licensure is counter productive
  • Licensure is a barrier to employment
    • Increased 4-fold in terms of number of licenses need3ed for employment
    • Average license requires over a year of training and hundreds to thousands of dollars
    • Noted barber training hours are significant and 4 times as many as EMTs
  • Raised concerns with licensing boards dominated by people within the industry
  • Has an impact on immigrants because of residency requirements
  • 80% of studies reviewed shows negative impact on minorities
  • Consumer safety
    • Licensure may not increase quality – little evidence to show that it does
    • More often increases costs to consumer
  • Sustainable path to reform
    • Establish an independent commission
    • Highlighted Nebraska – requires all agencies to review licensures every few years with an eye on creating the β€œleast restrictive means” to licensure
    • Lower the burden of proof – limit licensure to those which directly effect health, safety, and welfare
  • Estes – you do not think we should get rid of all licensing?
    • No sir, but there is some low hanging fruit
  • Estes – would appreciate a list that tells us what licenses we should eliminate
  • Campbell – what should definitely be licensed?
    • Nurses
  • Campbell – there are things that definitely need license, can appreciate that cosmetology may not be needed
    • Certification may be a feasible alternative to licensure
  • Schwertner – licensure does allow for individuals to seek redress through the board, what would you suggest if we eliminated that?
    • Would be through the court system
  • Schwertner – but the cost of legal action could be far more than the perceived wrong – need to find a way to ensure that consumers have a process for their grievances and complaints
  • Hancock – going back to reversing the burden of proof – the Reins Act in Arizona what impact did you see on the court system in Arizona, if any?
    • It just started last year, so we do not know yet
    • When people are held accountable for harms they might do to others they are already incentivized to behave better and ideally you do not have to get to a court to find that out – applying to regulators themselves. When talking about liability as a potential remedy it also applies to practitioners
  • Hancock – do caps in liability impacting that as well?
    • Not enough data yet, but will likely see something in the near future

 

Arif Ponju, Institute for Justice

  • Texas has more state licensing boards than any other state aside from Alabama
  • Unchecked their action can stifle innovation and employment opportunity without many benefits
  • The Republic of Texas only licensed doctors
    • Currently state regulates over 500 occupations
  • Need to consider what the constitution requires and why it is only license or no license?
  • Texas constitution protect economic liberty rights
  • 2015 – Texas supreme court took up that issue in Patel v Texas Department of licensing and Regulation
    • Ruling struck down attempt by a state agency to force individuals to take 750 hours of cosmetology courses that neither taught or tested the practice they were trying to engage in and get a license for – shaping eyebrows with cotton thread
    • Case established a new test for judging constitutionality of licensing regulations in the due course of law clause – provides more meaningful protections than in any other state
  • Licensing is very restrictive to employment
  • Should consider alternatives to licensure – list provided in written testimony
  • Needs to consider the β€œleast restrictive on economic liberty”
  • Boards that are filled with market participants are liable to antitrust laws
  • Zaffirini – addresses the potential harms of licensing, are there benefits?
    • There are market signals from licensing – that a person is competent and can do the service, alternatives are industry certifications, etc.
    • Recourse for consumers – can also get recourse through court or bad review on Yelp, etc.
    • Should look at other states from ideas on additional ways to get recourse on unregulated industry
  • Estes – what year was it that only physicians were licensed?
    • When Texas was a republic
  • Hancock – mentioned the constitution and how we lead the country in economic freedom, can you provide a list and ranking to the committee related to number of licenses

 

Vance Ginn, Texas Public Policy Foundation

  • People should be able to work in the industry they want to
  • Looking at occupational licensing – Texas is ranked 21st in most restrictive licensing
  • Effect on low income workers is more burdensome – highlighted over 300 days of training for cosmetology
  • 1999-2015 number of licenses increases 400%
  • Recommends review of licenses by experts in set format – 1/3 of licenses each session
  • Criminal justice system and those with criminal record are often kept out of the workforce by limiting access to licenses
  • Noted industry certifications as alternative to licenses
  • Zaffirini – what criteria can we identify to evaluate all licenses?
    • Ponju – many are already considered through sunset process but look through lens of least restrictive licensure. Also recommends looking into more relevant oversight authority than licensing board if applicable
    • Each occupation would have different necessary criteria
    • Mitchell – Nebraska is tasked with review 20% each year – all licenses are reviewed every 5 years – need to gather as much information as possible related to licensing board activities and consider how much time is spend on consumer protection issues
  • Zaffirini – what negative impact has been a result of licensing requirements last session?
    • Ponju – bottlenecking seen during Harvey – can provide list to the committee
  • Zaffirini – do you have specific recommendations?
    • Ponju – active supervision of boards and constant review of licenses
    • Mitchell – looking at each of the three types of reforms laid out in testimony
  • Taylor – also need to consider is additional regulation after disasters – highlighted roofers chasing storms, what do you recommend for that situation?
    • Does every licenses profession do great work every time?
  • Taylor – but there is a way to track them if there is a license
    • Ponju – difficulty is that those scammers are not likely to get a license anyway, but what other market signals can be sent – certification or bonding would be options
  • Taylor – noted bonding could be more restrictive than licensure
    • Ponju – roofing association’s voluntary certification would be a huge market signal – statewide registration would be another option that would better for tracking them anyway
  • Need to be careful of limiting entry into an industry based on the worst-case scenario
  • Taylor – would like help solving this issue
  • Campbell – need a model to answer scams that happen in the most significant disasters and we need a way to protect Texans in those instances
    • Ponju – most licenses come with worst case scenario – need to look at empirical evidence of harm on a scale that warrants state intervention
    • Mitchell – in terms of empirical evidence, not a lot of evidence that licensure protects people
  • Huffines – very concerned about economic liberty, could most industries police themselves for bad actors?
    • Ponju – The industry would because it is in their best interest
  • Huffines – in Dallas there are a lot of conversations related to the working poor – what impact has licensing had on that?
    • It has been clear the occupational licensing has had a large impact, especially on low income families
  • Hancock – are you familiar with the federal program to look at licensing across the state?
    • Ponju – allows the state to use certain funds to consider abolishing licensing boards
  • Hancock – charged witnesses to bring up the minor issues that do not need to be in place
  • Hancock – would licensing on roofers prevent them from coming in from out of state to help expedite repairs?
    • There are only two states that have reciprocity for HVAC which slowed aid from out of state
  • Taylor – speaking to the criminal background – you don’t want someone who has a criminal background unless they have been reformed, how can you check that? We have a lot of repeat offenders.
    • Mitchell – the greatest predictor of recidivism is lack of a job. Licensure creating barriers to employment may actually make people less safe. Noted specific example of person in barbering that was a nonviolent offender, state had trained her to be a barber but when she was let out of prison the licensing board denied her a license because of a criminal background
  • Taylor – there are some occupations that it would be more relevant
    • Ponju – believes that the person should be able to know before beginning training if their background precludes them. Also believes the scope of the criminal background needs to be narrowed to relevant concerns
  • Zaffirini – believes the committee should look into what professions the prisons are preparing inmates for that they will not be able to be licensed for upon release
  • Hancock – seems like something that the business should be able to make the decision whether to hire them or not, but able to know that they are technically qualified to do the work – but not all of the cities allow that to happen these days
  • Hancock – there are many smaller, incremental things that can be done to make progress. That is what I want you to bring to us, not just the headline grabbing things

 

Russell Withers, Texas Conservative Coalition Research Institute

  • Every profession will use health and safety as factor for licensing
  • Noted specific jobs that do not require licenses – highlighted, auto mechanics, nannies and many others
  • There is still diligence required by the consumer, even with a license is required
  • Described occupational requirements that were suspended by the governor after Harvey
    • Practical impact of licensing is supply – increased demand in times of need the artificial barriers are lifted
    • Also noted that there has not been an influx in complaints because of lifting those regulations
  • Barrier enforcement – TDLR enforcement records show half of fines are associated with barrier enforcement and not other items
  • Hancock – does that indicate if there were reports from others in the industry or if TDLR found them out on their own?
    • Not available in the data
  • Candidates for repeal include: interior design
  • Discussed opt out bill drafted last session: if not licensed, must provide disclosure to consumer saying that they are not licensed
    • Empowers the consumer to make a choice
    • Does not require eliminating licenses and industry can use them as needed
  • Nichols – speaking to interior designers, members had a lot of debate related to interior design and ultimately chose to keep the license – noted that there is no law enforcement related to it. what happens in opt out scenario for situations like architecture?
    • If you are building a large building and you choose to hire a non-licensed person to do the architecture that is an enormous amount of liability
    • Will look into that scenario
  • Zaffirini – the focus for the panel has been on health and safety, but what is your opinion on licensing lawyers?
    • Most lawyers do not work on items on the bar exam, does not believe that passing the bar does not ensure they are competent

 

Jared Meyer, Foundation for Government Accountability

  • Boards can deny licenses to those with criminal record that they deem as related – unrelated can be denied for 5 years
  • Described specific experience of one individual in this circumstance
  • Texas has over 130 automatic restricts to licensure
  • Licensing boards need to make specific criminal activities that are related to occupation and can be denied
  • Should consider the lookback period for related crimes – limit to 5 years
  • Taylor – 1 out of 3 Texans have a criminal record?
    • That is correct, will provide that information to the committee

 

 

Interim Charge on Social Media Access: Study access issues regarding digital assets of decedents.

 

Lindsay Beaver, Uniform Law Commission

  • Texas has adopted the uniform act that updates fiduciary law with social media technology
  • The Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA) – deals with digital documents – solved problem of restrictive terms of services and access to assets and protects sensitive information
  • 3 major areas where RUFADAA has changed:
    • Default privacy for electronic communications – fiduciary does not have access to content unless permitted by user in some form
    • Three-tiered hierarchy for user directions – terms of services, user indicates what they would like the fiduciary to have access to which trumps any other terms of service
    • Greater core involvement when necessary – fiduciary must provide additional information related to the account holder when there is question
  • RUFADAA means that custodians have a single legal standard across the country to follow
  • Zaffirini – in guardianship included in the act?
    • It is not included in the act, but will check and provide the information to the committee

 

Terri Helge, Texas A&M University School of Law

  • Supports RUFADAA (SB 1193)
  • Gives fiduciaries ability to manage digital assets after owner’s death
  • Revised act balances privacy concerns with need for access to manage assets
  • Allows custodian to terminate account when needed to protect decedent

 

 

Harry Wolf, Self

  • Lives are getting more digitalized, assets that used to be stored in a bank are now stored on the cloud
  • Anything that can be done to allow the fiduciary to carry out their responsibilities will be a benefit
  • Because this is so new, there is little experience and evidence – educating clients will be the most important aspect of this
  • Custodians allowing access to information will be a key aspect of this work
    • Learning that many provider/custodians will and are requiring court orders moving forward before releasing data
    • This will slow the court system
    • Has concerns with judges in different areas coming to different conclusions
  • The uniform commission and legislators and practitioners will have to work together to revise this as more is learned and understood
  • Nichols – did not recall anything regarding digital assets last time will was updated, does my fiduciary have access to digital assets?
    • Covered under new statute is right for them to get into digital assets
  • Zaffirini – has your section of the bar addressed this issue?
    • It is a hot topic and will be continuing to look at it is moving forward
  • Hancock – how dies this impact digital currency?
    • Beaver – it would fall under the definition of digital asset under terms of the uniform act

 

Study social media privacy laws and whether job applicants and students’ privacy is jeopardized under current law.

 

Lindsay Beaver, Uniform Law Commission

  • Uniform Employee and Student Online Privacy Protection Act (UESOPPA)– this act prevents universities or employers have right to coerce access from students or employees
    • Prohibits certain actions: alter settings, give access to, threaten to take adverse action for not complying with demands for access
    • Has narrowly tailored exceptions: to comply with court order
    • If content is accessed under exceptions, it accesses limit to what it can be used for
  • Texas does not have this – would give students and employees more freedom as to the access they grant
  • Hancock – how many states have enacted this?
    • None yet, it is not effective at this point

 

Jarod Gonzalez, Texas Tech University School of Law

  • Half of the states have regulated on this in some area
  • Question comes down to how and on what basis should access be mandatory (workplace conduct issues would be a consideration)
  • Model law brings in independent contractors – need to be aware of how far the model law comes in
  • Need to consider what the remedy for this is – should there be a state agency or board for this? Or would it go to punitive damages
  • Need to have a definition for employer as it relates to this
  • Not a lot of case law developed in this area yet
  • Described a specific scenario of two employees connected via social media

 

Michael Golden, Boulette Golden & Marin LLP

  • One part of this prohibits employers’ access to electronic communication without authorization
    • Already covered in federal stored communications act
  • Second part refers to employers right to ask for the information
    • Problem is that this creates an incentive for courts to sort this out
    • Highlighted case: Texas Farm Bureau vs. Sears

 

Phillip Durst, Employment Lawyer

  • Stored communication act covers different remedies than the act
  • A simple and narrow bill for the employer to disclose the ways in which they will require access to social media
  • A bill establishing a default setting for privacy – employee given assumption of privacy unless the employer explicitly identifies ways in which they will monitor social media
  • Hancock – would you recommend for employers?
    • Golden – it is an excellent proactive for employers to notify employees regarding access to social media
  • Nichols – believe the requirement should be to opt in as opposed to opt out
    • Beaver – difference between digital records versus digital assets are treated different
    • Beaver – digital assets are opt-out but digital records are opt-in
  • Hancock – who has access in the event of use on employer’s equipment and server?
    • Stored communication act dictated that because it is stored on the employer server the employer has access to it
  • Estes – main concern is that it chips away at at-will employers, what do you think about that?
    • It protects employees that are in an inherently coercive situation
  • Hancock – how long has it been available?
    • Since 2016
  • Hancock – so it has been around for 2 years and not adopted
    • Corrected

 

Closing Remarks

 

  • Hancock – will be one meeting left for the interim, looking at date range. Looking to do a data call regarding insurance and Harvey as close to the end of interim to have the most updated information going into session
  • Hancock – expecting late November/Early December for that meeting