Travel agencies of all sizes rely heavily on independent contractor travel advisors, but this structure is under intensified legal scrutiny regarding worker classification. A recent class action was filed in Massachusetts against a travel agency specializing in Disney vacations, and its owner personally, which underscores the potential ramifications for travel agencies using independent contractor models.
The lawsuit was filed by an advisor on behalf of all similarly situated advisors alleging that the agency misclassified them as independent contractors when they operated as employees under Massachusetts law. The complaint asserts violations of MA’s independent contractor, minimum wage and sick time statutes.
The advisor argues the agency exerted substantial control over her and other advisors through mandatory use of its booking network, strict compliance with company policies and training, requiring exclusive sales through the agency and detailed oversight of client interactions and booking procedures, which are all inconsistent with independent contractor status. Advisors purportedly worked for 25 to 30 hours or more weekly but were compensated solely by monthly commissions, with no minimum hourly wage or biweekly payment, allegedly violating wage payment frequency and minimum wage laws. The lawsuit argues that annual agency fees are prohibited under state wage laws. Additionally, by failing to accrue and pay sick time, the agency allegedly denied benefits mandated for employees. The advisor is seeking class action certification, unpaid wages, triple damages, attorneys’ fees, interest and an injunction to halt alleged misclassification.
The lawsuit discusses the Massachusetts “ABC test” for independent contractor classification, which is similar to many of states’ tests and presumes workers are employees unless employers prove: workers are free from control and direction; work is outside the usual course of business; and workers are customarily engaged in an independently established trade.
According to the advisor, the agency fails this test because 1) travel advisors perform services central to its business — selling travel and related products; 2) advisors are subjected to detailed company control including mandatory training, exclusive sales policies, use of company booking systems and adherence to strict operational procedures and marketing guidelines; 3) advisors lack independence to engage in similar work elsewhere as required; 4) working remotely from home does not constitute “outside sales,” as federal regulations consider a home office part of the employer’s place of business, thereby categorically excluding the outside sales exemption and entitling advisors to minimum wage protections; 5) payment solely by monthly commission without minimum hourly guarantees or timely payment violates wage laws; 6) the imposition of annual agency fees violates wage act prohibitions on charging workers fees necessary to secure work; and 7) the failure to accrue paid sick time for misclassified employees violates earned sick time laws. The advisor argues that these conditions demonstrate a clear employee relationship, warranting full application of wage and benefit protections under Massachusetts law.
The agency vigorously denies the allegations and seeks to defend the independent contractor classification, arguing: 1) Travel advisors perform “outside sales” work as defined by Massachusetts wage statutes, regularly selling away from the office without daily reports or visit requirements. This exempts them from minimum wage and overtime protections; 2) Payment by monthly commission complies with wage laws since commissions are paid when earned and payable; mere monthly timing does not violate payment frequency rules; 3) Any fees paid are customary agency fees consistent with contractor arrangements and not unlawful wage deductions; and 4) Class certification is unwarranted, as there is no proof of numerosity, commonality, typicality, or adequacy of representation required to certify a class under Massachusetts law.
As you can see, the misclassification question is a complex and fact-intensive matter under a state’s ABC test. This lawsuit could create a wave of legal challenges for travel agencies relying on independent contractors as core sales channels. The outcome may clarify or reshape what operational controls, contractual terms and compensation methods are permissible under increasingly rigorous legal standards. Travel businesses that maintain control over contractor booking systems, require exclusive sales, enforce branding and conduct policies, pay only commissions on a delayed schedule, or charge agency fees may face elevated litigation risk and liability. The case reinforces that courts will look at the terms of the parties’ written agreement, as well as operational realities, in assessing classification.
Jeffrey Ment
comments