Who gave you permission?

A new lawsuit highlights the slippery slope of government overreach and regulation.

Manufacturing and other companies count on periodic refresher courses, often offered by professional development training providers, to keep their employees’ skills up to speed. This vital service helps Minnesota businesses remain competitive in a tough economy.  

Yet the Minnesota Office of Higher Education (OHE) has launched a campaign not to facilitate, but rather aggressively regulate, for-profit occupational training providers the same as traditional career schools like cosmetology and technical colleges.  

As a result, after years of operating without a state license, OHE abruptly ordered QC Training Services to get one in order to remain in business. Never mind that it would cost tens of thousands of dollars for the privilege — a $2,500 application fee, plus $500 for each of the firm’s 75 programs, just for starters.  

But the Bloomington training provider refused to surrender, even after an administrative law judge gave the state agency the green light to force compliance.  

“I’ve already bled $40,000 in legal fees in the last two years,” says Anish Shah, owner and chief sales officer (CSO) of QC Training Services. “I just don’t know if I can continue to do so on my own. But if I don’t do this, I’m going to drag everybody down.”  

The legal standoff escalated in April when OHE sent a letter threatening QC Training Services with a $250 per day fine unless it obtained a license.  

“Entities which fall under this statute that have not completed the appropriate licensure process must not advertise or operate in Minnesota,” OHE’s Institutional Licensing and Registration manager warned in the letter. “Entities operating in Minnesota without the required licensure are subject to an injunction and/ or other penalties…”  

In a case before the Minnesota Court of Appeals as of this writing, QC Training Services contends OHE vastly overstepped its authority to monitor career-oriented schools with the goal of expanding its regulatory reach to include professional development trainers.  

“We do not meet any requirements that are embedded in the statutes. We are not a private career school,” says Shah. OHE’s legal response acknowledges the company previously received a state exemption to having a license. (In fact, the agency allows 18 exemptions, such as for modeling, acting, and personal development courses.) But QC Training lost out when the state agency discovered some attendees were personally paying for training sessions, instead of their employer.  

“While in the past the exemption may have applied to QC Training, there is no dispute that QC Training now accepts payment directly from some of the individuals it trains. QC Training ceased to qualify for the exemption when it adopted that practice.”  

In addition to QC Training Services’ case in state court, OHE faces a constitutional challenge in federal court. “This agency’s out of control,” says Bobbi Taylor, an attorney with Institute for Justice (IJ), a public service law firm specializing in occupational speech cases. “We’re saying that they can’t do it from a constitutional perspective, while QC Training is saying they can’t do it from a statutory perspective.” 

Under the Private Career School Act, OHE claims it can zero in on anyone who charges more than $100 for training services and “maintains, advertises, administers, solicits for, or conducts any program at less than an associate degree level.”  

That includes small business owners like Leda Mox, an equine massage therapist who’s taught the skill to other horse lovers on her Becker farm since 2013. Last year out of the blue, however, state regulators ordered Mox to fill out a 30-page license application or shut down.  

“I’m not a college, I’m not an institution,” Mox says. “There are a lot of things that don’t apply to my business. Why do I need to go through this?”  

The agency also demanded thousands of dollars in fees, disclosure of private information, state review of curriculum, a $10,000 surety bond, periodic inspections, and preservation of student records for 50 years.  

“When she holds herself out as a business that will provide a certification to others to open their own businesses performing horse massage, she is engaging in commerce and subjecting herself to a minimum level of regulation under the Minnesota statutes promulgated to protect students and consumers,” the state agency stated in court filings.  

But in July, the federal court denied the state’s motion to dismiss, allowing Mox’s freedom of speech case to go to trial in the coming months.  

“We brought a claim under the First Amendment,” says IJ attorney Taylor. “So many people talk for a living and the government is purporting to regulate that. We’re arguing certain distinctions the state draws between vocational and avocational are irrational, and therefore, violate the First Amendment.”  

In fact, U.S. District Court Judge Eric Tostrud cited a vocational speech case IJ won on behalf of a California horseshoer in his ruling.  

“The Ninth Circuit’s reasoning is both persuasive and applicable here,” Judge Tostrud wrote. “Plaintiffs plausibly allege their vocational instruction imparts specific skills and knowledge such that it may be considered speech protected by the First Amendment.”  

Meanwhile, QC Training Services continues to operate by seeking a business-to-business exemption limiting training solely to businesses, pending the outcome of litigation. “I’m falling behind with the legal fees I’ve paid, and the amount of energy and effort I’ve put into this,” Shah says. “And on top of that, I’ve got to get permission from somebody else about how I should operate my business?”