The American Society of Travel Advisors (ASTA) cautioned the New York State Assembly that pursuing legislation with a narrow definition of employees and independent contractors (IC) could greatly injure the travel agency community in America’s fourth largest state.
New York State is considering legislation that would amend state labor laws, tightening the definition of independent contractors and full-time employees. Senate Bill S6699A is sponsored by Robert Jackson, (D, 31st District), and is currently in the Senate Rules Committee. No movement is expected on the proposed legislation until the state legislature reconvenes in January 2020. The Assembly’s version is Bill A8721A.
Like California and New Jersey, New York is struggling to catch up with the “gig economy,” services and their related jobs created by companies like Uber, Grubhub and Lyft. Some states are concerned that full-time jobs are being shifted to independent contractor status by these smartphone apps, leaving a growing number of workers without benefits and work rules, while also costing states billions in tax revenue.
Speaking on Thursday, Dec. 5, to the Assembly’s Standing Committee on Labor, Genevieve Strand, ASTA’s advocacy director, warned that without exemptions for travel advisors, a law like the one initially proposed in California earlier this year, could decimate employment for thousands of travel advisors in the state.
“As you examine the various legislative proposals, it is critical they be amended to protect travel sellers based on the current standard in New York,” Strand told Labor Committee Chairman Marcos A. Crespo (D, 85th District).
She especially cautioned Crespo and the committee about adopting a narrow “ABC Test,” as California did earlier this year. Doing so would put the successful travel advisor/host agency model “at great risk.”
She said approximately 8,700 New Yorkers work at travel agencies in the state, at approximately 2,000 retail locations, booking close to $2 billion in annual travel sales. Strand said 70% of those agencies employ fewer than five people, so any new legislation blocking travel advisor ICs would particularly penalize small business owners.
Based on the California Supreme Court’s 2018 “Dynamex” decision, under the ABC test, a business must prove all three elements of the test to declare someone a contractor and not an employee. Under that ruling, a worker must: A) be free from company control; B) perform work not central to the company’s business; and C) have an independent business in their industry.
When California’s ground-breaking AB5 bill was introduced last spring, a group of professions lobbied successfully to be exempted from the law, including lawyers, financial advisors, and real estate salespeople.
Only at the end of the bill’s journey through the California Senate – with a final push from individual travel advisors, ASTA and a group of allied organizations – were agents finally added to the exemption list.
Travel advisors “would struggle to meet the B test” of the current proposed New York bill, Strand said. “That’s unfair. They are truly independent from these host agencies, but because these hosts are engaged in selling travel,” ICs would be deemed employees.
“We feel strongly that if New York adopts an ABC test, advisors should be exempt here in New York as well,” Strand said.
Proponents for and against bill pitch their case
The bulk of the guests invited to deliver prepared remarks to the Committee on Thursday represent the technology and taxi and limousine industries. Most said they were open to new rules and laws, but like Strand, asked New York legislators to be open to new ways of addressing the issues, and to be careful about unintended consequences from their actions.
As a result, it is difficult to forecast where the Assembly may go next with their bill.
Crespo acknowledged that the gig economy was “creating pathways to wealth and opportunity” for some people. “We’ve seen the good, the bad, and the ugly of how all of this works. While change will happen, we need to find that balance for technology to adapt, but for people to have opportunity.”
He offered his assessment that California’s AB5 legislation was so lacking in clarity, it was causing confusion for the state’s workers, employers and regulators.
John Olsen, director, state government affairs Northeast region, at the Internet Association, said an AB5-like bill would be “unworkable” in New York and called for a law “reflective of modern forms of work. New York can do better than California and New Jersey’s attempts,” he said.
“Everyone says that AB5, with its carveouts and ABC test, will be a ten-year exercise in litigation,” said Brian Miller, general counsel, Handy Technologies, an app-based company that allows customers to order a variety of services, like furniture assembly, painting, moving, and home cleaning. “We still have a team of lawyers trying to decipher the bill.”
Frank Kerbein, director, Center for Human Resources, The Business Council of New York State, testified that the gig economy was causing “painful” changes for some workers and businesses, but added that “sticking to the same rules in place since 1935-47, that is the easy way out,” and “would be detrimental to the state and industry as a whole.”
Deandra Khan, political coordinator, with the Service Employees International Union, urged the Committee to consider the “simple and modern” ABC test, “to build on the momentum of AB5.” But she acknowledged that all parties need to “make sure all workers’ voices are represented, so that we can come up with the best legislation for them.”
Bill sponsor open to listening to interested parties
Assemblyman Crespo sought insights on all sides of the issue. For example, he asked Strand, a freelance writer and an independent online educator, questions about any protections that contractors might be missing as a result of not being employees of a company offering benefits.
All three affirmed that the flexibility of being an independent contractor outweighed employer-sponsored benefits. “Clearly there is no one rule that fits all,” Crespo said. “There will always be a population that likes being an independent contractor. There are lots of nuances to break down here.”