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 with ICs.

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 said.

ASTA estimates there are currently around 20,000 ICs who sell travel.

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.

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