Travel Advisors Caught in the Crosshairs of California Senate
SACRAMENTO, CA (MPG) - If California Assembly Bill 5, currently making its way through the California Senate, is enacted without amendment, thousands of travel advisors in California and across the country will no longer have the option of rendering their services as independent business owners to the agencies that currently engage them, according to a survey conducted by the American Society of Travel Advisors (ASTA).
Like numerous other industries, travel agencies have come to rely heavily on the services of independent contractors, and this arrangement provides substantial benefits to both independent advisors and the agencies engaging them. Specifically, agencies gain a measure of flexibility where traditional employment relationships are either impractical or uneconomical, while advisors have the freedom to set their own hours and schedules, establish their own rates, select the customers with whom they will work and market their own brands.
Unfortunately, however, recent developments have put this mutually advantageous system at great risk. Last year, the California Supreme Court issued its decision in the case of Dynamex Operations West, Inc. v. Superior Court of Los Angeles County, 4 Cal. 5th 903 (2018), in which the Court adopted the so-called “ABC Test” to determine a worker’s status as either an employee or an independent contractor for purposes of wage order claims. In doing so, the Court overturned the common law “right of control” test established in the Borello decision upon which travel agencies and businesses in hundreds of other industries in California had relied upon for nearly three decades.
Recently, the American Society of Travel Advisors conducted an industry survey in order to assess the likely impact of this harmful legislation on the independent contractor community. The preliminary results paint a clear picture.
First, this is an established industry that is about to be thrown into upheaval by Assembly Bill 5. More than half of independent contractors (ICs) have been in their role for more than seven years.
The vast majority of respondents to our survey (85%) are very satisfied with their status as an IC and 93% of independent advisors reported that the freedom to set their own hours and work schedules was an important factor in choosing the IC business model.
If required by law to become agency employees, 41% of independent advisors responded that they would choose to leave the industry or leave the state for one that allows them the flexibility they currently have.
Now Assembly Bill 5, currently pending before the Senate Labor, Public Employment and Retirement Committee, aims to codify the holding in the Dynamex decision, making the ABC Test applicable to nearly everyone in every industry in the state. Because in most cases traditional travel agencies engaging workers to sell travel will be unable to satisfy the ABC Test, passage the bill would mean that thousands of independent advisors will no longer have the option of rendering their services as independent business owners to the agencies that currently engage them.
As the bill has moved through the legislature, exemptions have already been added for insurance agents, physicians, dentists, direct salespersons, real estate agents, barbers, architects, and others.
While the Senate considers Assembly Bill 5, it is critical that it be amended to clearly state that workers engaged to sell travel in the travel agency industry will be evaluated under the standard in place in California for nearly 30 years prior to the Dynamex decision.
Rebranded in 2018 as the American Society of Travel Advisors, ASTA is the leading global advocate for travel advisors, the travel industry and the traveling public. Its members represent 80 percent of all travel sold in the United States through the travel agency distribution channel. Together with hundreds of internationally-based members, ASTA’s history of industry advocacy traces back to its founding in 1931 when it launched with the mission to facilitate the business of selling travel through effective representation, shared knowledge and the enhancement of professionalism. For more information about the Society, visit ASTA.org. Consumers can connect with an ASTA travel advisor at TravelSense.org.