The American Society of Travel Advisors (ASTA) is showing support for the U.S. Department of Labor’s proposed rule that would revert to a previous framework for defining worker status for independent contractors (ICs).
In comments submitted to the office of Daniel Navarrete, the director for the Division of Regulations, Legislation and Interpretation within the wage and hour division at the U.S. Department of Labor, the association wrote that rescinding the current analysis for determining worker status under the Fair Labor Standards Act (FLSA) – and replacing it with analysis from a 2021 rule – would support the many travel agents (71%) who operate as ICs.
The current framework, from Jan. 10, 2024, does not give travel agencies clarity on six identified factors, wrote ASTA. The factors are: opportunity for profit or loss depending on managerial skill; investments by the worker and the potential employer; degree of permanence of the work relationship; nature and degree of control; extent to which the work performed is an integral part of the potential employer’s business; and skill and initiative.
“[The] rule to determine worker status for FLSA purposes imposes real burdens that negatively impact their operations,” ASTA’s Peter Lobasso, senior vice president of industry affairs and general counsel, wrote in the comments. “Specifically, companies must apply an overly broad and vague test to a given set of facts with little, if any, practical guidance and for which the consequences of an incorrect decision can be serious and costly.”
ASTA agrees with a reinstatement of the 2021 rule, which gives two factors — the nature and degree of the individual’s control over the work, and the individual’s opportunity for profit and loss — a greater weight than the other factors, noting that the “nature of control” factor often supports a finding of IC status, vs. an employee (where an individual does not have control of working hours, project selection and or whether they can render services to others).
ASTA additionally recommends an additional statement be added to the rule that would state that, unless extraordinary circumstances were present, the classification indicated by these two factors would determine the status of the worker, despite the evaluation of the other (non-core) factors.
The 2024 rule is especially limiting for agencies that may not have access to legal counsel because of their size, ASTA adds. Ninety-seven percent of agencies qualify as small businesses under the standards listed by the Small Business Administration.
“Independent contractors are essential to the travel advisor profession and to the entrepreneurial model that supports agencies of all sizes,” said Zane Kerby, CEO and president of ASTA, in a statement. “ASTA strongly supports efforts to provide clearer, more predictable federal guidance so our members can engage independent advisors with confidence, remain compliant and continue serving travelers across the country.”
