Are you thinking about opening up your studio again? Or are you teaching online at the moment?
Whatever you’re doing right now, we need to honor the fact you’re still standing after all that happened in 2020.
But, have you already thought about how the COVID-19 is going to affect your business from now on?
This pandemic has changed how our entire world functions. As we’re moving forward, it’s more important than ever to have the best legal practices in place to protect our businesses and assets.
You may feel overwhelmed with all the responsibilities you have to deal with to keep doing what you love.
But, instead of fear, we can operate from the energy of opportunity.
That’s why I spoke with the expert Corey Sterling. He is not only a lawyer but also a small business owner and a yoga teacher.
He wrote The Yoga Law Book: Legal Essentials for Yoga Professionals and has served hundreds of clients in the health and fitness space all over the world.
Corey knows better than anyone what it takes to be grounded and do the right thing as a studio owner or an independent instructor.
If you’re looking for some legal guidance, you can check the interview below.
We edited this talk for clarity.
Ryan Rockwell: What legal documents and considerations need an update for a studio that’s reopening?
Corey Sterling: The risk would be a claim of negligence against you. It means you were not responsible enough, or you didn’t foresee something happening, or you were behaving below a reasonable standard to protect your community. Anytime you’re facilitating an experience for another person, you assume responsibility that person is going to be safe with you.
It means there are guidelines about how you can safely operate. You didn’t do A, B, and C. Therefore, it’s clear that you are negligent. Someone contracted Covid, got injured, or whatever it is. And as a result, you’re the responsible one.
The difference to what happened with COVID is that everyone’s more concerned and nervous about it. As a business owner, if you’re going to be facilitating experiences that are in person, you have to make sure you’ve gone above and beyond to let people know that they’re going to be safe.
So first, you need an updated waiver of liability. It is only as good as the specific activities and risks that it describes. What’s changed with reopening is that we’re offering yoga activities in space while there is an infectious disease going around the world.
Also, I see a lot of clients who are studio owners practicing outdoors. And that poses a different risk. If you’re doing a class in a park and someone steps on glass or trips over something, and your document doesn’t cover you for that, you’re going to be liable again.
The other agreement that needs to be updated is the studio membership agreements.
Ryan Rockwell: Do most insurance companies cover COVID?
Corey Sterling: I’m not an insurance expert, but I know that some do, and some don’t.
Ryan Rockwell: What about employee agreements, contractors, and how to communicate effectively with your team?
Corey Sterling: The biggest change from the employee contractor standpoint is a shift in favor of the yoga teacher. Before, if I wanted to teach at the coolest studio, I would always be at the whims of them. They could give me a hard time and impose harsh instructions, like restrictions, a non-compete, or non-solicitation. Because the studio had a physical space where everyone congregated, I was subject to their demands.
I have a lot of clients who taught at studios and during COVID started their own business. What’s happened is now the teachers have more power. That centralization of the brick and mortar studio does not have the influence and power that it used to have. Instagram is now the teacher’s broadcasting channel.
What I’ve seen is that studios need to re-enroll their teachers and get them recommitted to the vision. But studio owners need to understand the budget of their business and what it’s going to be required to keep the doors open for the next three to five months. Then, visit the working relationships with their instructors.
All these aspects of the business need to be updated. I’ll give you one example of a studio owner who I thought did a great job in employment agreements. They didn’t promise any particular amount of work to their team. It may be possible based on demand. Some weeks you only have three hours of work, and others you have 13 hours. But you have to be flexible with us now. We’re in the midst of this trying time. Otherwise, the alternative is that the game is over for everyone, and then the community dies.
Ryan Rockwell: The biggest thing is communication. There weren’t enough conversations around this.
Corey Sterling: The laws are a series of relationships. If I’m a yoga studio owner, the relationships I have are with my landlord, teachers, whether they’re contractors or employees, and my studio members.
The goal of each relationship is to communicate expectations openly and honestly.
My quest as a lawyer is how we can use the document as a means to be real and vulnerable and communicate the expectations of a relationship openly and honestly.
It seems complex, but it’s also simple. Here is an example: “I can’t guarantee you the number of hours because we have to make sure that we stay afloat, and then we don’t incur more debt.”
Something that I also like is using documents for storytelling. The story is your studio. You’ve been in business for 15 years, and you love your teachers and students. You’re going through a difficult period, and how can you enroll others in your vision? So you agree to contractual terms that will benefit you and your business.
We call it practicing proactive law, which means you’re in control of the situation. I’ve set the relationship and communicated the expectations on my terms beforehand. And if something unexpected comes up, I know that I’m protected.
The better we can be proactive in letting people know what we need in the relationship, the better the relationship will be.
Ryan Rockwell: I’m dying with anticipation to know the difference between employee and contractor.
Corey Sterling: It always comes down to the amount of control you have over the people working with you. The more you control what someone is doing for you, the more they are an employee. The less control you have, the more they’re a contractor. There’s no definitive test. It is going to weigh on every aspect of the services provided to determine if someone is a contractor or an employee. There are some states where you know they have the ABC test, which means: if someone is providing a service that is the core service of your business, at law, they are an employee.
Do the services have to be performed in a specific way to send them a uniform? Do they have to be at a place at a particular time? Do they invoice you, or are they always paid the same? Are they incentivized with their wages?
Both Canada and the USA have controlled tests to determine it. The reason I shared this distinction is that some jurisdictions are constantly changing what that test is. Misclassification of an employee as a contractor puts a lot of red flags up for your business. Then, you run the risk of being audited, which is not fun for anyone. It’s a fine for Misclassification, plus the possibility of back taxes and interest on back taxes.
Ryan Rockwell: Was there anything more around the employee versus contractors?
Corey Sterling: The last piece on the employee contractor distinction in a post-COVID world is making sure that you get your staff to sign a waiver of liability and voluntary return to work, which is a crucial provision for either contractor or employee. Control over services is the distinguishing factor for contractors and employees.
Ryan Rockwell: Do you want to talk about going online? How to protect yourself in that way?
Corey Sterling: Remember what I said earlier, a waiver is only as good as it describes the activities. Practicing online, either through on-demand content or live streaming, is a different activity than practicing in the studio. It’s a secure space, but there are other risks. So, you want to make sure that the waiver covers you for that.
If you’re able to collect people’s email addresses or to administer who is going to be participating in the classes, ensure they sign a waiver of liability. A situation where you need everyone to sign is where people are registering for classes. You’ve got the information, even if it’s for free. While the standard care of doing something for free is lower, you still have to make sure that they’re going to be safe. It doesn’t mean that you can be completely negligent and mislead them in practice.
Ryan Rockwell: There are software programs out there that people can use to do online signatures, and that’s the easiest way.
Corey Sterling: All of my clients only use an electronic waiver. The distinction is that you have to make sure they sign to control who is observing your content or participating in your classes.
When you’re administering who’s participating, you collect their email address. It’s sort of like at a studio. They’re only allowed past the front desk once they sign the waiver.
It’s the same way now online. I see that you’re coming into class. Before I allow you to participate, you have to sign the waiver electronically.
If you’re doing Facebook or Instagram Live, or you’re doing it through a method where you can control who’s going to be observing the content, then you want to use a disclaimer. If a waiver is a gold standard, a disclaimer is the bronze standard.
The reason a disclaimer is like the bronze standard is that someone is going to say they got hurt. In the absence of a signed agreement, which is well-drafted and explains all of the activities and risks, the process will get drawn out to be much longer and more difficult to defend the games.
The waiver of liability is someone signing away their rights to sue you, and anything other than that is much less potent and less useful. So you can have a disclaimer for your social media and include all of these things, but it’s going to be harder to defend against in the event something happens.
Ryan Rockwell: Studio owners are taking that weight of responsibility. They’re opening up their doors, bringing in students and their staff back. How do you prepare yourself if a staff member or a student gets COVID?
Corey Sterling: You need a plan then you have a zoom meeting with your team. You record and explain exactly what your reaction is going to be. It is a crucial thing post-COVID. Everyone has to have a game plan in place, which is how we’re providing the services.
These are the eight steps for anyone who’s coming to our studio to practice yoga. Step one, signing online 20 minutes before. Step two, keep your social distance. Step three, mats are cleaned in place. Step four, people have to wear a mask. But again, the first thing I said was negligence is the biggest risk to studio owners at this point.
What you have to do is show anyone who’s going to make a claim against you that you were super prepared. You had a plan. Your entire studio team knew about it.
Apart from that, you need to have not only processes and post them in the studio, but you also keep a recording of a team meeting, where you are going through those processes, and what you do. If I’m a lawyer and I’m defending that particular studio, it’s a lot easier for me to show that my client was prepared to turn their mind to all of these risks, and something inevitable happens. But, that person signed a document understanding that risk.
Ryan Rockwell: Is there anything else you want to add at this point?
Corey Sterling: I have to talk about leases because it’s been such a big part of my practice. If you’re going to be signing a lease for a new place, keep in mind the possibility of closures. I had someone who recently signed the lease from a pre-COVID world, and so much of my time now is trying to renegotiate leases, which is challenging. It’s inherently a document favored in front of landlords. So, it hasn’t become easier as a result.
The other thing that I would say to everyone is most of the legal issues you’re going through, at least in our law firm, it’s something we’ve dealt with before. As you may not have a lot of experience dealing as an individual, as a business owner, this may be overwhelming. Even if it seems stressful, know that we’re here for you. The reason I’m a lawyer is that I want to help. I want to see businesses protected and thriving.
Then, the last thing I would say is to keep going and find a way to do what’s right for you. If shutting the business is right for you, then close the business. Put yourself first and do what feels right. Remember, you’re always going to be better for the experience that you went through.
You can watch the full interview on our YouTube channel.
You can also know more about Corey on Instagram.