System Integration

How does the ‘Industrial Exemption’ impact automation businesses?

Legalities: For many automation companies, complying with the requirements for the professional licensing of engineers is not required for work in a factory thanks to the “industrial exemption.” State engineering licensing laws vary by state and can change; it is important to evaluate compliance annually.
By Julie Weller, Faegre Baker Daniels November 5, 2018

Julie Weller is a lawyer in the automation and robotics practice of Faegre Baker Daniels, a law firm in the U.S., U.K., and China. Courtesy: Faegre Baker DanielsProfessional licensing laws can be some of the most complex and mind-boggling to read, even for lawyers. However, for many automation companies, the painstaking task of scouring the requirements for the professional licensing of their engineers is not required thanks to the “industrial exemption.” While the exact rules vary by state, the industrial exemption relieves work within a factory from the necessity of complying with state engineering licensing laws.

Many states’ industrial exemptions contain some or all of the following stipulations: the engineer must not be offering services to the general public; the engineer must be an “employee” of a public utility, state agency, or manufacturing company; and the engineering work must be incidental to the products or non-engineering services of the engineer’s employer.

In sum, the industrial exemption is meant to benefit those entities that have enough internal processes and safeguards in place to supervise their engineers without interference of the state through professional licensing laws.

Not every state has an exemption

It is important to note not every state includes manufacturing in its industrial exemption and there are a handful of states without an industrial exemption. The industrial exemption also faces opposition, including from some national and local engineering associations, which seek to limit states’ industrial exemptions, citing public safety reasons, among other things.

If a company’s engineers are not properly licensed, the company may be subjected to government fines. In some cases, there is a possibility customers can rightfully refuse to pay for work done by personnel who should have been licensed. The unauthorized practice of engineering is also a criminal offense in some states.

Professional licensing action plan

Automation companies should consider implementing an industrial exemption “action plan” to ensure the engineering licensing requirements of each of the states in which they do business are met. An action plan might include the following steps:

1. Review (or have a lawyer review) the engineering licensing laws of the states in which the company operates – It is important to know what engineering activities require a professional license and which don’t. If the activities are arguably covered, then check if the state’s industrial exemption may apply and, even more importantly, if such an exemption does not exist.

Give some thought to whether or not what the business does truly falls within the industrial exemption. If not, what are the licensing requirements for the given activities? Research whether or not the state has a definition of control systems integration and, if so, if that definition requires a professional license. Then determine whether or not the industrial exemption could arguably apply to the work done for customers.

If this task seems too daunting, contact a lawyer familiar with the automation industry and ask him or her to prepare a licensing law summary the company can use as a guideline for each state in which the company operates.

2. Conduct an “inventory” of engineers – Some states’ industrial exemptions require the exempt engineer to be supervised by a licensed engineer. Create a list of engineers, what licenses they hold, their role, and what projects they are working on. This will be a useful tool to determine if the company complies with the state’s industrial exemption.

3. Keep abreast of any proposed changes to the state’s industrial exemption – Whenever a change to the industrial exemption is mentioned in the state the company operates, learn more about the proposed changes. If an association or organization in which the company is involved is proposing a change, be an advocate for the company’s position on the proposal.

4. Include an acknowledgement in the company’s terms and conditions – To better protect the company from customers who refuse to pay based on an issue with an engineer’s licensing, consider including a provision in the company’s terms and conditions providing that the customer agrees the industrial exemption applies to the company’s work and acknowledges some or all of the work may be performed by unlicensed engineers. Licensing laws can change frequently, so it is important to annually evaluate the company’s compliance with such requirements.

Julie Weller is a lawyer in the automation and robotics practice of Faegre Baker Daniels, a law firm in the U.S., U.K., and China. Edited by Mark T. Hoske, content manager, Control Engineering, CFE Media, mhoske@cfemedia.com.

KEYWORDS: Legalities, engineering licensing laws

  • Professional engineering licensing laws can vary by state.
  • Exemptions also can vary by state for professional engineer licensing.
  • Rules change; review them. Consider a contract clause.

CONSIDER THIS

Is your company covered by professional engineering licensing laws in the states where you work?