CCTO: California IC Bill Expected to Pass to Senate Floor

AB 5, a bill in the California Senate that would change how an independent contractor is defined in the state, is expected to pass to the Senate floor, according to the latest update from the California Coalition of Travel Organizations (CCTO)

The CCTO said that AB5 was heard in the California Senate Appropriations Committee on Monday, August 12. There were 14 representatives from CCTO member organizations, including the American Society of Travel Advisors (ASTA), who testified, the CCTO said.

The bill’s author, Assembly Member Lorena Gonzalez, waived presentation because the bill was proceeding to the suspense file, according to the CCTO. The committee places “on suspense” all bills with projected costs to the state. Just prior to the deadline for bills to pass committee, the committee chair will announce which bills have passed. That deadline is August 30. It is projected that AB 5 will pass to the Senate floor.

Last week, ASTA and the CCTO held a joint lobbying day to argue for a travel industry exemption in the bill. The two organizations said that 24 out of 35 requested meetings took place; California has 40 state Senators. Shortly after the event ASTA EVP Advocacy Eben Peck said it went “very well,” noting that in-person meetings with legislators are more effective than emails and phone calls, and that ASTA has received positive feedback from the meetings. 

ASTA, the CCTO and other California-based travel agencies have warned that the legislation could seriously disrupt travel agencies, even those not based in California: by changing how an independent contractor is defined in the state, it could render agencies unable to use California-based ICs, instead requiring that they be converted to full-time employees, imposing significant additional cost in terms of benefits. Many agencies we have spoken with say they would not be able to convert their independent contractors to full-time employees if the bill passes as-is. 

In another wrinkle, Congresswoman Elise Stefanik (NY-21st) recently introduced new legislation regarding independent contractors in Congress called the Modern Worker Empowerment Act (H.R. 4609). That bill would update the Fair Labor Standards act to clarify how independent contractors are defined on the federal level, saying that the employee-employer relationship should be determined by the common law test. ASTA has announced its support for this legislation. 

ASTA has set up a grassroots portal that allows advisors to contact their state senator, send a letter to the editor of their local paper and stay up to date on the latest developments. 

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