Personal trainers, fitness instructors and front-desk personnel are the most important asset to a fitness studio (collectively for the purposes of this article, “Fitness Personnel”). They are what keep the business operating smoothly on a day-to-day basis and they are many times the reason your clients keep coming back. In essence, Fitness Personnel are the client-interfacing side of your company. As such, the relationship between an owner and his/her Fitness Personnel is key to the business and the terms of such relationship should be well documented in an Employment Agreement or Independent Contractor Agreement, as applicable.
While the Fitness Personnel contract can and should contain a variety of provisions, this article is focused on the two main provisions that a company can use as tools to ensure adequate protection of the business and its clientele.
Owners often times want to restrict their yoga instructors, barre teachers, personal trainers, etc. from servicing other facilities. There are a few things that owners should understand regarding non-compete clauses before inserting such provisions in their template employment or independent contractor agreements.
First, over the last few years, courts in Illinois have been increasingly finding that the mere offer of employment alone is not adequate consideration for requiring a worker to agree to a non-competition provision. Remember that if there is not adequate consideration, which means something of value is not given by both parties to a contract that induces them to enter into the agreement, then such an agreement is invalid. Moreover, where the mere offer of employment is the only consideration given, some courts have determined that unless the workers remains employed for at least 15-24 months, the non-competition provision is invalid. Therefore, if you are particularly concerned about your star instructor leaving to go work for your biggest competitor, you may want to consider offering a signing bonus or some other additional compensation to the worker at the time the contract is executed in exchange for such worker agreeing to be bound by the non-competition provision.
Second, with respect to independent contractors, certain non-competition provisions can be dangerous because the general notion is that an independent contractor is just that, “independent”, and therefore free to work in the market place without restriction (therefore, saying that a personal trainer cannot, for two years, conduct personal training sessions will most likely be invalid). Keep in mind that the enforceability of these provisions against any class of worker revolves around a courts interpretation of whether the contract is reasonable (tailored in scope and location) to protect your business interest or an undue restraint on an employee’s ability to work. Therefore, in the event you bring a lawsuit to enforce a non-competition clause against an independent contractor, the court could find that the business actually misclassified the worker from the onset of the relationship, which could subject the business to overtime or other claims.
Non-Solicitation of Clients and Employees
A non-solicitation provision restricts the employee from soliciting (i) employees or (ii) clients of the business after the worker’s departure. Non-solicitation clauses should be considered for insertion in both employment and independent contractor agreements. Generally, non-solicitation provisions are much easier to enforce then non-competition provisions because, as mentioned above, the court is viewing the issue through the lens of whether or not the provision in question restricts an employee’s ability to earn a living. A non-solicitation clause is geared towards employees or independent contractors who are attempting to poach clients or employees of the company. This is considered a “bad act” on the worker’s part and it is likely that the court will uphold such provisions in favor of the company, provided that the provision is not overly broad (tailored to include clients that the worker came into contact with while employed with the company). A common carve out from a non-solicitation provision is called the “general solicitation” exception, which means that if a worker posts an advertisement in a public forum (such as Craigslist) and an employee or client of the business reaches out to the worker, such act will generally not be a breach of the non-solicitation provision.
Overall, the purpose of non-competition and non-solicitation clauses is to keep individuals from using their access to a company, employees, and clients to harm the company upon departure. These provisions can be useful tools when done properly. Aside from the ability to sue a worker for a breach of contract, it should also be noted that sometimes, the mere fact of including such provisions in a contact can cause the worker and company to come to the table to have a conversation when the worker is contemplating an exit. People are generally reluctant to disregard promises they have made to the company, regardless of enforceability, and as such, sometimes non-competition and non-solicitation clauses can serve as a bargaining chip if nothing else.