As a general rule, anytime you are exchanging money in your gym business, you want to have something in writing. This might seem obvious when we are talking about clients paying you for gym memberships. They are giving you money, you are providing a service, and you are likely taking payments on an automatically recurring basis. You need this to be in writing.
Perhaps less obvious is the need for employment agreements. However, written agreements in this situation are just as important. You are paying someone to perform a service. At the very least, put that agreement in writing. How much are you paying for what service? Beyond that, there are other provisions that can go into an employment agreement, like employment status (“at-will”), benefits, paid time off, and more. Here are three reasons you need employment agreements.
1. Employee Agreements Set Expectations
The majority of lawsuits we’ve handled arise because the parties failed to set expectations upfront. For example, you told an employee that you will pay $20/hr for group coaching. However, the employee thought you said $25/hr and they are now creating an issue because they want to be paid more. The employment agreement is the best opportunity you have as a gym owner to set expectations. If you put in the employment agreement that the employee does not get paid time off, then the employee cannot later demand that you pay them for the week’s vacation at the beach.
One of the most important provisions to put into an employment agreement is the employment status. For example, an “at-will” employment status. Most states allow employees to be terminated at will. That means you don’t need a reason to terminate someone. There are some general protections like you cannot fire someone because of their race or gender. However, generally speaking, we want gym owners to be able to terminate a bad employee for any reason. The employment agreement helps to solidify that employment status.
2. Employee Agreements Set Consistency
The best-run gyms thrive on consistency. All members are treated the same way, classes are run the same from start to finish, opening and closing procedures are the same every day, etc. The same also applies to your staff. You want each staff member to have their own personality, but you also want them to deliver your service in the same great way you do.
At some point in your gym ownership, you may not be the person doing the hiring. Because of this, you want to make sure you still have control over the employment offers and agreements. The best way to do this is through employment agreements. You can create a specific agreement for each staff position and set general provisions in each agreement.
Your team coach employee may not get benefits. However, your general manager does get benefits. You may pay the travel expenses of your competition team staff, but no one else. The bottom line, you don’t want to negotiate these terms every time you hire someone for a role you already created. You also want to know that if someone else is going to manage staffing, each position will be treated the same.
3. Employee Agreements Are More Specific Than the Employee Handbook
Most gyms we talk with have employee handbooks. Employee handbooks are a great way to set expectations and manage consistency regarding how you want your staff to carry out services. The employee handbook is not a great place to set employment policies for specific employees like compensation structure, benefits packages, paid time off policies, sick leave policies, and employment status. Those employee treatment policies will be specific to each employee’s position and/or each employee.
As such, gym owners need employment agreements in addition to employee handbooks. The employment agreement is the contractual relationship between the gym and the staff member through which the staff member agrees to perform the duties outlined in the employee handbook for specific compensation.
On a final note, employee handbooks are often long and robust. They can be difficult to enforce because it can be challenging for the gym owner to prove that the employee read and understood the entire handbook. The employment agreement, on the other hand, is shorter and more specific. Along with all of the other provisions we’ve touched on above, you can require the employee to acknowledge that they read and understood the employee handbook. That makes it much harder for them to later claim they “didn’t know.”
As we said in the beginning, anytime you have an exchange of money in your business, you want something in writing. This applies to staff as well. You need something in writing that outlines the specific agreement between you and your staff. Never assume that your staff won’t make a big deal out of it because they are your friends. Once money comes into the picture, friendships tend to degrade. Remember also, it is never too late. You can always have someone sign an employment agreement either at the beginning of their employment or even if they’ve been with you for a few years.
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Matthew Becker is the owner of Gym Lawyers PLLC. He started Gym Lawyers in 2021 in hopes of helping gym owners navigate the complex legal issues that impact their businesses. Matthew started practicing the law in Pittsburgh, PA in 2009 and opened his gym, Industrial Athletics, in 2013. He managed both businesses until 2019 when he started shutting down his litigation practice in order to dedicate his full time to helping his gym members become better individuals. In 2021, he was approached by a micro gym consulting company and asked to fill the gap in professional services dedicated to helping gym owners. Matthew now helps gym owners in all stages of ownership from corporate set up, to proper legal contracts when running a gym, to assisting in the buying/selling process.