Assembly Bill 5, now making its way through the state Legislature in California, has the ability to drastically alter the way independent contractors (IC) living in the state could work with travel agencies. The bill would codify a court decision last year that replaced a decades-old method known as a "common-law test" for determining which workers were employees and which were ICs with a more rigid "ABC Test." Under this method, in order to be considered an IC, a worker needs to perform work outside the usual course of the hiring entity's business.
ASTA and the California Coalition of Travel Organizations (CCTO) have been fighting to have sellers of travel listed as exempt from the new employee classification rules. Senior editor Jamie Biesiada sat down with ASTA general counsel Peter Lobasso to discuss the road ahead.
Q: AB 5 has passed in the Assembly and is currently with the state Senate, but it still has to go through a number of steps before it hits the governor's desk. Are there more opportunities to get an exemption?
A: We've still got a couple more bites at the apple. For example, once the bill comes out of the Senate, it's been amended since it left the Assembly, so it goes back to the Assembly for a concurrence vote ... on the changes the Senate made. If that's approved, then it goes to the governor's desk for his signature. But if it's not approved, then it goes before a conference committee where you have members of the Assembly and members of the Senate working together to hash out the differences.
That might be another opportunity for our lobbying efforts, so we are by no means done with this. There are a lot of opportunities that we still have to influence what the bill looks like before it gets to the governor.
Q: What can travel advisors do to help?
A: We've got a call to action, which is scheduled for Aug. 6, that we are working on jointly with the CCTO.
We're asking our members to visit the district office of their state senators, who are on recess until Aug. 12. We view this as a potential opportunity to talk to the senators in their districts, so that's good for us, too, because our members aren't going to have to travel to Sacramento to make that personal connection. A personal visit is a wonderful thing if folks are able to take a little time out of their day to do that.
We view this call for action on Aug. 6 as a way that we can potentially get hundreds of travel advisors who would be affected by this to visit the district office of their state senator.
Q: Some of the contingency plans that ASTA has provided for travel agencies include setting up a separate legal entity that doesn't sell travel to engage California ICs or allowing the contracts of California ICs to expire. When should agencies start looking at alternatives?
A: It's never too early to start thinking about what your business model might have to look like after this goes into effect, but at the same time, it's a little difficult because we have no idea what this bill is ultimately going to look like.
You really have to think about how this is likely to affect your particular business model, and obviously part of that is asking, "How dependent am I on my ICs?"
My feeling is that it's likely that the governor is going to sign AB 5 in some form by the middle of October; that's the deadline that he has in order to do that.
That would give everybody in California about two and a half months to make whatever adjustments they deem necessary. It's not a lot of time, but it's not insignificant, either.
Q: How big of a deal is this for the industry?
A: There's a lot of justified concern, but at the same time I really think that a lot of people think that the world is coming to an end, and I think that's really overstated.
What I mean by that is, by comparison, [the Department of Labor's 2016 attempt to widen the number of salaried workers eligible for overtime pay] was far bigger of a deal for our industry as a whole than this is. ... That's cold comfort for those folks in California, but industrywide, there really isn't any comparison.