Today more and more of our lives are playing out online. You pay your bills online, you order groceries online, and you look up lots and lots of advice online. Many business that were once traditionally brick-and-mortar are now transitioning to the digital world, bringing with them countless legal questions.
If you own an online business then you know there are legal issues to consider when you have clients or customers in other states or even other countries. For example, you must know what taxes have to be collected and remitted to which jurisdictions. These considerations are even greater if your business deals with a profession that requires a license.
What is a license? Essentially a license is the way a state says to the public that the license-holder has met certain requirements that allow them to practice their profession. Further, the state determines the manner in which the license-holder is allowed to practice. If a licensed person fails to abide by the state’s regulations then they may face administrative or legal consequences.
Each state regulates different professions via licensure. Some professions that often require licenses are:
- Medical Professionals (e.g., Doctors/Nurses/Psychologists)
If a state provides a license for a specific profession, then anyone practicing that profession in that state MUST hold a license. This means that for online businesses you must have a license to practice wherever your client is located.
Many states offer something along the lines of license reciprocity or comity for certain professions under certain circumstances. Generally, if a state does offer reciprocity there are a few requirements that must be met, such as:
- You must hold a license from a state that the new state accepts.
- Meet the requirements of the specific reciprocity agreement. This may include a certain time period of practice, be in good standing in your state, etc.
- Complete the new state’s application process. This process is generally easier and cheaper than applying for a brand new license.
If you are granted a license in the new state via this method you may then practice your profession in both states. This means that you can have a brick-and-mortar business in either state or you can service clients online that are physically located in either state, no matter where you are physically located.
Remember that the requirements of licensure via reciprocity will vary by state and profession. Further, reciprocity may not be available at all.
Often confused with licenses, certification is a voluntary process that is completed by private organizations. The granting organization will generally have a set list of qualifications one must meet in order to achieve certification through their group.
If a profession is regulated by license, you will still need a license in addition to any certification available in order to practice. Certification may have added benefits not available through licensure, such as confirmation to the public that you hold a certain skill, marketing, networking, access to practicing in a certain business, etc.
What Can You Do Online as a Licensed Professional?
As a licensed professional, if you have an online business in that field you must be very careful about following the rules and regulations of your licensing body. Generally, the rule will be that you can only practice within your state. While this is simple for brick-and-mortar storefronts, it is much trickier considering the online world. If you only have a license in one state then you can only practice on clients/customers physically within that state, whether it is in person or online.
The fine line here is what constitutes “practicing”? The exact definition will depend on your state licensing board and your profession. For example, it may be found that a doctor merely presenting generally recognized medical facts in a blog is not “practicing medicine”, but if the same doctor provided a medical opinion in response to someone’s posted question on a Q&A website that could be considered practicing. Now, if the person asking the question was in a state that the Doctor was not licensed in then they could potentially face negative consequences.
Now what if you were on the “practice” side of that fine line, but had an air-tight disclaimer that you are only licensed in state X and nothing was to be considered “practicing”? Is that enough to protect you from liability? Probably not. You can put whatever you want to into a disclaimer, but it doesn’t mean that it will be held up in court. For example, you cannot “disclaim away” something that is illegal. Thus, if what you are doing through your online business constitutes practicing your profession, and you are assisting clients in state Y, but only hold a license in state X, then a disclaimer can’t help you because your actions are likely illegal.
How will you know which side of the fine line you are on? If it isn’t clear from your licensing board’s regulations, reach out to them and ask for their opinion on your specific situation. They will likely be happy to help and may even have a department set up just to answer those types of questions.