ASTA supports a proposed federal bill that aims to simplify
the determination of who qualifies as an independent contractor (IC).
The Harmonization of Coverage Act of 2017, introduced by Reps.
Diane Black (R-Tenn.) and Elise Stefanik (R-N.Y.), would rely on a common-law
approach to determine whether a worker is an employee or an IC, a method that is
currently used by the Internal Revenue Service.
Specifically, the bill would amend the Fair Labor Standards
Act to solely adopt the common-law test, eliminating the "economic
realities" test currently used by the Department of Labor.
Peter Lobasso, ASTA's general counsel, said the common-law
test "looks essentially at the degree of control that the engaging party exercises
over the engaged party." He said that test works well for travel agencies
Lobasso said the economic realities test is problematic for
travel agencies because it considers "the extent to which the work performed is an
integral part of the employer’s business" when determining if a worker is an IC or an employee. Lobasso noted that it is
impossible for travel agencies with ICs to satisfy that factor.
"There are real-world examples everywhere where a
worker will be classified as an independent contractor under the IRS test and
will be classified as an employee under the Department of Labor's test, and
that creates some incredible difficulties," Lobasso said. "It also
creates a lot of uncertainty, which has a chilling effect on businesses that
want to engage contract workers."
Lobasso said most agencies would prefer the common-law test.
"When we're looking at an industry like travel where
the independent businessperson is the model that's gaining in ascendancy, this
is something that would be a very big boon to the industry as far as having
that certainty and having the right to engage a number of workers as
contractors as opposed to being forced to engage them as employees," he
ASTA estimates there are currently around 20,000 ICs who
The Coalition to Promote Independent Entrepreneurs, of which
ASTA is a member, worked to have the bill introduced.
Eben Peck, ASTA’s senior vice president of government and
public affairs, said the bill would be "controversial."
"Unions don't like anything to do with independent
contracting," he said. "It has nothing to do with our industry, it
has to do with other industries -- if somebody is a contractor instead of a
[full-time employee], then they can't be unionized. So Democrats tend not to
like these kinds of bills."
He said there could be opportunities to attach it to a
larger bill in the future but regardless, ASTA will push for its passage.
"There will be opposition to this, but obviously we
think it makes perfect sense, and we'll be pushing for it," Peck said.