Complacent or Compliant?

Kevin A. Bowen breaks down the new California ruling that might pose a threat to your Pilates business. Plus: what you can do to protect yourself and your employees.

By Kevin A. Bowen

These days, there are so many options for just about everything we do—buy, read, join, subscribe to, and so on. As a professional or business owner, the choices you make are very important to your long-term outcome, bottom line and compliance. The continued growth of the Pilates profession and those businesses and individuals offering “Pilates” based classes is growing—and projected to continue to grow even more over the next decade.

There are many strategies being offered by various individuals and businesses, within and outside our profession, on how to market, sell and manage your studio. There are online coaches, software, apps, social media groups etc., all supposedly set up to allow you, the business owner, to become more successful and profitable.

One key factor to consider: employee/employer relationships.

The larger franchise and multi-location Pilates studio businesses, such as Club Pilates and Lifetime Fitness, have set up their instructors as employees on payroll. Many smaller studios do not follow this protocol, and have set up their instructors as independent contractors. Many business owners and instructors feel that this is a win-win; after all, the business does not have to set up and incur payroll expenses for their instructor staff, and the staff feel as if they have more autonomy and flexibility over their schedule, hours and income.

The only problem: This system works until it doesn’t anymore.

Cue the recent California labor law, which has changed in the state, due, in large part, to Uber. California’s definition of an employee/employer relationships has been updated, and with that, the government has started to audit Pilates and yoga studios. California can now go back four years in your records, and issue fines, penalties and the payment of back taxes they say you owe.

Business owners I’ve spoken with consider the employee/employer relationship to be a very fuzzy arena. However, with the many and varied online-scheduling software widely used today, the business of your studio is open for everyone to see. If you have an independent contractor listed on your studio’s schedule online and in printed materials, then many U.S. states—not to mention the IRS—consider said instructor to be an “employee.” See the problem?

So, what do we do now?

First off, know the distinctions of the employee and an independent contractor. “Common law principles further define independent contractor status by method of compensation,” explains the legal website legalzoom.com. “If a person is on an employer’s payroll and receives a steady paycheck, clearly that person is an employee rather than an independent contractor, who likely receives payment in a different manner.”

More factors to take into account when identifying someone as an independent contractor, according to legalzoom.com:

  • If the worker supplies his or her own equipment, materials and tools.
  • If all necessary materials are not supplied by the employer.
  • If the worker can be discharged at anytime and can choose whether or not to come to work without fear of losing employment.
  • If the worker controls the hours of employment, thus indicating they are acting as an independent contractor.
  • Whether the work is temporary or permanent.

Now, a few simple solutions.

Here are some simple guidelines to follow when setting up yourself—or your instructors—as independent contractors:

  • Have your own liability insurance.
  • Establish a contract/written agreement between the studio and the instructor that includes the following:
  1. The contractor establishes their own schedule for work and availability.
  2. The contractor collects all fees associated with their services as well as charges the appropriate taxes to their clients as necessary.
  3. The contractor agrees to a specific rental payment per hour for use of the space and equipment.
  4. The contractor will pay all rentals dues within a specified time frame, i.e., weekly, monthly, etc.

» Kevin A. Bowen is regarded both in the United States and internationally as an advocate and authority for the Pilates industry. He was the cofounder of the Pilates Method Alliance (PMA), and owned and operated Pilates Miami for more than 13 years. He has also served as the director of education for Peak Pilates and director of development for Lolita’s Legacy. Currently, Kevin is the owner and director of Core Dynamics Pilates, a Pilates teacher-training program, and works as a consultant and program developer for various companies in the health, fitness and Pilates profession. For more information, visit kevinabowen.com and coredynamicspilates.com.


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