The Legal Risk of Misclassifying Yoga Studio Workers

May 28, 2014
Updated: March 31, 2016

Protect your yoga business from lawsuits with a new resource from Yoga Alliance® and Gary Kissiah.

Classifying Teachers as Contractors Could Put Your Studio at Risk

Many yoga studio owners classify their yoga teachers as independent contractors rather than employees. The problem with this approach is that in many cases it may be inconsistent with state and federal labor laws intended to prescribe the terms of the relationship between businesses and the individuals whose work adds value to their enterprise.

Since serious legal issues are implicated, it is important for yoga studio owners to make a careful decision about how they choose to classify their workers.

Officials Are Seeking to Profit from Vague Labor Laws

Labor laws, many derived from the 1930s, were designed to protect workers from exploitation by those who employed them. Though well-intended, these labor laws can be vague and uncertain when applied to employment relationships, and the government officials responsible for enforcing them often have other motives aside from protecting workers. To collect revenue for their agencies, government officials may pursue an extreme interpretation of the law that runs counter to the interests of the businesses from which they hope to collect a toll.

A Failure to Understand Legal Responsibilities Could Result in an Audit

This combination of factors can be a poisonous web for small businesses that don’t pay close attention to their legal responsibilities when they are establishing employment relationships with their workers. Federal and many state taxing authorities are aggressively auditing yoga studios that classify their workers as independent contractors rather than as employees. New York and California are now specifically targeting the yoga community over this issue, and several other states are ramping up audits.

We are hearing of studios being audited, fines being imposed and studios being forced out of business. Yoga communities are being disrupted and teachers are losing their jobs. Many studio owners are anxious about whether they will open their mailbox one day and find an audit letter.

Yoga Alliance Wants Teachers and Schools to Be Protected

Our primary role as a membership organization is to represent the interests of Registered Yoga Teachers (RYT®s) and Registered Yoga Schools (RYS®s). (This is distinct from our role as a credentialing organization, where our responsibility is to serve the public.) This issue has the potential to pit the interests of yoga teachers against the interests of yoga studio owners, which limits our ability to serve as an advocate on behalf of the yoga community. Nevertheless, it is clear that we have a responsibility to provide our members with education about labor laws and to inform yoga teachers and studio owners about their rights and responsibilities under these laws.

Legal Savvy is Your Best Defense

To educate our members about this issue, we presented a series of online workshops last year featuring lawyer and yogi Gary Kissiah, including a presentation on the topic of the law surrounding the classification of employees vs. independent contractors.

As Gary noted in his 2013 Business of Yoga Conference presentation, all yoga studios that classify their teachers as independent contractors should use professional agreements that reflect their actual business practices and comply with federal and state independent contractor laws. Studios that do not use a professional agreement with their teachers are unlikely to win a tax audit, which could subject them to liability for back taxes and fines.

To educate members on this issue, we are sponsoring an e-book by Gary, “Light on Law- A Guide to Independent Contractors and Employees for Yoga and Wellness Businesses.” It provides 280 pages of resources and includes professional independent contractor and employment agreements. We also encourage you to sign up for Gary’s newsletter, which is a good way to keep on top of current legal developments impacting the yoga community.

The list price of this e-book is $29.95 but we are making it available to Yoga Alliance members for $9.99. We are sponsoring 400 copies.

This discussion is for informational and illustrative purposes only and is not meant to impart legal or tax advice. Each studio owner’s situation may differ depending on the factual circumstances and the jurisdiction in which the studio operates.

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