Jamie Biesiada
There's no denying the importance of independent contractors (ICs) to the travel industry.
According to ASTA, there are an estimated 20,000 ICs working in the industry today, around 20% of the total workforce. Three-quarters of ASTA's member agencies have at least one IC. The average agency has 12 ICs for every 13 full-time employees.
And, the Society said, the use of ICs is on the rise: Compared to today's average of 12, in 2006, the average agency had only four.
With ICs being so prevalent, it's important to clearly define their relationship with the agency they are contracting with. If an IC is misclassified and found to be an employee, an employer faces fines and penalties and the employee is due compensation owed to them, like wages and benefits.
A recently introduced federal bill would work to simplify the definition of who qualifies as an IC, and would be a boon to the travel industry, according to ASTA.
But under current rules and regulations, there are still best practices agencies can use when engaging ICs to ensure they aren't misclassified.
The most important is to ensure the employer has a written, fixed-term contract with the IC, said Peter Lobasso, general counsel for ASTA.
"That's always got to be the No. 1 box that you've got to check if you want to engage an independent contractor," he said.
While there are several tests on the federal level to determine if a worker is an employer or an IC, each state also has individual laws. Lobasso said the default rule is presumed employment.
"Therefore you, as the party engaging the IC, have the burden of proof in most instances to show that your relationship does in fact pass muster," he said.
A contract should specify the length of the relationship bewteen the employer and IC, and should include clauses of termination for only certain reasons.
"I've seen some really unfortunate contracts that basically state that the engaging party can terminate their relationship at any time, and that obviously smacks of at-will employment more than anything else," Lobasso said. "So you've got to not only have a contract, but you've got to have an intelligent contract that has the proper provisions in it."
ASTA has also advised agencies to pay their ICs on commission, not salary; charge them for use of any facilities, software, etc.; and engage with them as an entity, such as a limited liability corporation.
Lobasso advised agents who want to use ICs to contact legal counsel to ensure they are taking the right steps for their specific business.
ASTA offers in-person training on the subject at industry events, like its annual Global Convention, and offers compliance training online as a standalone course and as part of its Verified Travel Advisor certification program.