Licensing Restrictions

More than 30% of Americans now work in professions requiring licenses, and we seem to have become inured to the condition of seeking permission from the state before being permitted to perform our professions. Fill out the form, pay the fee, smile for the camera. Rinse and repeat annually. 

So it’s not necessarily obvious that licensing requirements could be speech restrictions. But consider: there are a number of professions in which the thing of value, the service being sold, IS speech. And when a license is required in order to sell that speech (or even engage in it all), the licensing regime is a speech restriction. 

Of course, this doesn’t mean that such license requirements are necessarily unconstitutional. But shouldn’t it mean that any speech-impacting licensing regime should be analyzed to ensure it doesn’t unduly impinge on free speech rights?

Courts, unfortunately, aren’t so sure. As with the professional speech doctrine more generally, a bright-line test has yet to coalesce in this area. Let’s look at how courts are trying to sort things out.

The Expansive View

The thin gruel that is the professional speech doctrine, as currently constituted, relies for much of its body on a 1985 concurring opinion by Justice Byron White. In writing his concurrence in Lowe v. SEC 1 — a case finding that the publication of financial advice by a former financial advisor was protected by the First Amendment — White noted:

One who takes the affairs of a client personally in hand and purports to exercise judgment on behalf of the client in the light of the client’s individual needs and circumstances is properly viewed as engaging in the practice of a profession. Just as offer and acceptance are communications incidental to the regulable transaction called a contract, the professional’s speech is incidental to the conduct of the profession. If the government enacts generally applicable licensing provisions limiting the class of persons who may practice the profession, it cannot be said to have enacted a limitation on freedom of speech or the press subject to First Amendment scrutiny.” 2

This formulation – “one who takes the affairs of a client personally in hand and purports to exercise judgment on behalf of the client in the light of the client’s individual needs and circumstances” – finds its way into most of the subsequent decisions wrestling with the question of “generally applicable licensing requirements.” However, one important nuance sometimes gets lost: White’s was just a concurrence, and despite his willingness to hand-wave First Amendment scrutiny away from licensing requirements, he also recognized the limited scope of such requirements:

As applied to limit entry into the profession of providing investment advice tailored to the individual needs of each client, then, the Investment Advisers Act is not subject to scrutiny as a regulation of speech — it can be justified as a legitimate exercise of the power to license those who would practice a profession, and it is no more subject to constitutional attack than state-imposed limits on those who may practice the professions of law and medicine. The application of the Act’s enforcement provisions to prevent unregistered persons from engaging in the business of publishing investment advice for the benefit of any who would purchase their publications, however, is a direct restraint on freedom of speech and of the press subject to the searching scrutiny called for by the First Amendment.”

For White, the distinction turns on whether the advice is personally-tailored. While White claims that generally applicable licensing restrictions can restrict the right to provide such services without offending the First Amendment, in his formulation the same cannot be said for professional licensing restrictions that would limit the right to provide advice generally, outside of an individualized relationship. 

Courts Run with Lowe

White’s concurrence obviously isn’t binding law, but his approach has been adopted by a number of courts. The most recent notable example comes from a federal District Court in Florida, which upheld the state’s right to fine someone for selling personalized health coaching services without being a licensed dietician. 3

What’s it take to be a licensed dietician in Florida? Well, not just filling out some forms and paying a nominal fee. In addition to a licensing exam, one must have completed an undergraduate degree in the subject and have at least 900 hours of relevant experience.

Is this a “generally applicable” licensing requirement? The defendant, Heather Kokesch del Castillo, was not holding herself out as a licensed dietician or nutritionist — she was just selling a service that the state determined was monopolized by licensees. Citing Locke v. Shore, 634 F.3d 1185 (11th Cir. 2011) — a case involving licensing requirements for commercial interior designers 4 — the court had two takeaways: 

  1. That “a statute governing the practice of an occupation is not unconstitutional as an abridgement of the right to free speech, so long as any inhibition of that right is merely the incidental effect of observing an otherwise legitimate regulation;” 5 and
  2. That “generally applicable licensing provisions limiting the class of persons who may practice the profession” are not subject to First Amendment scrutiny.

The first of these concepts is widely accepted throughout First Amendment jurisprudence; the “incidental effects” concept can be found in dozens of Supreme Court cases on a wide range of free speech-related topics. The second concept, well, . . . is from White’s concurrence in Lowe. 

What this move essentially does is to say that when it comes to speech within the practice of a profession, speech regulation is merely an “incidental effect.” Or, to put a finer point on it, that there is no First Amendment issue raised by licensing rules that limit entry to a profession. As the court described the Locke decision:

The court concluded that the interior design statute in Locke did not violate the First Amendment because it was a generally applicable professional licensing law with a merely incidental impact on protected speech and because it only regulated professionals’ direct, personal speech with clients, not speech to the public at large.”

That seems like a lot of water for White’s concurring opinion in Lowe to carry. But is this the right way to think about things? 

Does it Matter Whether You’re Paid For it?

At first blush, Moore-King v. County of Chesterfield, VA  — a case involving a licensing requirement for fortune tellers — seems to follow the same logic as White’s concurrence in Lowe:  

Professional speech analysis applies . . . where a speaker “takes the affairs of a client personally in hand and purports to exercise judgment on behalf of the client in the light of the client’s individual needs and circumstances. 6

And . . .

Under the professional speech doctrine, the government can license and regulate those who would provide services to their clients for compensation without running afoul of the First Amendment.” 7 

Note, however, the turn about the work being paid: the court in Moore-King notes that professional speech regulation is limited to the world of compensated employment. It doesn’t operate to prevent such work when it is unpaid. 

And Prohibitions are Different Than Licensing Restrictions

What’s more, the Moore-King decision distinguishes Chesterfield County’s generally applicable licensing rule from other jurisdictions’ attempts to prohibit fortune telling services – prohibitions which, the court finds, violate the First Amendment by restricting speech.

But it’s confusing. As one of the decisions striking down such a regulation comprehensively reviews, it actually shouldn’t matter that such regulations only prohibit paid speech:

The County argues that the Ordinance does not implicate the First Amendment at all because it prohibits not fortunetelling itself, but the receipt of remuneration for fortunetelling. This is not a meaningful distinction. The Supreme Court has held that a restriction on compensation for speech implicates the First Amendment. In United States v. National Treasury Employees Union the Court . . . explained that an outright ban on remuneration for speech implicates the First Amendment even though it “neither prohibits any speech nor discriminates among speakers based on the content or viewpoint of their messages.” Nat’l Treasury, 513 U.S. 454, 468. Such a restriction implicates the First Amendment because “its prohibition on compensation unquestionably imposes a significant burden on expressive activity.” Nat’l Treasury, 513 U.S. at 468.” 

Nefedro v. Montgomery County, 996 A. 2d 850 – Md: Court of Appeals 2010. 8

OK . . .

This concept does make sense — while the fact of payment may justify a generally applicable licensing requirement (like obtaining a business license, which makes it easier to chase down shady operators who defraud consumers), it doesn’t justify banning the speech. And limitations on unpaid speech? Well then we SHOULD be out of professional speech territory entirely, and back in the world of strict scrutiny.

But let’s circle back to Lowe. We know that a ban on speech, paid or unpaid, offends the First Amendment. But while a licensing restriction is less burdensome to speech than a ban, doesn’t it seem a bit much to say that it raises NO First Amendment issues? 

I’d say so. 

Recall that Locke v. Shore, channelling White’s concurrence in Lowe, held that a law restricting entry into a profession is but an incidental effect of valid regulation. In so doing, it skipped past the usual factual analysis of whether a restriction actually has only an incidental effect on speech. The court in Del Castillo v. Philip repeats this move, seeming to find that regulation-of-entry-to-a-profession inherently cannot do anything more than incidentally impact free speech rights.

But in reading earlier cases dealing with similar issues, there’s no indication that courts have made such a bold determination. Rather, they simply didn’t have to spend much time on the specific speech-impacting effects of such regulation. Consider Wilson v. State Bar of Georgia: 

We have little difficulty agreeing with the district court’s conclusion that the amendments govern occupational conduct, and not a substantial amount of protected speech.” (emphasis mine) 9 

Or Lawline v. American Bar Association

Although we uphold the validity of the unauthorized practice rule against facial constitutional attack, we do not speculate as to whether this regulation would be constitutional as applied to particular cases.” 10

Or even the progenitor of them all, the original “ambulance chasing” case, Ohralik v. Ohio State Bar Association: 

While entitled to some constitutional protection, appellant’s conduct is subject to regulation in furtherance of important state interests.” 11 

Just as the vast majority of commercial speech cases don’t need to get into the question of whether the speech in question is actually commercial or not (nearly all of them dealing with content that is unquestionably commercial speech), it seems that the bulk of the cases dealing with licensing restrictions don’t have to deal with the question of whether the restrictions in play actually impact speech. 

But that should not lead to the conclusion — as it seems to have in cases like Locke and del Castillo — that any-and-all restrictions are inherently incidental in effect. The impact-on-speech analysis must still be carried out, in order to ensure that licensing restrictions don’t subsume the free speech rights of professionals — or unduly exclude citizens from speaking, even for pay, under the mantle of occupational licensing. 

So What SHOULD Make a Licensing Restriction “Generally Applicable?” 

For a licensing restriction to be “generally applicable,” and thus free from First Amendment scrutiny, it should — in the words of all of the cases we’ve reviewed so far — have no more than incidental effects on speech. And not via circular reasoning; its effects aren’t incidental simply because it’s a licensing restriction.

Consider the recent case of Billups v. City of Charleston. 12

Billups involved Charleston’s licensing scheme for tour guides in that historic coastal city. The licensing requirements includes the usual – registration, payment of a fee for a business license, etc. – but also a written exam on matters related to Charleston history and architecture. Unless a passing score was achieved on this exam, one could not be licensed as a tour guide, and thus could not guide paid tours in Charleston.

The District Court noted that a law restricting the leading of tours inherently implicates speech. In so doing it distinguished such situations from those where the license restricts conduct (and, perhaps, speech that is merely incidental to the licensed conduct):

Thus, the fact that the plaintiffs in Detroit Automotive [a case involving a licensing requirement for car sales] did not need a license to inform customers about the price of automobiles is not analogous to the instant plaintiffs’ ability to engage in free tour guide services. Communicating the price of an automobile simply facilitates the sale of the automobile. The automobile remains the object of the sale. In this case, tour guide services are not ancillary communications used to facilitate a transaction; they are — like the automobiles in Detroit Automotive — the objects of the transaction. Thus, the appropriate comparison is between tour guide services and automobiles, not communications about the price of automobiles.” 13

Unlike Moore-King, the Billups court found that the licensing requirement had more than incidental impacts on speech. This may be due to the examination requirement, the fact that tour guide speech is not individualized to clients, or something else — the court didn’t say one way or the other. Once it had concluded that the regulation was speech-impacting, it became simply a question of which level of scrutiny – intermediate or strict – to apply. And given the licensing alternatives available to Charleston, the court concluded that the licensing regime could not survive even intermediate scrutiny. 

So . . . What Does This All Mean?

Despite the differences between these cases, can we sniff out a test for licensing restrictions? Maybe. There’s still a lot of dissonance, as too many courts blow past the issue. That said, I think the best reading of the law is that a test for professional licensing restrictions should look like this:

  • A basic business license requirement for professionals operating speech-based businesses – of the sort applicable to any sort of business – is fine and need meet only the rational basis test.
  • An enhanced or special licensing requirement (like a test or a requirement of extensive education):
    • Will still only require a rational basis as long as its impacts on speech are incidental to the business conduct being licensed. 
    • Will need to meet heightened scrutiny (intermediate or even strict) if it imposes more-than-incidental restrictions on speech.
    • Is likelier to be permissible – or even subject to a lower bar of scrutiny – if the profession involves individualized advice rather than public speech.
  • An outright prohibition on speech – or on selling speech – will need to meet strict scrutiny.

There are two categories of problems that remain. The first is the issue described earlier: the inclination of some courts to simply conclude that all licensing restrictions are inherently incidental to speech. In such cases — like that of Heather Kokesch del Castillo — the courts are taking a shortcut that’s foreclosing a wide swath of compensated speech without inquiring as to whether such restrictions are justified and in the public interest.

The second issue is even less-explored: the use of licensing restrictions to restrict even uncompensated speech. While the Moore-King decision noted there would be no issue if the tour guides wanted to offer unpaid tours 14, and the United States v. National Treasury Employees Union case noted that bans on unpaid speech violate the First Amendment, some licensing requirements foreclose even speech that’s outside of a paid professional-client relationship. The obvious example is legal advice, where a mushily-defined monopoly creates all sorts of uncertainty about whether speech falls within or without the “practice of law” (and the chilling effect is exacerbated by the fact that the unlicensed practice of law is a criminal offense in most states). But this overreach isn’t limited to the law. Consider these two recent examples:

In both cases, the individuals involved weren’t holding out as state-licensed professionals seeking employment. They weren’t representing clients or providing individualized advice. They were simply commenting, publicly, using accurate descriptions of their vocational backgrounds. Yet the state took offense because they weren’t licensed. 

Fortunately, these cases were recognized for the overreach they represented. But there remains too much uncertainty when it comes to the appropriateness of licenses as gatekeepers for speech, too much grey area that’s clearly chilling a wide range of expression. In order to bring more certainty, predictability, and order to licensing regulation, we’re going to need another opinion to expand on the hints the Supreme Court left in NIFLA v Becerra, 15 and actually establish a test for licensing that fully respects the First Amendment interests at stake.

Notes:

  1. 472 U.S. 181 (1985)
  2. 472 U.S. at 232.
  3. Del Castillo v. Philip, ND Fla. (decided July 17, 2019).
  4. And if you wonder why commercial interior designers would need to be licensed while residential designers would not, well, join the club.
  5. citations omitted.
  6. Moore-King v. County of Chesterfield, Va., 708 F. 3d 560, 569 (4th Cir. 2013).
  7. Id.
  8. Interestingly, Nefedro ALSO concludes that the prohibition is not commercial speech and must be tested using strict scrutiny.
  9. 132 F. 3d 1422, 1429 (11th Cir. 1998)
  10. 956 F. 2d 1378, 1386 (7th Cir. 1992)
  11. 436 US 447 (1978). It’s also worth noting that Ohralik was decided two years before the Supreme Court crystallized the commercial speech doctrine, so its discussion of how “constitutional protections” and “important state interests” get weighed in this context is, understandably, not particularly crisp.
  12. Billups v. City of Charleston, 331 F. Supp. 3d 500 (D. S.C. 2018).
  13. Billups v. City of Charleston, 194 F. Supp. 3d 452, 462 (D. S.C. 2016) – note that this was an earlier decision on Charleston’s motion to dismiss and Billups’ motion for a preliminary injunction.
  14. Indeed, this is actually commonplace, and one of the best local tours I ever went on was “unpaid” in Portland, OR – the guide more than made up for it in tips.
  15. See discussion on the Professional Speech Doctrine page.