Federal Independent Contractor Bill Introduced in Congress

While plenty of focus in recent weeks has been spent combating California Assembly Bill (AB) 5, which would drastically change the host travel agency business model in the state, there is some more big news regarding labor laws coming from Washington, D.C.

On July 26, just before Congress left for its August recess, Congresswoman Elise Stefanik (NY-21st) introduced the Modern Worker Empowerment Act (HR 4069), which would update the current patchwork system of multiple federal tests, providing clear and consistent rules in regard to determining who is an employee and who is an independent contractor.

According to a press release from Congresswoman Stefanik, independent work arrangements provide freelancers and small businesses the freedom and flexibility to provide specialized services on a per-job basis, while promoting economic growth through an efficient pairing of providers with consumers. However, expansion of the independent workforce is under threat due to outdated laws that increase the cost and complexity of doing business. Her solution is the Modern Worker Empowerment Act, which updates the Fair Labor Standards Act to clarify that the employee-employer relationship should be determined by the common law test, bringing consistency across federal government and creating a level playing field for individual entrepreneurs and small businesses.

The American Society of Travel Advisors (ASTA) has sent a letter to Congresswoman Stefanik, as well as the bill’s co-sponsors, Reps. Bradley Bryne (AL-1st), Phil Roe (TN-1st) and Ron Wright (TX-6th), to show its support.

“Like many other industries, travel agencies rely heavily on the services of independent contractors (ICs), an arrangement that our members tell us provides substantial benefits for both workers and businesses in situations where a traditional employment relationship is impractical or uneconomical,” Eben Peck, ASTA’s EVP, advocacy, wrote. “Both parties benefit from the flexibility in business operations and opportunities for entrepreneurialism that IC arrangements provide.”

He goes on to say, “However, ICs and their clients currently face substantial uncertainty over whether their business relationship will be respected for purposes of federal statutes, due to the variety of statutory definitions for the term ‘employee.’”

Peck added that advisors are responsible for the sale of the majority of air travel in the U.S. (selling $86 billion worth of tickets on 155 million transactions in 2018) and that the use of ICs in the industry is growing. According to the latest ASTA member survey, 75 percent of agencies reported using at least one IC and these agencies average 12 ICs to 13 full-time employees. (In 2006, the average agency used just four ICs.)

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