six years of dispute, the New York Court of Appeals, in In re Yoga Vida NYC, Inc. (Commissioner of Labor), 28 N.Y.3d 1013
(2016), ruled in favor of Yoga Vida NYC, Inc. The court determined that non-staff yoga
instructors were not “employees” of the studio, but rather “independent
contractors”. The ruling provides
clearer guidelines on how fitness studios in New York should treat their
instructors in order to maintain the “independent contractor” classification.
This could have financial benefits for fitness studios throughout the State of
Yoga Vida is a yoga studio in New
York City that offers yoga classes taught by both non-staff instructors and
staff instructors. In 2010, the New York
Department of Labor ruled that these non-staff instructors were employees, and
thus Yoga Vida would be liable for unpaid unemployment contributions. After four different forms of appeals, the
New York Court of Appeals ruled in favor of Yoga Vida, stating that the
non-staff instructors were not employees.
The Department of Labor and the courts
weigh whether there is an employer/employee relationship by looking at the
amount of control the employer exercises over the worker. Although different courts have a variety of
tests to examine control, the determination rests on the totality of the circumstances. In this case, Yoga Vida’s non-staff
instructors could make their own schedule, determine their own payment
structure, and never had to attend staff meetings. Additionally, they were free
to teach at other studios as well. Conversely, the staff instructors had no
choice in payment method and were required to attend staff meetings. With these factors in mind, the court ruled
that there was not significant “control” over the non-staff instructors and they
thus were deemed independent contractors.
Why Does this
boutique fitness sector grows, and more and more instructional fitness studios
pop up in New York, this ruling helpsl provide clarity to owners and
instructors. The distinction between the
“employee” and “independent contractor” is a costly decision and one that has
significant financial ramifications on owners and instructors. If an instructor is deemed to be an
“employee”, the gym is required to pay certain fees and taxes, including
contributions for unemployment. However,
if the instructors are deemed to be “independent contractors”, these fees are
not required and the employers are relieved from these obligations.
ruling is New York state specific, we have yet to see how this decision may
impact these determinations elsewhere.