California Gov. Gavin Newsom has signed Assembly Bill 5 (AB
5), the bill that changes the test used to determine employee classification,
into law. While the travel industry was successful in carving out an exemption
for advisors so agencies can use the same classification test that has been in
use for decades, the issue is likely to spread to other states.
ASTA is already gearing up to fight similar proposals using
tactics the Society developed in California alongside the California Coalition
of Travel Organizations (CCTO).
Meanwhile, with the passage of AB 5, lawyers are urging
travel agencies to review the contracts they have in place with independent
contractors (ICs) to ensure they pass muster.
Even in California, where the law goes into effect in
January, advocacy groups aren't quite done with their work.
The victory "was very exciting," said CCTO
president Diane Embree, who's also an IC with Michael's Travel Centre in
Westlake Village, Calif. "I'm trying to temper the excitement a little bit
because we know that come January, there are going to be a rash of bills trying
to exempt not only the Lyfts and Ubers but other professions as well. And there
could be bills looking to amend this new law.
"So our concern would be that if something is done to
amend the law, will it have any kind of impact on the professions that are
already protected by the law?"
She said she believes agencies were granted an exemption at
least in part because there's a seller of travel law in California. Most exempt
industries were those requiring professional licensing. While the seller of
travel law is not a professional license, it still represents a registry of
advisors overseen by the state's attorney general.
Embree was on the CCTO board in the 1990s, when the seller
of travel law was introduced. The coalition supported it, as it replaced the
unenforced travel promoter law. That law had more stringent bonding and
ticket-delivery requirements with which advisors would not have been able to
"Certainly, way back then, we never would have dreamed
of the impact it would have almost 30 years later," Embree said.
Eben Peck, executive vice president of advocacy at ASTA,
said the Society started preparing for more state-level fights in places like New
York, Oregon and Washington state shortly after getting the exemption in
California. The Society feels more prepared, he said, because it has a "playbook"
ready thanks to its efforts in California.
Agencies that work with ICs in California are advised to pay
attention to ensure that they meet the requirements for the exemption carved
out for them, but lawyers who specialize in the industry are urging everyone to
review IC contracts and make sure they comply with applicable laws.
Employment lawyer Sue Bendavid with the firm Lewitt
Hackman said, "Smart companies are the ones that keep their fingers on
the pulse ... and always pay attention to the laws that are changing. And they
have to change when those laws change."
In California, specifically, the exemption for travel
advisors comes under the overarching "professional services"
exemption, Bendavid said. In order to qualify for that exemption, a number of
criteria are outlined in the bill. For example, an IC must secure a business
license within six months of the law becoming effective and have the ability to
set his or her own hours. Additionally, it dictates that a travel advisor must
satisfy California's seller of travel law.
If all the provisions are met, the agent in question would
qualify for the exemption, meaning the Borello standard would be used to
determine worker status instead of the newer ABC test required by the law. The
Borello standard has been used in California for decades.
Peter Lobasso, the Society's general counsel, said two
criteria outlined in the professional services exemption might mean changes to
current practices: the requirement that the worker have his or her own business
location (which can be a home); and that "the individual is customarily
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."
Lobasso interprets the latter requirement as meaning a
worker can work or is actively working with another entity. In travel, that
means that if a host agency has an exclusivity clause in an IC's contract, it
would have to be removed for the IC to qualify for the exemption.
Robert Joselyn, president and CEO of the Joselyn Consulting
Group, said there is a case to be made for professional licensing of travel
advisors. It could help protect them from future legislation like that in
California, he said, and would elevate the industry and the profession.
Joselyn recently wrote an argument for licensing and
distributed it throughout the industry. In it, he said he understood arguments
against professional licensing.
"Wouldn't it be nice though," Joselyn wrote, "if
10 years from now, advisors were viewed with the same respect as attorneys,
CPAs, certified financial advisors, etc.?"