Legal Issues in Certification
- Written by Hugh K. Webster, Esq.
The following paper was presented at the CESB 2000 Certification Symposium held February 8, 2000 in Alexandria, Virginia.
TAX EXEMPTION ISSUES
The Internal Revenue Service has acknowledged that certification programs are entirely consistent with Section 501(c)(6) tax exempt status because they are designed to promote either an industry or the members of an industry or a profession. Such promotion can be either through improving the employment prospects of those who have become certified, or by improving the profession or industry as a whole by raising the standards therein.
The IRS has taken a harder line, however, with respect to Section 501(c)(3) organizations that wish to operate a certification program. The official view of the IRS is that, as stated above, most certification programs are primarily designed to benefit an industry or a profession or the members thereof, and therefore the IRS does not view these programs as serving any kind of “public” purpose consistent with Section 501(c)(3) status. This is not to say that it is impossible for an association to demonstrate some benefit (e.g., improvement of health, safety, etc.) to society and, further, such is the primary benefit and focus of the program, not the professional development of those who have become certified. But clearly the burden will be on the association.
It is also possible for a certification program to be undertaken consistent with Section 501(c)(3) if the association shows that it is “relieving the burdens of government” through operation of the program. The association would have to show that the federal government, or a state or local government, has demonstrated a clear interest and desire to have a certification program of the kind that the association is operating, and that if the association did not operate the program, the government would have to do so. The evidence that the association would need to produce would perhaps be in the nature of governmental regulations, hearings, statutes, etc. It could not be simply a random or general interest expressed by certain government employees.
If a Section 501(c)(3) organization operates a certification program that does not fit within Section 501(c)(3), then any net income from the program would be considered unrelated income, and therefore taxable. One way to avoid this result would be to create a section 501(c)(6) subsidiary.
INTELLECTUAL PROPERTY ISSUES
Certification designations (e.g., “Certified _____________”; “C _ _”)
can be trademarked under federal law. A “certification mark” is defined as “any word, name, symbol, or device, or any combination thereof used...to certify...quality, accuracy, or other characteristics of such person's goods or services.” In most association programs, of course, certification marks certify that the performer of services has met certain standards or criteria.
Certification materials, including examinations, are eligible for copyright registration and protection. Further, the U.S. Copyright Office has developed a procedure that virtually eliminates the privacy and security concerns that a certifying organization may have about the customary requirement that a copy of any work to be copyrighted must be deposited with the Copyright Office.
Association certification programs can be vulnerable to attack on antitrust grounds. There are two components to such an antitrust argument.
First, a plaintiff must demonstrate that the certification program has significant economic importance such that the failure to become certified could negatively affect an individual from an economic or financial standpoint. This can be a difficult burden to bear. The kinds of harm could include, for example, inability to advance in one's career, damaged compensation potential, inability to attract customers, etc.
The second component of the antitrust attack is that the certification program is somehow deficient, e.g., it requires knowledge or ability in areas that are not relevant to practice of the profession or employment in the industry, or it does not adequately test relevant knowledge or skills.
In order to avoid or defend against charges that a certification program is unreasonable in some respect, most associations undertake formal validation of their programs. In fact, failure to do so can be a basis for a legal challenge—again typically on antitrust grounds. In addition, associations should be generally prepared to defend their programs not only in terms of validation, but also in terms of all aspects of preparation, including personnel that were involved in the preparation, source of questions, etc. If a certification program is a reasonably accurate measure of knowledge and/or competency, it should be upheld as valid by a court, regardless of the protests of those who fail.
Another area where programs are subject to challenge is with respect to formal education requirements. While courts often will grant associations a great deal of latitude in determining what are sufficient educational requirements, especially with respect to recognized professions, it often is prudent to have a competency or experience aspect of the program. For example, if an applicant for certification does not have a college degree, the association may want to provide an alternative, such as years of experience or competency testing.
Finally, oral examinations or other subjective elements in a certification program, while not impermissible per se, can be troubling and do leave an association vulnerable to charges of arbitrariness or unfairness. Ideally, exams should be objective and written, with oral interviews undertaken only for a good reason.
DUE PROCESS ISSUES
Because certification can have economic value to those seeking to become certified, some due process must be accorded those who fail.
The most fundamental due process is the right to reapply for certification or retake the certification exam. Indeed, re-examination virtually eliminates the possibility of recurring clerical or computational errors.
From a practical standpoint, other steps may be necessary, such as meeting with the failed candidate, reviewing the exam with the candidate, etc.
If an individual who has become certified subsequently fails to meet continuing requirements to maintain the certification, or if the certified individual takes some affirmative action which jeopardizes the certified status, such as violating a code of ethics, the association is justified in revoking the certification. However, the association must be very careful to provide full due process and fair procedures to the individual prior to imposing any punishment, including revocation, especially when the proposed revocation is based on alleged wrongdoing by the certified individual.
An instructive case in this regard is Lidenburg v. National Board of Certified Counselors. In this case, a certifying association initiated disciplinary proceedings against a certified individual based on alleged ethical violations. However, the individual challenged the disciplinary process, and the court issued a scathing opinion condemning the practices of the association from a due process standpoint. In particular, the court objected to the following practices:
- Pending outcome of the proceeding, the individual's certified status was placed in suspension. The court found that his violated the fundamental principle of an individual being innocent until proven guilty.
- The individual's attorney was very limited with respect to cross-examining witnesses or otherwise participating in the disciplinary hearing, while the association itself was fully represented by its own legal counsel.
- The hearing examiner was the same individual who initially investigated the charge, decided that there was a sufficient basis to continue, and determined what the punishment would be.
While the court very reluctantly upheld the right of the organization to engage in this conduct, since the association's procedures allowed for it, the court felt compelled to express its opinion as to these procedures. The court stated that the association's procedures were “repugnant to this court's sense of decency” and compared them to a “medieval Star Chamber practice.”
AMERICANS WITH DISABILITIES ACT ISSUES
Examinations and courses related to certification are subject to the Americans With Disabilities Act (“ADA”). Specifically, the ADA states as follows:
“Any person that offers examination or courses related to applications for licensing, certification, or credentialing for secondary or post-secondary education, professional, or trade purposes shall offer such examinations or courses in a place and manner accessible to persons with disabilities or offer alternative accessible arrangements for such individuals.”
The U.S. Department of Justice, which enforces the ADA, has issued regulations stating that the purpose of the above-quoted requirement is to ensure that a certification examination accurately measures “the individual's aptitude or achievement level or whatever other factor the examination purports to measure, rather than reflecting the individual's impaired sensory, manual, or speaking skills.” A disabled individual must have an equal opportunity to obtain the same result any other applicant,” i.e., an equal opportunity to demonstrate the skills, knowledge, and achievement that the certification examination is intended to measure.
What this means from a practical standpoint is that an association is, except as noted below, required to provide appropriate auxiliary aids or make other accommodations as necessary to allow disabled individuals to take the examination in such a manner that the individual's knowledge or skill (or whatever the examination is designed to test) can be accurately measured, and so that the individual does not fail the exam because of a disability rather than because of a lack of knowledge, skill, etc.
The most common accommodation requested by and provided to disabled individuals in connection with a certification program is extra time to take the examination. With respect to “auxiliary aids,” these can include any number of accommodations, including:
- a reader
- large print exams
- a separate testing room
- frequent breaks
- the ability to take the exam in different parts
Auxiliary aids can also include taped examinations, interpreters or other effective methods of making orally delivered material available to individuals with hearing impairments, Brailled or large print examination and answer sheets for individuals with visual impairments or learning disabilities, and transcribers for individuals with manual impairments.
There are three general exceptions to the requirement that a certifying association provide an accommodation to disabled individuals.
First, no accommodation need be provided if this would cause an “undue burden” to the association. In most cases, whether or not an accommodation would result in an undue burden usually is a question of cost. In fact, the Justice Department usually takes the position the auxiliary aids must be paid for by the association unless the cost would result in an undue burden.
Second, no accommodation need be made if to do so “would fundamentally alter the measurement of the skills or knowledge the examination is intended to test.” That is, the ADA does not require associations “to lower or to effect substantial modifications of standards to accommodate a disabled person.” As stated by one court: “The purpose of the ADA is to guarantee that those with disabilities are not disadvantaged...the ADA was not meant to give the disabled advantages over other applicants. The purpose of the ADA is to place those with disabilities on equal footing and not to give them an unfair advantage.”
Third, a certification examination can require that a certain skill be demonstrated or knowledge shown in a particular instance, if necessary to the performance of the job or profession that is the subject of the certification. For example, if a particular job requires certain skills, then a certification examination can test those skills, even if an individual applicant's disability prevents that applicant from performing the demonstration successfully. In an advisory opinion to a State board of medical examiners, the Department of Justice stated as follows: “The Board is permitted to impose eligibility criteria (i.e., ask questions) that screen out, or tend to screen out, individuals with disabilities if the criteria are `necessary' to ensure that the Board is licensing persons fit to practice medicine.” Similarly, in a letter to an organization that certifies emergency medical technicians, Justice said: “The Board is permitted to impose eligibility criteria (i.e., require a skill be performed in a certain way) that screen out, or tend to screen out, individuals with disabilities if the criteria are `necessary' to ensure that the Board is licensing person who can safely perform the duties of emergency medical technicians.”
The ADA restrictions on certification programs also require that certification examinations and courses be offered at facilities that are accessible to the disabled. If the particular facility is not accessible, the association may provide an alternative facility, but the location of this facility must be as convenient to the disabled individual as the normal locations, and the conditions of the examination must be comparable as well. Offering a proctored examination at an individual's home is a possible accommodation in this regard.
“Flagging” Disabled Applicant's Scores
Some organizations believe that if an applicant takes and passes an examination with an accommodation, this is not the equivalent of doing so without an accommodation. They also maintain that they have an obligation to notify third parties who may utilize the services of a certified individual, which of these individuals became certified with assistance of an accommodation. As a result, these organizations will “flag” in some manner those certificants who received an accommodation.
There have been few cases addressing the legality of flagging, but suffice to say it is a practice that has generated strong feelings on both sides of the issue. At this point, it cannot be said to be clearly in violation of the ADA, but organizations should have a strong, defensible reason for flagging if they choose to do so.
There are several additional points to keep in mind:
- the ADA applies with equal force to recertification examinations or procedures;
- the ADA applies not only to examinations but also courses related to certifications exams, such as review courses;
- an association can require that an applicant submit proof of the claimed disability and can require the applicant to submit to examination by a medical professional selected by the association.
Lawsuits for violation of the ADA can be brought by disabled individuals who believe the association has not followed the requirements of the law, or by the U.S. Department of Justice.
In a suit by an individual, the only relief that a court may award is injunctive relief, that is, an order by the court requiring the association to comply with the ADA, e.g., by providing a particular auxiliary aid, etc. The Department of Justice, however, may seek monetary damages for individual victims of discrimination, and may ask to the court to impose a civil penalty on the association. A penalty cannot exceed $50,000 for the first violation, and $100,000 for any subsequent violation.
CIVIL RIGHTS ISSUES
Because a certification program has implications with respect to the employment prospects of those who wish to take the exam, the association sponsoring the program may be held to be in the nature of an “employer” with respect to applicants for certification. The significance of this is that applicants who fail to become certified can bring suit under Title VII of the Civil Rights Act of 1964 for discrimination. Discrimination might be based upon the failure of the association to pass an individual in a protected category or, potentially, the fact that the failure rate of a certain protected group is unusually high.
TORT LIABILITY ISSUES
While antitrust cases are certainly the most common types of lawsuits against associations with certification programs, tort liability is an emerging issue. The specific question is whether an association can be held legally responsible if an individual who has achieved certified status subsequently causes injury, either to person or property, while working in the employment or profession for which he or she has been certified.
Courts have held that organizations which certify products can be held liable if those products are defective. It also has been held that an organization which certifies or accredits facilities can be held responsible for a safety or health problem of the facility.
To date, however, there is no reported court decision holding an association liable, solely based on the fact of certification, for the negligent or other wrongful conduct of one whom the association has certified. Logically, it would seem that the human element would be a factor against holding the association liable.
By way of analogy, lawsuits have been brought against State and local governments for the negligent issuance of, or failure to revoke, a license. Courts have generally held that the government authority is not liable because it is not the proximate cause of the injury; rather, the licensed individual primarily is to blame.
There are important exceptions, however. For example, “Certification” implies that some bona fide testing, examination, or review of an individual's minimal qualifications, knowledge, or competency has been undertaken. If an association certification program does not include such testing, examination, or review, then the association, in effect, has committed a fraud or misrepresentation by bestowing certified status, and can be held liable for that.
Another exception concerns an association's own claims or advertising with respect to the qualifications of those certified. If these claims or advertising are not truthful, then liability may result.
For example, in one case an association published a brochure in which it claimed that those certified by the association had met certain standards. In fact, many certified individuals had been “grandfathered” when the program was begun, and had not met the advertised standards, nor had the association taken any steps to assure itself that those grandfathered met the program standards. Consumers who had used the services of one of the grandfathered certificants, and had been dissatisfied with his work, sued the association for misrepresentation, and the court held that they had stated a valid cause of action.
Associations can best protect themselves in this regard by having, first and foremost, a quality certification program that covers all areas necessary. Recertification is also essential to ensure that those practicing in the industry or their profession continue to be qualified. Finally, associations should be careful with respect to statements regarding their certification program, e.g., in promotional or marketing materials. They should not make any statements that could be construed as a guarantee of performance by certified individuals.