California state capitol Sacramento

In an effort to combat a bill in California that would limit the ability for travel advisors to work as independent contractors, ASTA is asking members to write letters to the editor.

ASTA has been actively lobbying for an amendment to California Assembly Bill 5, which stems from a 2018 California Supreme Court ruling that threatens independent contractors in the state, including travel advisors. The bill amends the Business and Professions Code and adds to the labor code a more restrictive definition of the role an independent contractor can play in a business.

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Currently, many other industries that rely on the services of independent contractors have been exempted from the bill, including hairstylists, barbers, investment advisers, realtors, physicians, direct salespeople and more.

Still, travel advisors, many of whom are women operating home-based businesses, have not been exempted and will be required to change the way that they do business—either by being hired on as an employee or by no longer operating as a sole proprietor.

As the bill moves to passage by the California State Senate, ASTA is asking travel advisors to express their feelings on the amendment and request that it be amended to exempt travel agents.

The organization points out that, according to its research, it will do great harm to travel advisors operating independently in California.

Independent advisors value their independent status and 85 percent of them are very satisfied with their status. Ninety-five percent choose the IA model because of the freedom it provides and 83 percent choose to be an IA because they can choose who they want to work with.

What will happen if the bill passes? Travel advisors do have options to maintain their independent status by moving from doing business as a sole proprietor to becoming a Limited Liability Company (or similar designation). However, this comes with considerable cost and set up fees but does offer protection from liability. Although, even after setting up an LLC, it’s unclear if companies will still be comfortable hiring independent contractors if the legislation passes.

ASTA believes that the best and easiest way to avoid this type of change in the industry is to amend the bill to exempt agents.

Data shows that this is likely the healthiest option for the industry.

Forty-five percent of travel agency owners said that, if required by law to reclassify their contractors as employees, they would terminate workers’ contracts, and 27 percent of advisors said that if they could not continue operating as an independent agent they would move to a state in which they could.