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California bill amended to exempt agents from independent contractor rule

Cruise Lines International Association worked with the California state legislature to amend Assembly Bill 5, 'The Opportunity to Work Act,' to protect the independent contractor option for the more than 26,000 CLIA travel agents in California.

Aug. 31 update

Late Friday the Los Angeles Times reported travel agents have been exempted from the legislation which CLIA said would have hurt agents' income.

Assembly Bill 5 would codify the California court decision in Dynamex Operations West, Inc. v. Superior Court of Los Angeles County, 4 Cal. 5th 903 (2018), where the court adopted the so-called 'ABC Test,' which determines a worker’s status as either an employee or independent contractor (IC) for purposes of wage order claims.

Agents working as ICs would have to become W-2 employees

As currently written, the ABC Test in AB5 would not allow travel agents to work as ICs. Instead, it would require them to become a W-2 employee to perform the services they have previously provided to large travel agencies as an IC.

It is much more economically beneficial for small, independent agents to work as an IC than to become a W-2 employee.

'In order to be competitive with larger travel intermediaries, independent travel agents often aggregate their sales opportunities with other individual travel agents and then contract for services with larger host travel agencies,' said CLIA's Charles Sylvia, VP membership and trade relations. 'This allows travel agents working as independent, small businesses to earn substantially more and deliver more customized travel packages to consumers. CLIA is urging California state legislators to clarify that independent travel agents are exempt from the ABC Test in AB5.'

Call to action

CLIA sent a call to action to its California-based travel agents, encouraging them ask their state assembly members and state senators to provide an exemption for independent travel agents in AB5.

CLIA President and CEO Kelly Craighead has contacted key legislators directly to seek their assistance in preserving the IC option for travel agents.