Request By:
Hon. Jerry P. Rhoads
Rhoads & Rhoads, P.S.C.
9 East Center Street
Madisonville, KY 42431
Opinion
Opinion By: David L. Armstrong, Attorney General; By: Christopher W. Johnson, Assistant Attorney General
You have written to this Office to request an opinion regarding the issuance by the Kentucky Board of Hairdressers and Cosmetologists of a license to operate a school of cosmetology. Your question is two-fold:
1. May a member of the Kentucky Board of Hairdressers and Cosmetologists who has applied for a license to operate a school of cosmetology participate in any way in the consideration by and decision-making process of the Kentucky Board of Hairdressers and Cosmetologists of all applications for such a license?
2. May the Kentucky Board of Hairdressers and Cosmetologists issue such a license to operate a school of cosmetology either directly to one of its own members of or to any person with whom a member has any proprietary connection?
It should first be noted that KRS 317A.060 provides that the Kentucky Board of Hairdressers and Cosmetologists shall implement rules and regulations governing the number of licenses for schools in this state. KRS 317A.060(1)(a). To this end, the Board has in 201 KAR 12:105, seen fit for the purpose of awarding school licenses to divide the Commonwealth of Kentucky into seven (7) districts. 201 KAR 12:105, Section 1. Only eight (8) school licenses are to be awarded per district. 201 KAR 12:105, Section 2.
We shall first examine your question of whether a member of the Kentucky Board of Hairdressers and Cosmetologists who has applied for a license to operate a school of cosmetology may participate in any way in the consideration or decision-making process of the Kentucky Board of Hairdressers and Cosmetologists of the applications for such a license. It is the opinion of this office that an applicant who holds a position on the Kentucky Board of Hairdressers and Cosmetologists may not participate in any way in the decision-making function of the Kentucky Board of Hairdressers and Cosmetologists. Any member of the Kentucky Board of Hairdressers and Cosmetologists who has any interest, financial or otherwise, in the award of such a license should properly disqualify himself, or herself, from participating as a board member in consideration of the matter.
The foregoing conclusion is derived from the common law doctrine of conflict of interest. Although there exists no statutory law in this Commonwealth governing conflict of interest with regard to cosmetologists, the courts have long held that ". . . he who is intrusted with the business of others cannot be allowed to make such business an object of profit to himself." Commonwealth, ex rel Vincent v. Withers, 266 Ky. 29, 98 S.W.2d 24, 25 (1936). See also: McQuillin, Municipal Corps, Vol. 10, § 29.97 (3rd ed.). With this in mind, this Office can only conclude that a member of the Kentucky Board of Hairdressers and Cosmetologists must remove himself, or herself, from consideration of the award of a license in order to remove any semblance of impropriety.
It being clear that a member of the Kentucky Board of Hairdressers and Cosmetologists who has an interest in the award of a license to operate a school of cosmetology by that same body must disqualify himself, or herself, in regard to that matter, we must now turn to the second question posed regarding the propriety of the Kentucky Board of Hairdresser's power to issue a license to such a board member. The statutes and regulations relative to the Kentucky Board of Hairdressers and Cosmetologists do not prohibit a member of the board from holding such a financial interest. In fact, KRS 317A.030, which addresses Kentucky Board of Hairdressers and Cosmetologists membership qualifications, specifically provides that one (1) member of the Kentucky Board of Hairdressers and Cosmetologists shall be either an owner of a licensed cosmetology school or hold a financial interest in such a school. KRS 317A.030(2)(d). In the absence of any specific prohibition against ownership of a cosmetology school, it is clear that the statutes do not prohibit the issuance of a subsequent and additional license to operate a school of cosmetology to a member of the Kentucky Board of Hairdressers and Cosmetologists.
Of course, as delineated in the earlier part of this opinion, the award of a license to one of its own members should only be made in the absence of any participation by that interested member of the Board. In such a case, the interested member of the Board is to be treated on equal footing with all other applicants for the same license. KRS 317A.050(7) sets forth preliminary requirements expected of all applicants for such a license:
"(7) The cosmetologist board may issue a license to operate a school of cosmetology to any person, firm or corporation who or which:
(a) Has complied with the rules and regulations of the board including, but not limited thereto, the necessary equipment, supplies and facilities;
(b) Has furnished evidence or proof deemed necessary by the board in its sound discretion that the granting of said license to operate a school of cosmetology is needed and that the person, firm or corporation is otherwise qualified to operate a school of cosmetology, and that it is the purpose of the applicant to establish a bona fide school for the education and training of competent cosmetologists and that said applicant will employ a sufficient number of licensed instructors of cosmetology to conduct such school;
(c) That the licensee shall have as manager at all times a person licensed as an instructor who will be charged with the responsibility of having a sufficient number of licensed instructors of cosmetology to conduct such school. The designated manager as defined herein shall be approved by the board before a license may be issued;
(d) Complies with the rules and regulations of the board including, but not limited thereto, regarding courses, curriculum and hours of instruction;
(e) Otherwise complies with this chapter;
(f) Has paid a fee of one thousand dollars ($1,000);
(g) Has been a resident of Kentucky for five (5) years if the applicant is an individual. If not, the firm or corporation shall be a Kentucky corporation or is licensed or qualified to do business in Kentucky and shall be in existence for a period of at least five (5) years before said firm or corporation may be eligible to file an application;
(h) Any student enrolling in said school shall pay a fee of five dollars ($5.00) to the board before enrollment shall be allowed; and
(i) The transfer of any license to operate a school of cosmetology shall require the approval of the board and a new application filed with the board and a fee of one thousand dollars ($1,000) paid." KRS 317A.050(7).
Moreover, the following relevant portions of 201 KAR 12:110 serve to further elaborate on qualifications demanded of applicants for school licenses.
"Section 1. Each person, firm or corporation applying for a license to operate a school of cosmetology must submit an application provided by the board.
Section 2. Each individual owner, or one (1) partner, in the instance of a partnership, or one (1) corporate officer in the instance of a corporation, must submit a financial statement indicating financial assets in the amount of $10,000 for twenty (20) students enrolled and $1,000 for each additional student enrolled.
Section 3. A person having any interest in operating a school must submit a minimum of two (2) character references, proposed copy of student contract indicating all financial charges to enrolling students, and term of lease for location, if applicable.
Section 4. Application for license to operate a school of cosmetology must be accompanied by an architect's or draftsman's plan of proposed premises drawn to scale, showing the arrangements of the classroom, clinic area, mannequin area, dispensary, reception area, shampoo area, office and any other area of the school, entrance and exits, and placement of equipment." 201 KAR 12:110.
In considering the award of cosmetology school licenses, the Kentucky Board of Hairdressers and Cosmetologists should, in its exercise of sound discretion pursuant to KRS 317A.050(7)(b), award the license to that applicant who best convinces the Kentucky Board of Hairdressers and Cosmetologists that, in view of all attendant circumstances, he or she is the best qualified applicant. KRS 317A.050(7) states that the applicant must demonstrate that it is the purpose of the applicant to establish a bona fide school for the education and training of competent cosmetologists. KRS 317A.050(7)(b). To that end, the Kentucky Board of Hairdressers and Cosmetologists which is charged pursuant to KRS 317A.030(1) with the complete supervision and administration of the provisions of KRS Chapter 317A relating to the practice and teaching of cosmetology, thereby insuring a high level of professionalism among licensees in its field, should be guided in its decision as to the award of a school license by factors presented by applicants for a single school license which tend to demonstrate that the proposed school will present a curriculum best designed to educate and train the most competent cosmetologists.