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By now, you’ve probably heard about California’s proposed change in regulations related to independent contractors (ICs). These rules, first suggested in a court ruling known as the Dynamex Decision, are being debated in the state’s legislature. As written, California Assembly Bill 5 (AB 5) would drastically change the ability of agencies to work with ICs. If travel advisors don’t get an exemption from the rules, the effect could be dire for the industry.
The American Society of Travel Advisors (ASTA) and the California Coalition of Travel Organizations recently encouraged advisors to meet with state legislators. In all, 24 separate meetings were scheduled, involving 164 advisors.
Melissa Varela, president and CEO of Modern Romance Travel in San Ramon, Calif., visited the office of her senator, Steve Glazer of Orinda, Calif.
“Between the eight of us in the meeting, we had 70,000 clients in our database — one advisor alone employed 50 ICs,” Varela said. “That’s just in one meeting. It’s interesting when you see real numbers like that. These representatives need to understand how it’s going to affect local communities. One of the agents in the meeting even sold Sen. Glazer’s travel.”
The new law could have a major impact. According to a survey conducted by ASTA, 27% of respondents say that if the law goes into effect, they will move to a different state; 35% say if they can’t be an IC, they will leave the industry.
“We were asked about the financial implications of AB 5,” said Steve Orens, president of Plaza Travel in Encino, Calif., who visited Sen. Henry Stern’s office in Los Angeles. “We told his staff that the bill could end up lowering the taxable revenue for the state of California. If a Mediterranean cruise costs $4,000, that’s $600 commission coming to an agency. But if a business shuts down because of this law, and the client books direct, the state of California wouldn’t see any taxable revenue.”
The stakes are high, and the time to lobby for an exemption is running out. For more information, visit ASTA’s Grassroots Portal at www.asta.org/advocacy.