Regarding how Trainers are Being Classified in the Realm of the Athletic Gyms/Studios.
Pursuant to California Labor Law, the basic test for determining whether a worker is an independent contractor versus an employee is whether the principal has the right to direct and control the manner and means by which the work is performed. In essence, control is the motivating factor. How control is considered is by analyzing “control” and considering the secondary factors that serve as evidence of the existence or nonexistence of the right of control. The secondary factors are based on common law as developed in past court cases and administrative hearings. Those factors were present in the chart we handed you at our last meeting.
The following elements should be helpful:
- Whether the person performing services is engaged in an occupation or business distinct from that of the principal;
- Whether or not the work is a part of the regular business of the principal or alleged employer;
- Whether the principal or the worker supplies the instrumentalities, tools, and the place for the person doing the work;
- The alleged employee’s investment in the equipment or materials required by his or her task or his or her employment of helpers;
- Whether the service rendered requires a special skill;
- The kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the principal or by a specialist without supervision;
- The alleged employee’s opportunity for profit or loss depending on his or her managerial skill;
- The length of time for which the services are to be performed;
- The degree of permanence of the working relationship;
- The method of payment, whether by time or by the job; and
- Whether or not the parties believe they are creating an employer-employee relationship may have some bearing on the question, but is not determinative since this is a question of law based on objective tests.
What we do understand is the relationship you have with your trainers is unique to the type of business you are in, and traditionally, the relationship has been one of independent contractor and principal. Our colleague expressed concerns, similar to ours, that your industry has been, and will be later, scrutinized because of the traditional approach to classification of trainers as independent contractors. Often times, although a business has been conducted in a past manner, this does not necessarily mean that it has been, or will continue to be, lawful. The elements that cause a potential dispute in this traditional approach is that the trainers are in the same business as the company itself, the clients are those of the business, not the specific trainers, the equipment being used is owned solely by the business, the scheduling of clients is directly monitored, provided for, and controlled by the company, the marketing is done by the business, not the trainers, and these factors cumulatively push the classification over to the employer-employee side.
What is highly determinative in the classification as independent contractors is those workers properly classified as independent contractors usually have their own clients, provide for their own marketing, invoice the company/principal, are in a business separate from the company, and schedule their own time for doing the work. In essence, when you have guest trainers, these individuals run their own business apart from yours. Their relationship with you is short term, for a specific time period, and specific job (i.e. training for a specific weekend), bringing their own expertise as a “guest” trainer, and understand that this is a single job and that they are coming in as an independent contractor, not an employee. They may even wear or market for themselves outside of Poletential, although we did not go into specifics about your guest trainers’ marketing efforts.
Another example we briefly discussed was the possibility of bringing in technicians to assist you with your aerial studio. If you brought in assistants to help you with this studio, you would be bringing in individuals with a separate skill set separate and apart from your business (i.e. operation of carabineers and experience with aerial apparatuses). Essentially, these individuals have a business separate and apart from yours entirely, and would most likely be invoicing your company for the specific job they performed.
Although it would be impossible to outline every scenario, your on-going structure of how you classify your workers may be exposing you to potential penalties, and potential wage and labor disputes. Our determination is that your trainers and administrative staff should be classified as employees. Our recommendation is to restructure your relationship with your workers, and treat them as employees. We can guide you through this process, provide you with further information related to the possible penalties, and provide you with counseling so that you have a smooth transition if you would like to follow our recommendation. We understand this is different approach from tradition and your past relationships with these individuals; however, it is our duty to inform you of the legal considerations and ramifications of misclassifying so that you are fully informed.
If you want to learn more on employee classification contact us at:
2070 Pioneer Court
San Mateo, CA 94403
McDowall Cotter provides comprehensive legal services in three areas of practice: civil litigation; business; and wealth preservation. To learn more visit us at https://www.mcdlawyers.net. We are a San Mateo based law firm and for more than 50 years, McDowall Cotter’s chief objective has been to deliver exemplary legal services that are personalized, effective and efficient.