Joshua Windham and Daryl James: Fight for right to work from home

Travelers shop online for short-term vacation rentals. They browse listings, compare rates and make inquiries on sites like Airbnb — sometimes from thousands of miles away. Nobody needs a brick-and-mortar office to close a deal.

Sally Ladd, who managed five short-term rental properties in Pennsylvania’s Pocono Mountains, worked remotely without a problem for years. She scheduled stays, collected payments and made cleaning arrangements from her home about 60 miles away in Hampton, N.J.

Ladd enjoyed the work and planned to continue the enterprise in retirement, until an officer from Pennsylvania’s Bureau of Professional and Occupational Affairs called one day. He told Ladd that she was under investigation for the unlicensed practice of real estate.

Ladd was shocked. She wasn’t doing property sales or long-term leases. But she soon learned that Pennsylvania’s outdated licensing law, written decades before the gig economy existed, requires a full broker’s license to help with rentals of any kind.

Hosts could list their own properties online, but they could not hire someone else to handle operations unless the person held the state-issued credential, which is not easy to obtain. Besides spending three years apprenticing for a licensed broker, taking hundreds of hours of courses and passing two exams, applicants must maintain a physical office in Pennsylvania — where Ladd does not live.

Even before the covid-19 lockdowns, which forced employers to rethink remote work, the brick-and-mortar mandate made no sense for an industry that operates almost entirely online. Airbnb drove the point home with an April 2022 announcement that its employees can work remotely forever without penalty.

“I think that the office as we know it is over,” Airbnb CEO Brian Chesky said. “We can’t try to hold on to 2019 any more than 1950. We have to move forward.”

Pennsylvania prefers to cling to the past. The investigator who called Ladd forced her to choose: She could complete the burdensome licensing requirements necessary to continue running her business — including paying for an office she did not need and could not afford — or she could shut down.

“I hung up from that call, and almost couldn’t breathe,” Ladd said.

Her dreams were crushed, but she decided to fight back. So in July 2017 she filed a constitutional lawsuit with representation from our public interest law firm, the Institute for Justice. The case hinges on Ladd’s right to earn an honest living without irrational or excessive government interference.

Ladd lost the first round of her case at the trial court level, but the Pennsylvania Supreme Court reversed the ruling against her in May 2020, allowing her case to proceed. The high court recognized the “undeniably important” right to pursue a chosen business and noted that “(a) requirement that (Ladd) obtain physical office space in Pennsylvania is tantamount to an excessive fee for entry into a profession.”

A trial is set to begin in July 2022, and Ladd will be ready.

“I find it absurd that in order to keep running my own business, the state of Pennsylvania is requiring me to open my own office in Pennsylvania, pass two exams and spend three years working for an established broker,” she said.

The brick-and-mortar office requirement is especially absurd after the lessons learned about remote work during the pandemic. Yet Pennsylvania continues to dig in and defend the status quo — while the rest of the world moves forward.

The taxi industry has adjusted to the rise of Uber and Lyft. Employment agencies have adjusted to the rise of Indeed and Monster. And classified advertisers have adjusted to the rise of Craigslist and eBay. Going further back, telegraph operators adjusted to Bell Telephone and carriage makers adjusted to Ford.

Now Pennsylvania must rethink short-term rentals. Growth can be painful. But the answer is not to stifle change using licensing laws designed for a 20th-century economy. Instead, policymakers should stay nimble and respect innovation.

People like Ladd have a right to build a business, be their own boss and earn a living from home in the new economy. So does anyone else with a laptop and phone.

Joshua Windham is an attorney and Daryl James is a writer at the Institute for Justice in Arlington, Va.