If California Assembly Bill (AB) 5 passes as it’s currently worded—without an exception for the travel industry—it could have disastrous effects on independent contractors (ICs) and possibly host agencies, as well.
From a poll conducted by Travel Agent Central and our partner publication, Luxury Travel Advisor, 65 percent of host agency owners said they would not employ a single IC should the bill pass as-is. Just over one-fifth (21.25 percent) says they would employ “only a few.” Just under nine percent (8.75) replied they would employ all of their ICs, while five percent said they would employ “most of them.”
With that said, only 8.33 percent of ICs said they would even accept becoming an employee if offered. The majority (54.63 percent), rather, said they would leave the travel industry entirely if the bill passes without an exemption for the travel industry. Just over 37 percent said they would leave the state in order to remain an IC.
During a webinar hosted by the American Society of Travel Advisors (ASTA), offering five options for host agencies as AB 5 looms over their business, general counsel Peter Lobasso said that employing ICs would come with at least a 30 percent increase in labor costs due to payroll taxes, overtime, benefits and more. However, the loss of business brought to the host agency by ICs could also have a strong negative effect on the agency, says Diane Embree, CCTO president and IC for Michael's Travel Centre.
We are a week of from the joint lobbying day, arranged by the ASTA and the Coalition of California Travel Organizations (CCTO), aimed at receiving an exception for the travel industry in California Assembly Bill (AB) 5. ASTA is also encouraging advisors to contact local news outlets to share the importance of amending the bill.