Preventing lawsuits brought by employees and subcontractors
By Bill Coons, Loss Control Director
Employment in health and fitness centers varies widely depending on the business model of the facility. Health and fitness centers can utilize both employees and contract workers to staff their center. Using both types of workers requires careful planning to help prevent and prepare for potential lawsuits and their ability to defend lawsuits if they do happen.
Many fitness centers utilize subcontractors as personal trainers who, when not with clients, may also answer questions from members of the club not training with them. Other health clubs have employees who may work as personal trainers on the side. Both types of workers need to be treated fairly, but they need to be managed differently to prevent an employment practices liability lawsuit. Complaints from both employees and subcontractors damage a fitness center’s reputation and can cost the center money by losing members. A lawsuit can cause even more damage in both reputation and loss of money, but also the legal costs required.
A recent lawsuit was filed by 6 former employees of a national fitness center who alleged the company discriminated based on race and gender in their promotion practices. Companies can avoid this type of litigation through solid documentation in employee files which make it clear as to why one employee may have been selected over another. Both positive documentation of employee achievements and documentation of employee discipline action will serve to provide a clear picture of why an employee may have been passed over for a promotion.
There have been lawsuits against fitness center owners by subcontractors who claim they were treated, “like employees” without the benefit packages employees receive. Some states are very strict on how businesses can direct subcontractors in their work before the employee / employer relationship is established. Club owners should make sure they know and follow the laws in every state they operate. The defense of the contractor / owner relationship is strong if the relationship is clearly established and will stand up to state specific laws. If an individual you previously thought of as a contractor is deemed to be an employee, the club can be held liable for that person’s actions.
In addition to proper documentation and a clear distinction between the management of subcontractors and employees, clubs can protect themselves against claim damages by having proper insurance in place. To protect against lawsuits by employees and personal trainers clubs should consider Employment Practices Liability Insurance (E.P.L.I.) as an endorsement to their general liability insurance policy. E.P.L.I. coverage will defend a club against lawsuits and pay for damages if a club owner is found guilty of employment policies and procedures that result in claims.
If you have a safety or risk management question or a suggestion for a topic, please contact Markel’s Risk Management Department at firstname.lastname@example.org.
*Markel Specialty is a business division of Markel Service, Incorporated, the underwriting manager for the Markel affiliated insurance companies.