ASTA: 41 Percent of ICs Might Leave Industry if AB 5 Passes

Man signing law
Photo by Worawee Meepian/iStock/Getty Images Plus/Getty Images

A new bill that would change how independent contractors are defined—and, thus, their employment status—is progressing through the California Senate. If the bill, known as Assembly Bill (AB) 5, is passed as it’s currently worded, it would affect tens of thousands of ICs in the state, with a large number of such working for travel agencies. The California labor committee was scheduled to vote on AB 5 July 10, with a final State Senate vote slated for early/mid-September.

Through the July 10 vote, the American Society of Travel Advisors (ASTA) said it was still fighting to preserve the current independent business model in California. Members of the ASTA staff, along with board members (Brian Chapin of Ensemble Travel Group and Betsy Geiser of Uniglobe Travel Center) were in Sacramento sharing research with members of Senate labor committee. What they found: If required by law to become agency employees, 41 percent of independent advisors said they would choose to leave the industry or leave the state for one that allows them the flexibility they currently have. The vast majority of IC respondents (85 percent) said they are very satisfied with their status as an IC.

Chapin, Geiser and Peter Lobasso and Genevieve Strand (ASTA staff) visited all 40 California Senate offices. ASTA’s goal is to secure a travel advisor exemption in the bill, which threatens the business model of travel agencies in California who rely on independent contractors (ICs) to sell travel. This exemption is, according to the association, ASTA’s No. 1 priority. California-based ICs can contact their state senator through ASTA’s grassroots portal.

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It is critical that this legislation be amended to protect the independent advisor model that has existed in our industry for decades and provides opportunities for thousands of small business owners,” ASTA has said.

Previously, Diane Embree, CCTO president and IC for Michael’s Travel Centre, echoed that this could spell bad news for the travel industry. She told Luxury Travel Advisor that an informal survey conducted by the CCTO found that many agencies would not offer their ICs employment should the bill pass. Robin Sanchez, chief operating officer, Montecito Village Travel, agreed, saying, “I think jobs would just be lost in California, to be honest.” Sanchez added she isn’t sure how Montecito Village Travel would move forward if the bill were passed.

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