ASTA remains vigilant in monitoring activity surrounding the new way workers are classified in California, but doesn't believe the agency community will be affected by a recent lawsuit from Uber and Postmates nor a judge blocking the law from impacting independent truckers.
Last year, ASTA won a hard-fought victory in the Golden State.
There, Assembly Bill 5 (AB5) was signed into law by the governor, changing the way workers are classified as employees or independent contractors. The bill was drafted as a response to a lawsuit, referred to as the Dynamex decision. It replaced the previous standard used to determine worker status, the Borello standard.
AB5 made it more difficult to classify a worker as an IC, but ASTA and the California Coalition of Travel Organizations were successful in securing an exemption for the agency community.
Many industries lobbied for a similar result but were unsuccessful.
This week, Uber and Postmates filed a lawsuit to block the new law. A federal judge separately, and temporarily, blocked the law from impacting independent truckers.
"I'm not sure how much these developments will impact us, if at all," Eben Peck, ASTA's executive vice president of advocacy, said this week.
After gaining the exemption for travel agent services last year, ASTA began educating members on how to comply with current regulations. Peck called it "complicated but not nearly as bad as if we hadn't gotten an exemption."
The exemption ASTA secured was under the "professional services" exemption in the bill. Contracts for professional services (including travel agent services) must satisfy six factors and, if they do so, use the old Borello standard to determine which workers are ICs.
Those factors, according to the Society, include that the worker must maintain a business location separate from the hiring entity, which could be their home; the worker must have a business license if work is performed more than six months after the bill became law; the worker can set or negotiate their own rates for services; the worker can set their own hours; the worker is engaged in the same type of work performed under contract with another hiring entity, or "holds themselves out to other potential customers as available to perform the same type of work;" and the worker uses discretion and independent judgement in performing their services.
According to Peck, if the legislature in California starts to tweak AB5, the Society will watch closely to ensure its exemption remains in place.
"If the entire law is thrown out by the courts, agencies will have to operate under the Borello standard, which is what they had been doing for decades until Dynamex and AB5 came along," Peck said.
He added, "We'll be watching all of this closely and remain grateful for the hard work of our California members and consortia and host agency partners in winning the AB5 exemption last year."