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.
- Be free from control and direction of the fitness studio as to how they perform their services
For a yoga instructor to be legally classified as an independent contractor, the fitness studio must not control or direct how the instructor performs their classes. For example, if a yoga instructor is given autonomy over class schedules, teaching methods, and the content of the classes without following strict guidelines set by the studio, they may qualify as an independent contractor. This freedom reflects that the studio only controls the final result, not the day-to-day work of the instructor, thus distinguishing them from employees.
- Perform their work outside of the fitness studio’s usual business
To qualify as an independent contractor, a yoga instructor’s work should not be integral to the fitness studio’s primary business model. For instance, if the core business of the studio is providing wellness programs that include yoga, and the instructor is part of the core service offering, this might suggest an employee relationship. On the other hand, if the yoga classes are a secondary offering or the instructor provides services outside of the studio’s primary operations, it may be an indicator of an independent contractor status.
- Be currently engaged in their duties as a business, occupation, or independently established trade
A yoga instructor must be actively conducting their duties as an independent business or trade. For example, if the instructor has their own business entity, provides services to multiple clients, advertises their services independently, or directly contracts with other studios or private clients, it supports their classification as an independent contractor. This independent engagement shows that the instructor is not economically dependent solely on one studio, indicating a contractor relationship.
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 persist in misclassifying yoga instructors, which constitutes a violation of the law. This misclassification affects not only the rights and benefits that should be afforded to yoga instructors but also the payroll costs and taxes that the studios are legally obligated to pay. For example, an instructor consistently teaching scheduled classes, following the studio’s set curriculum, and being required to attend mandatory staff meetings would typically be considered an employee. Misclassifying them as an independent contractor denies them benefits like health insurance, paid leave, and overtime pay.
Should a yoga instructor pursue legal action against a fitness studio for worker misclassification, or if a class-action lawsuit is initiated, the studio could face serious consequences. For instance, if a group of instructors filed a class-action suit, the court might require the studio to pay retroactive wages to the instructors for unpaid overtime or missed meal breaks, reflecting an example of compensatory damages. The studio could also be forced to revise all existing contracts to accurately reflect employee status, ensuring compliance with labor laws moving forward. Additionally, the studio might be liable for back taxes, including contributions to unemployment insurance and Social Security, along with substantial fines for failure to comply with tax regulations. This could significantly impact the studio’s financial and operational structure while highlighting the importance of legal compliance in employment practices.
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.
