Should Your Team Be Independent Contractors or Employees?

Woman coaching a fitness class

As a fitness, wellness or beauty business owner, you’ve most likely thought about how to classify your staff as independent contractors or employees. Over the past few years, this designation has become a hot topic—particularly with the advent of the “shared economy” or “gig” model.

More and more attention has been given toward making sure these workers are compensated and protected appropriately, as well as ensuring that both employer and employee are paying their share of taxes.

The designations between independently contracted workers and employees can be hazy, particularly in the group fitness industry, but the repercussions can be costly.

The primary lesson is to educate yourself, be aware of the laws and circumstances within your state, and figure out what works best for your business model, advisably with the help of legal counsel that specializes in labor rules and regulations. 

Depending on your industry, you can use the following resources to help guide your decision:

  • Yoga Alliance has some great, state-by-state guidelines here and here.
  • ISSA has some personal trainer-specific tips here.
  • AMTA has some useful information on contracting or employing massage therapists here.
  • The SBA gives some fundamental concepts on what makes someone an independent contractor versus an employee here.
  • This IRS webpage provides links to understanding the designations, as well as Form SS-8, the Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding. 
  • There are now 37 US states that have signed an agreement with the US Department of Labor to share information regarding misclassification of workers. You can find your state’s specific terms here.

If you’re unsure of whether your workers meet the test for independent contractor status or how to proceed when contacted by state or federal authorities, consult with an employment lawyer, tax attorney or accountant who can help you navigate state and federal laws—and even avert troublesome scenarios from the start.

For more conversations already happening on this topic join the MINDBODY One community.

DisclaimerAlthough this blog offers business advice, this content is for general informational purposes only—it is not intended to replace the guidance of a licensed legal or financial professional. Information created by third parties that we may link out to or feature on our site is not endorsed by us and remains the responsibility of such third parties. MINDBODY assumes no responsibility for errors or omissions in the content.

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