It happens every day: You settle a difficult tort case--or possibly negotiate a plea bargain in a criminal matter, such as a DUI case--and just before your client signs on the dotted line, he or she asks a thorny question, "Will this affect my future career opportunities?"
The answer depends on whether your client needs a license to work. If your client chooses a career in neurology, car sales, teaching, plumbing, cosmetology, pest control, or truck driving, among many others, he or she will need a license. Say your client is an entrepreneur. Entrepreneurs, too, face licensing requirements in fields as diverse as construction, child care, moving and storage, selling estate jewelry, and security alarm services. Is your client a chef who simply wants to open a little cafe? Even restaurants must have licenses to serve alcoholic beverages.
If your client's livelihood requires licensing, the client likely will face questions on the application such as: Have you ever been convicted of a crime? Some license applications even require the disclosure of civil judgments. For example, aspiring insurance brokers must disclose lawsuits and arbitrations involving allegations of fraud, misappropriation or conversion of funds, misrepresentation, or breach of fiduciary duty.
Clients who are already licensed face similar questions on renewal applications. Some licensed professionals even have a duty to self-report certain tort judgments and criminal convictions against them. For example, contractors must notify the Contractors State License Board of all unsatisfied judgments (Cal. Bus. & Prof. Code § 7071.17 (b)). Architects must report malpractice settlements, awards, and judgments if the claim exceeds $5,000 (Cal. Bus. & Prof. Code § 5588(a)). Insurers for most health care providers must report malpractice settlements and arbitration awards exceeding $3,000 (Cal. Bus. & Prof. Code § 801). In the case of an uninsured health care provider, the attorney and client have a reporting duty, and an attorney who fails to ensure reporting is guilty of a crime (Cal. Bus. & Prof. Code § 802).
Civil fraud judgments are cause for discipline against real estate agents and insurance brokers. (See Bus. & Prof. Code §§ 10177.5 [real estate] and 1668 [insurance].) Contractors face automatic license suspension until they pay a civil judgment (or post a bond) as long as the judgment is substantially related to construction activities or to the qualifications, functions, or duties of a contractor (Cal. Bus. & Prof. Code § 7071.17(b) and (e)).
California has approximately 50 different agencies licensing businesses and professions, from accountants to vocational nurses. Fortunately, key guiding principles can be found in constitutional law.
PRACTICING ONE'S PROFESSION
California's courts recognize that the "right to practice one's profession is sufficiently precious to surround it with a panoply of legal protection." (Yakov v. Board of Medical Examiners, 68 Cal. 2d 67, 75 (1968).) A major portion of that protection stems from the federal Due Process and Equal Protection clauses of the 14th Amendment.
The U.S. Supreme Court has squarely stated, for ex-ample, that qualifications for bar membership "must have a rational connection with the applicant's fitness or capacity to practice law." (Schware v. Board of Bar Examiners, 353 U.S. 232, 238239 (1957).) The California Supreme Court has followed a similar path, holding that "a statute constitutionally can prohibit an individual from practicing a lawful profession only for reasons related to his or her fitness or competence to practice that profession." (Hughes v. Bd. of Architectural Examiners, 17 Cal. 4th 763, 788 (1998); see also Morrison v. State Board of Education, 1 Cal. 3d 214 (1969).)
THE "SUBSTANTIALRELATIONSHIP" TEST
The Business and Professions Code prohibits the denial, suspension, or revocation of a license "on the grounds of a lack of good moral character or any similar ground relating to an applicant's character, reputation, personality, or habits." (Cal. Bus. & Prof. Code § 475.) The Legislature codified the rational-relationship standard in Business and Professions Code sections 480 and 490. (See Petropoulos v. Department of Real Estate, 142 Cal. App. 4th 554 (2006).) The test is whether the conduct in question is "substantially related" to the qualifications, functions, or duties of the business or profession (Cal. Bus. & Prof. Code §§ 480 [license denials] and 490 [suspension or revocation]).
Each licensing agency must develop criteria to guide the determination of whether misconduct is substantially related to the licensed activity. (SeeCal. Bus. & Prof. Code § 481.) The criteria vary widely from agency to agency.
Historically, conviction for a crime of moral turpitude was considered "a disqualifying defect in moral character," which justified permanent exclusion from all licensed professions. (See Hirsch v. City & County of San Francisco, 143 Cal. App. 2d 213 (1956).) But more recent decisions have rejected this view (Pieri v. Fox, 96 Cal. App. 3d 802, 807 (1979)). Administrative agencies and courts now look to the individual facts and circumstances surrounding a criminal conviction and the presence of aggravating or mitigating factors. (See Matanky v. Board of Medical Examiners, 79 Cal. App. 3d 293, 302 (1978).)
Criminal convictions may not be your client's only professional roadblock. Licensing statutes typically provide for denial, suspension, or revocation of a license based on "acts" that involve dishonesty, fraud, or deceit, regardless of whether criminal charges result. For example, the Bureau of Automotive Repair may deny a license to an applicant who commits "any act involving dishonesty, fraud, or deceit whereby another is injured or whereby the applicant has benefited." (Cal. Bus. & Prof. Code § 9889.2.) Of course, the act must be "substantially related" (Cal. Bus. & Prof. Code § 480).
SUBSTANTIALLY RELATED CONVICTIONS
In many cases courts have found that a conviction was substantially related to the qualifications, functions, or duties of a licensed profession. For example:
-A real estate broker's conviction for possession of marijuana for sale involving transportation of a substantial amount of marijuana from Mexico to California by private plane (Golde v. Fox, 98 Cal. App. 3d 167 (1979)).
-A physician's conviction for federal income tax evasion (Windham v. Board of Medical Quality Assurance, 104 Cal. App. 3d 461 (1980)).
-An attorney's repeated acts of alcohol-induced violence and possession of a concealed gun (In re Hickey, 50 Cal. 3d 571 (1990)).
-Child molestation by a lawyer (In re Lesansky, 25 Cal. 4th 11 (2001)) and by a real estate licensee (Jennings v. Karpe, 36 Cal. App. 3d 709 (1974)).
One case involving a physician is particularly instructive. The doctor in question was convicted of three misdemeanors: one for driving under the influence of alcohol and two more for reckless driving involving alcohol. This put his license at risk, because the Business and Professions Code provides that if a physician sustains two or more misdemeanor convictions involving the consumption of alcoholic beverages, those convictions constitute unprofessional conduct. (See Cal. Bus. & Prof. Code § 2239 (a).)
At an administrative hearing, the doctor proved that he had never treated patients while under the influence of alcohol. The administrative law judge (ALJ) dismissed the accusation of unprofessional conduct, concluding that the convictions and proven facts did not provide a basis for imposing discipline; the ALJ found no inherent nexus between driving under the influence and the practice of medicine.
An appellate court reversed (Griffiths v. Super. Court, 96 Cal. App. 4th 757 (2002)). The court found that the code section at issue (the aforementioned section 2239 of the Business and Professions Code) satisfies the constitutional requirement that a nexus exists between the disciplined conduct and the physician's fitness and competence to practice medicine "without any additional showing that the convictions or the alcohol consumption impaired Griffiths's practice of medicine." (96 Cal. App. 4th at 774.) The statute met the constitutional nexus requirement because it required more than one misdemeanor conviction involving alcohol (96 Cal. App. 4th at 770). The court reasoned that "[r]epeated convictions involving alcohol use, two of which violated Griffiths's probation, reflect poorly on Griffiths's common sense and professional judgment, which are essential to the practice of medicine, and tend to undermine public confidence in and respect for the medical profession." (96 Cal. App. 4th at 771.)
In rejecting Griffiths's argument that no evidence showed his criminal convictions resulted in any harm to patients, the court stated that the doctor's argument overlooked the preventive functions of license discipline, whose main purpose is protection of the public, and that "it is far more desirable to discipline before a licensee harms any patient than after harm has occurred." (96 Cal. App. 4th at 772.)
NO SUBSTANTIAL RELATIONSHIP
In other cases courts found no substantial relationship justifying discipline, suspension, or revocation or denial of a license. Examples include:
-A real estate broker's misdemeanor conviction for making a false statement to obtain unemployment benefits (Pieri v. Fox) and felony conviction for introducing parties to a drug deal (Brandt v. Fox, 90 Cal. App. 3d 737 (1979)).
-A car dealer's misdemeanor conviction for annoying or molesting a child (Brewer v. Department of Motor Vehicles, 93 Cal. App. 3d 358 (1979)).
-A chiropractor's misdemeanor conviction for willfully residing in a house of ill repute (Cartwright v. Board of Chiropractic Examiners, 16 Cal. 3d 762 (1976)).
-A lawyer's conviction for acts of civil disobedience, coupled with his active participation in nine different fistfights over the years (Hallinan v. Committee of Bar Examiners, 65 Cal. 2d 447 (1966)).
A dispute involving discipline imposed by the Department of Real Estate illustrates this end of the legal spectrum. The case involved a licensed real estate salesperson who was convicted of engaging in sexual relations with his wife's 16-year-old sister. The conduct occurred while the sister was babysitting and the licensee's wife was out of town. The licensee pleaded nolo contendere to unlawful intercourse with a minor, and the charges were later reduced to a misdemeanor. There were no allegations of rape.
The Department of Real Estate was notified of the conviction and sought to revoke the defendant's license. After an administrative hearing, the ALJ found that the conduct in question was an isolated incident and that it was not contrary to the public interest for the licensee to retain his license on a restricted basis.
The Department of Real Estate rejected the ALJ's proposed decision and revoked the salesperson's license on the ground that the crime was substantially related to the qualifications and duties of a real estate licensee under a regulation declaring sex crimes without consent to be substantially related. (The Department of Real Estate argued that the 16-year-old did not consent, because minors cannot consent to sex.)
The court of appeal overturned the license revocation, declaring that consent was not an element of the conviction, and consequently there was no evidence in the record supporting a lack of consent (Donaldson v. Department of Real Estate, 134 Cal. App. 4th 948, 963967 (2005)).
RIGH OF REHABILITATION
Even when a conviction is substantially related to professional qualifications, a licensee still has a due process right to present evidence of rehabilitation and mitigation at an administrative hearing (Arneson v. Fox, 28 Cal. 3d 440, 449 (1980)). In fact, Business and Professions Code section 480 provides that no person shall be denied a license solely on the basis of a conviction if the person has obtained a certificate of rehabilitation or has met certain rehabilitation requirements.
Rehabilitation regulations typically focus on a number of factors: the passage of time since conviction; successful completion of parole or probation; remorse; change in attitude; expungement of the conviction; alcohol or drug rehabilitation; completion of formal education; stability of family life; correction of business practices; and community involvement. (See Cal. Code Regs., Tit.10, § 2911 (developed by the Department of Real Estate).)
NO CONTEST PLEAS, EXPUNGEMENTS, AND INFRACTIONS
Many clients inquire whether a plea of nolo contendere will prevent licensing problems. The answer is no. Licensing laws treat nolo contendere, or "no contest," pleas the same as guilty pleas. (See Arneson v. Fox at 440, 447.)
Your client may also ask if an expunged conviction will be invisible to licensing authorities. Again, the answer is no. California's expungement statute specifically provides an exception that requires disclosure of an expunged conviction to state and local licensing agencies. (See Cal. Penal Code § 1203.5.)
What about traffic infractions? The news here is better for your client. The Penal Code specifically states that, except in the case of specific Vehicle Code exceptions, a conviction for a traffic infraction is not a ground for the suspension, revocation, or denial of any license. (See Cal. Penal Code § 19.8.)
In practice, all but the oldest and most minor criminal convictions will trigger months of delay in the licensing process while the governing agency collects certified copies of court records and police investigation reports. Licensing agency staff members are focused on consumer protection rather than an applicant's interest in becoming licensed.
In the case of minor convictions, licensing agencies typically settle with applicants by granting probationary or restricted licenses. License applications involving serious convictions or a significant criminal history will almost certainly result in denial of the license, subject to an administrative hearing. And note that the published appellate cases do not tell the whole story. For every license issued after a successful legal challenge, numerous applicants lose at the administrative hearing level, many press on but lose at the trial court level, and still others lose in an unpublished appellate decision.
Certain and immediate consequences--such as financial ruin or going to prison--often must take priority over possible future problems in the area of occupational licensing. Settlements should be encouraged, even if there are future ramifications for a client's professional license, and in many instances they are unavoidable anyway. But with the background provided here, at least your client will be able to agree to a civil settlement or criminal plea bargain with his or her eyes wide open.
Adam G. Slote is a sole practitioner in San Francisco who defends licensed businesses and professionals before administrative agencies.