Independent Contractor vs Employee
In the personal training world, this is a hot topic for gym owners and both the State and Federal governments. Every year the standards seem to change in terms of what constitutes someone as a contractor as opposed to an employee. As a gym owner, a personal trainer contractor costs you a lot less money than a personal trainer employee, but you also forfeit any and all control over that individual (not exactly what you might envision for YOUR club’s training department). You can have complete control over an employee, but with the rising payroll taxes, worker’s compensation insurance, unemployment insurance and liability insurance, you may find that your actual net income (including management costs) is almost not worth the headache.
So what is the right answer for your club?
Employees. The penalties associated with claiming individuals as contractors instead of employees from the feds alone are more than enough to close down most clubs. If you currently have trainers at your club that you claim as independent contractors, below is what the IRS uses (as per their website in 2015) to determine if you are in the wrong:
“Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?
Financial: Are the business aspects of the worker’s job controlled by the payer? (These include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)
Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?”
If you are currently outsourcing your personal training to a company that claims the provided trainers as independent contractors, the IRS can still get you on this, as well as the HUGE liability you open yourself and company up to by allowing all of these individuals on YOUR premises with or without insurance and their own worker’s comp insurance (they must provide both). If a trainer from that company gets sued by a client, you can bet that YOUR club is getting sued as well. If that trainer tries to claim unemployment or worker’s comp, you can be sure that YOUR Company will be named in the claim.
If you currently have personal trainers in your club that pay you monthly to be there and they are responsible for determining training rates, collecting dues and how they decide to train and treat YOUR members as clients….not only is your club going to be a “free-for-all” and lack cohesion or a unified program, but those individuals can still cause trouble for you by trying to claim they were an employee all along or can leave you in a bad position should they decide to up and leave after YOUR members have already paid them for a service that they will never receive.
Fact: Our Company uses ONLY employees at every level AND we pay for EVERY cost associated with the personal training as well as provide ALL liability insurance (with your club as additional insured), professional liability insurance, worker’s comp insurance and unemployment insurance.
Reduce your risk, make more money and sleep better at night by working with Metabolic Fitness Management. Contact us today!