Travel Industry Receives Exemption in California AB 5

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California host travel agencies and independent contractors should congratulate themselves on their hard work. They have officially secured an exemption in Assembly Bill (AB) 5, the American Society of Travel Advisors (ASTA) and California Coalition of Travel Organizations shared with Luxury Travel Advisor. On Friday night, the California Labor Federation determined it would add travel sellers to a revised “professional services” exemption in the bill.

With this said, the process is not over. AB 5 has advanced out of committee to the full Senate, which has until September 13 to pass it (or make additional changes). If there are no further changes, it progresses to the governor, who has until October 13 to sign or veto the bill. It's also possible, ASTA adds, that due to the complexity of the bill, it does not pass and is taken back up next year.

"As you will remember, AB 5 as previously written threatened the business model of travel agencies in California that rely on independent contractors (ICs) to sell travel. The amendment added today would add travel agency services regulated by the state's Seller of Travel law to the list of "Professional Services" exempt from the bill's impacts," ASTA's statement reads.

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"The only provisions of the amendment that may require modest changes to current business practices are a requirement that an independent contractor (IC) must 'maintain a business location, which may include the individual's residence, that is separate from the hiring entity' and must be 'customarily engaged in the same type of work performed under the contract with another hiring entity' or must 'hold themselves out to other potential customers as available to perform the same type of work,'" the statement continues. "Further, to be covered under the pre-Dynamex standard, the IC must be in compliance with the California Seller of Travel law, either by registering or qualifying for the exemption from the registration requirement." 

CCTO president Diane Embree said in a statement provided to Luxury Travel Advisor: “We are very pleased that Assembly Member Gonzalez and the California Labor Federation have reviewed the specific situation for California sellers of travel and have decided to add this provision to AB 5. The efforts of ASTA and our CCTO coalition member organizations have been critical to this decision. Our member organizations are California chapters of the American Society of Travel Advisors, as well as United States Tour Operators Association, Student Youth Travel Association, Signature Travel Network, WESTA, Ensemble, PATH, Travel Leaders Network, and Virtuoso."

A notable effort was made by ASTA and the CCTO, who held joint lobbying days in California to plead their case and their efforts seemed to have paid off. Without the exemption, Luxury Travel Advisor found that the majority of ICs said they would leave the travel industry, while 65 percent of host agency owners said they would not employ a single IC. The exemption means that this drastic shakeup will no longer occur.

According to ASTA, 230 people participated in the joint lobbying day with the CCTO on August 6 and 28, and 2,752 Californians called or emailed legislators through its grassroots advocacy portal. 

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