Concern Grows in California for Travel Agent Independent Contractor Status

The California Coalition of Travel Organizations [CCTO] has issued a “call to action,” urging California travel agencies, tour operators and independent agents to contact their state senators and assembly members to resist calls for new legislation that might tighten up the rules for employing independent contractors (ICs).

“Please take action today to preserve the independent model that has existed for decades and provides opportunities for thousands of small business owners,” CCTO said in its call-to-action memo distributed recently. The memo also provided rosters of state legislators and an example of a letter agents could adopt and customize.

The email campaign, from CCTO President Diane Embree, said, “California legislators are considering legislation to enact new laws determining when workers are considered ‘independent contractors’ and when they are considered ‘employees.’”

“The request is that state senators and assembly members take action to ensure that legislation addressing the Dynamex decision clearly states that independent agents under the state’s Seller of Travel Law are independent contractors,” CCTO said.

Embree is referring to the 14-year-old Dynamex Operations West v Superior Court of Los Angeles case. When Dynamex changed the status of its delivery drivers from employees to independent contractors, the employees filed suit.

The debate has since heightened. In April 2018, the California Supreme Court issued a ruling making it harder for employers to classify workers as independent contractors. Under the new ruling, California workers are assumed to be employees unless the following three factors are proven by the employer:

1. The worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work and in fact.

2. The worker performs work that is outside the usual course of the hiring entity’s business.

3. The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.

Until the April 2018 ruling, the state relied on a previous California Supreme Court decision S.G. Borello & Sons, Inc. v Dept. of Industrial Relations (1989), to adjudicate cases about employment status.

Independent contractor status “at risk”
Agent/IC relationships are “now at risk due to a recent court decision. The ‘B’ criteria established in the California Supreme Court’s April 2018 Dynamex decision would result in these small business owners being considered employees,” CCTO said.

“Since the inception of the California Seller of Travel Law 25 years ago, this state consumer protection law has acknowledged independent agents — who are primarily women and are all small business owners — as an integral part of the travel industry,” the CCTO told its agents in its recent memo.

CCTO noted how ICs set their own hours and schedules, set their own rates, select the customers with whom they will work, select and market their own brands, may choose to affiliate with more than one host agency, select the services they desire to sell, may decide to specialize in specific types of travel services, and select the service providers whose products they desire to sell.

“Few, if any, of these important factors would be available to these independent small business owners were they to be forced into an unwanted employee relationship. CCTO estimates there are tens of thousands of persons who are providing travel services as small businesses in conformance with the Seller of Travel Law,” the memo said.

CCTO is directing agents and ICs to go to the state website, http://findyourrep.legislature.ca.gov, so they can identify their representative and petition them to oppose any future legislation.

The communication example provided by the CCTO suggests language like the following: “I am contacting you as your constituent who is a small business independent travel agent. I urge you to take action to ensure that legislation addressing the Dynamex decision clearly states that independent agents under the state’s Seller of Travel Law are independent contractors.”