“Out of control” state agency moves to regulate training course providers

Manufacturing and other companies count on keeping their employees’ skills up to date through short refresher courses, often offered by professional development training providers. It’s a vital service that Minnesota businesses depend on to remain competitive.

Yet an aggressive attempt by the Minnesota Office of Higher Education (OHE) to regulate for-profit professional development training providers like career schools threatens not only to significantly drive up costs, but also drive them out of business. As a result, the state agency faces two separate legal challenges to its power grab in federal and state court.

“I’ve already bled $40,000 in legal fees in the last two years,” said Anish Shah, CEO of QC Training Services of his case in the Minnesota Court of Appeals. “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.”

QC Training has appealed an administrative law judge’s ruling requiring the company to be licensed by the state in order to continue in business. Following the ruling, OHE’s Institutional Licensing and Registration department fired off a letter threatening the provider with a $250 per day fine for continuing to operate without a state 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 an April letter. “Entities operating in Minnesota without the required licensure are subject to an injunction and/or other penalties…”

Shah contends OHE is misusing a state law that’s on the books to regulate career and vocational schools like beauty and technical colleges. On top of that, the state wants to charge QC Training tens of thousands of dollars–a $2,500 application fee, plus $500 for each of the company’s 75 programs.

“We do not meet any requirements that are embedded in the statutes. We are not a private career school,” Shah said. “If you go to OHE website, there are many institutions that are  licensed. There is a school of cosmetology, there is a school of beautician, there is a school of yoga. Those are the ones that are licensed because they teach people. You are basically required to have a cosmetology certificate to operate as a hair stylist. We just offer continuing education period.”

The state agency previously granted QC Training an exemption, but revoked it after finding some individuals personally paid for a session, rather than their employer. The company is still operating by seeking a Business to Business exemption limiting training to only businesses. To make matters worse, this year the DFL-run state legislature further expanded the universe of companies to be regulated.

“It says anybody that has a physical presence in Minnesota and offers training ,” Shah said. “That means it could be the 3Ms, the Honeywells, the Targets, the Best Buys. It’s anybody that offers training.”

No wonder the attorney who’s suing OHE in U.S. District Court on behalf of a horse message trainer in Becker labels the agency “out of control.”

“If you are charging someone a fee to learn how to do something that they can in turn make money doing, then the state wants you to register as a private career school and be subject to all the requirements of that act,” said Bobbi Taylor, an attorney for the Institute for Justice.

“As you can imagine, this could be applied very broadly because anything anyone can teach someone to do, that person can then go make a living, whether it be sewing, baking, teaching people how to ride or massage horses. If you can make money doing it, the state wants to regulate the teaching of it.”

The Institute for Justice’s case continues to proceed before the federal bench, based on claims OHE violated their client’s First Amendment rights to “freely speak on a subject in which she is clearly an expert in.” The public interest law firm has successfully won similar constitutional challenges in other states.

Meantime, QC Training has received another exemption from OHE, pending the outcome of the company’s case in the Minnesota Court of Appeals.

“I’m falling behind, the legal fees I’ve paid, the amount of energy and effort I’ve put into this,” Shah said. “And some of the things I have to do, I have to be very careful. It’s like, I’ve got to get permission from somebody else about how I should operate my business?”