Peter Lobasso, general counsel for ASTA, shared his thoughts on the pending AB5 legislation in California with the media at ASTA’s annual conference yesterday in Fort Lauderdale.
The bill, which would go into effect January 1, 2020, would ‘codify’—turn into law—the so-called "Dynamex decision," a 2018 court decision severely limiting the ability of California businesses to utilize independent contractors. The legislation would essentially turn the business model for many travel agencies in California upside down.
AB5 has been front and center for ASTA all summer, as the association seeks to have travel agencies exempted from the bill.
“Obviously we are hoping for the best, but at the same time as the trade association, I think it's a responsible thing for us to do to figure out what kind of options are available to our members who are affected,” says Lobasso. “The good news is we're still hopeful for the exemption and we've got a couple more bites at the apple if we don't get good news at the end of this week…As we understand it, there's probably about three months between when we see what AB5 in its final form looks like when it's signed by [Governor Newsom] and January 1 when the bill would go into effect. So we just want to communicate that there are options available.”
Lobasso acknowledged that the large corporate travel agencies will have their legal team on hand to deal with the fallout from the bill, but emphasized that ASTA will be on hand to assist its membership.
“There are a lot of small operators, folks with one or two ICs who will want to know what happens," Lobasso says. "Do I have to terminate my contracts immediately? Can I wait until January 1? What about conditions that are payable after AB5 goes into effect? And all of these questions are really great ones and we don't have the answers right now because we don't know what AB5 is going to ultimately look like. But the message here is that as the national trade association for travel advisors, we are going to be with them every step of the way to ensure that this disruption is as minimal as possible. And again, we're hoping for the best, but we're planning for the worst. And I think that's the message that we want to send.”
Eben Peck, executive vice president, advocacy for ASTA, was also on hand to comment on AB5. While he acknowledged it’s not possible to forecast whether or not AB5 will pass and what effect it will have on advisors, he did have a strong perspective on the matter and assured the media that ASTA is on top of the situation, advocating on advisors’ behalf.
“I will say this, we have fought these state tax fights before," Peck says. "We have a pretty good sense of what it takes to win in that case. We have not been in a situation like this before in California, so it would be silly of me to try to hazard a guess, I think.
"What I do know is that what's most effective, generally, and especially right now, is in-person constituent pressure on these Senators, and that is happening. We helped to organize a virtual district office fly-in a couple weeks ago. We're supporting another Sacramento fly-in on Wednesday. The first one had about 150 people. This next one has about 100 people at this point. We are applying pressure in my view, in what is the most effective way possible. That I know.”
Peck says he knows that ASTA’s efforts are being heard and getting the attention of legislators who will write the final language of the bill.
Erika Richter, director of communications for ASTA, said that ASTA has a “Letter to the Editor” campaign, encouraging advisors to write to their local media outlets about the potential affects of the bill and that several Op/Ed pages have picked up some of these letters. As well, the larger travel agency and agency networks with a presence in California are also working hard to fight the bill.
Lobasso said that the bill is expected to come out of the Appropriations Committee on Friday, August 30, and it will then go before the entire California State Senate.
“Assuming it's passed, then there's a concurrence or reconciliation process in order for the Assembly to get on the same page with whatever the Senate passed," Lobasso says. "And we're still expecting that it will get to the Governor mid to late September. And, basically, the deadline would be October 13.” There is a chance the wording in the bill could change before that date, he noted.