Californian prioritize their health and wellness, and as such, yoga studios are flourishing. Most fitness professionals are misclassified as independent contractors when the reality is they should be classified as employees. Yoga instructors are no exception, and these misclassifications means that countless yoga instructors are being denied their legal rights and benefits, just so fitness studios can save millions of dollars.
How Does AB-5 Apply to Yoga Instructors?
The California AB-5 Law presumes that all workers are employees. The burden of proof is on the employer to prove that their worker is an independent contractor. In the case of yoga instructors, a fitness studio must show through documentation that their yoga instructors meet all three of the AB-5 Law Requirements.
In order to be legally classified as an independent contractor, a yoga instructor must:
- Be free from control and direction of the fitness studio as to how they perform their services.
- Perform their work outside of the fitness studio’s usual business.
- Be currently engaged in their duties as a business, occupation, or independently established trade.
If you believe you do not satisfy all three of these requirements and your workplace has misclassified you, please call Brad Nakase for a free consultation on 888-600-8654.
How Does AB-5 Apply To Yoga Instructors?
The above three requirements are called the ABC test, and all three of those must be met for a yoga instructor to be considered an independent contractor rather than an employee. This makes it easy to quickly test whether fitness studio workers should be considered as employees or independent contractors. In order to be considered as an independent contractor, a yoga instructor must be free from any control or direction from their hiring party, conduct work that goes beyond the normal scope of the fitness studio’s business, and perform their work as a business, occupation, or trade. Therefore, yoga instructors at a gym or fitness studio would be likely to be an employee rather than an independent contractor. A yoga instructor who is hired to run a prenatal yoga class for a doula may be classified as an independent contractor depending on the nature of the business and work agreement.
The AB-5 Law was created after Dynamex v. Superior Court (2019) 4 Cal.5th 903. This momentous case established the precedent of classifying workers as employees or independent contractors. The ABC test is now the legal standard for classifying workers as employees or independent contractors.
For the fitness industry, this means a complete overhaul of its classification of workers, as many people who were classified as independent contractors are now employees. This means that workers have missed out on breaks, paid leave, and sick leave. Courts across California have also decided that the ABC test and AB-5 can be applied retroactively.
What Are The Consequences For Misclassifying Yoga Instructors?
Many fitness studios have continued to misclassify yoga instructors, therefore breaking the law. Not only does this impact the benefits and rights due to yoga instructors, but payroll costs and other taxes that should be paid. If a yoga instructor were to take a fitness studio to court for misclassifying workers, or a class-action lawsuit were to be filed, a fitness studio could find themselves required to pay retroactive costs, change their contracts for all workers, and pay back taxes and fines.
Costs of Classifying California Yoga Instructors As Employees
Here are some of the costs associated with employees rather than independent contractors. You will see why many fitness studios are reluctant to classify their staff correctly under the law.
- Workers Compensation – By classifying yoga instructors as independent contractors, the fitness studio does not have to pay workers compensation. Instead, the onus is on the yoga instructor to get their own insurance.
- Off-The-Clock Work – An independent contractor will get a flat rate for their time. When a yoga instructor is an employee, they will be paid for time outside of the actual class, so they will be paid for planning the class.
- Meal Breaks and Rest Breaks – Paying a yoga instructor a flat rate means they are entitled to be paid for rest breaks or meal breaks at their regular rate of pay. They should receive 20 mins of rest break for an eight hour day. A yoga instructor should also be paid for the non-productive downtime before and after class, such as meetings and training programs. This time should be paid at a minimum of the minimum wage.
- Paid Sick Leave – As an independent contractor, if you are sick and cannot take your yoga class, then it is cancelled, and you don’t get paid. However, when you are classified as an employee, you must be paid for sick leave.
- Uniforms – As an employee, if the gym requires you to wear a uniform, they must pay for it. If the fitness studio or gym has asked you to buy a uniform, they are violating the law.
- Record Keeping – The gym owner is not keeping a record of their yoga instructors’ work hours and non-productive downtime if they are misclassifying their workers as independent contractors. Yoga instructors can file class-action lawsuits if their hours are not being tracked.
- Payroll Taxes – Fitness studio owners do not have to pay payroll taxes for their independent contractors. This is perhaps the biggest reason for business owners avoiding correctly classifying their yoga instructors. This affects yoga instructors from applying for unemployment benefits if they are terminated through no fault of their own.
- Discrimination and Harassment Training – The law requires all employees to receive sexual harassment training. If a yoga instructor is classified as an independent contractor, they will not receive this training.
- Wrongful Termination – Yoga instructors at gyms should be classified as employees which means they cannot be terminated for reasons which violate state public policy. By misclassifying their yoga instructors as independent contractors, gym owners can let go of their yoga instructors as they wish. As an employee, your rights are protected under California law.
- Waiting Time Penalties – As an employee, if you are not paid your owed wages upon termination, your employer must pay an additional 30 days of pay. This is under Labor Code 203 and protects yoga instructors.
- Reimbursements to Yoga Instructors – If a yoga instructor is classified as an employee, the gym must reimburse them for all work-related expenses. This includes equipment, training, and music. Labor Code 2802 covers this matter.
These are just some of the costs fitness studios will incur if their yoga instructors are classified as employees rather than independent contractors. It is easy to see why many gym owners are avoiding doing the right thing and classifying their employees correctly. They are making money from violating the rights of yoga instructors.
AB-5 seeks to reduce income inequality caused by the misclassification and therefore underpayment and rights infringement of workers. Yoga instructors deserve fair pay and rights under the law. This includes worker’s compensation, minimum wage, paid sick leave, unemployment insurance, and paid family leave. Under AB-5, millions of people will now be afforded better protection and a better work environment.
Brad Nakase, Attorney
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Business Trial Lawyer since 2005. Proven Results.