A Pa. Supreme Court Victory for Licensing Relief

Sally Ladd is an entrepreneur in her 60s who rents out vacation properties around Pennsylvania’s Pocono Mountains. After years of litigation, she is finally free to build her rental business without an expensive and time-consuming realtor license.

In 2013, Ladd formed a home business that manages short-term rentals of less than 30 days. While Ladd initially hoped to supplement her income and prepare for retirement, she grew to “love and cherish the work of owning and operating her own business.”

The Pennsylvania Constitution affirms the right of individuals to pursue a chosen occupation. But Ladd’s ability to choose her occupation ended when she faced harassment from the Bureau of Professional and Occupational Affairs. The Bureau informed Ladd that her business was reported for “unlicensed practice of real estate.” If Ladd wanted to continue renting vacation cottages, she would need to undergo 315 hours of coursework, complete a 3-year apprenticeship, pass two real estate exams, and open a physical office space in Pennsylvania.

Not only would the requirements impose excessive costs on Ladd’s small business, much of the coursework and exams related to property sales—which were completely irrelevant to Ladd’s rental business. Ladd refused to submit her business to the same licensing requirements as traditional real estate agents.

In an interview with Forbes, Ladd stated that “overcoming Pennsylvania's high hurdles to work is a luxury that I simply don’t have.” Essentially, Pennsylvania’s onerous occupational licensing rules shut down her business.

Ladd filed a complaint and eventually appealed to the Pennsylvania Supreme Court. On Tuesday, the Supreme Court ruled in favor of Ladd’s argument that the licensing requirement was unreasonable. In Ladd’s case, the real estate broker licensing requirement did not have a substantial relation to fulfilling the state’s objective of protecting buyers and sellers of homes, since Ladd didn’t buy or sell any homes at all.    

The Supreme Court decision is a victory for Ladd, but many Pennsylvanians still struggle to start or maintain a business due to licensing requirements. In fact, one in five Pennsylvania workers are required to obtain a professional license for their job. For example, Pennsylvanians like Courtney Haveman and Amanda Spillane cannot receive a cosmetology license due to old felony convictions.

Licensing restrictions even threatened the supply of nurses during the pandemic. For example, nurse practitioner Stephanie Phillips lives in Chester County and was laid off when her office closed. She could have started a new job immediately at an overrun hospital in most states, but Pennsylvania’s restrictive collaborative agreements meant it would be weeks before she could see another patient.

As Pennsylvania recovers from the pandemic, it is more important than ever to make it easy for individuals to start a business or start a new job. Occupational licensing reform, including Governor Wolf’s recommendation to eliminate 13 licenses, can help spur the entrepreneurship that Pennsylvanians need to heal from the pandemic and rebuild prosperity in the commonwealth.