Why fitness studios should think twice before offering free classes in exchange for work

It’s become increasingly common for fitness studios to offer customers free access to classes in exchange for performing tasks around the studio. This is often seen in yoga studios, where patrons can access free yoga classes if they help with cleaning tasks or tasks at reception. However, these studios may be taking on more risk than they realize, as only compensating patrons with free classes, a form of payment “in-kind,” may breach employment standards legislation.

Are the patrons employees?

Whether these patrons may be entitled to more than just free classes largely depends on whether the law considers them “employees” of the studio. In Friends of Animals, Re, the B.C. Employment Standards Tribunal (the “Tribunal”) considered the following interrelated statutory definitions of “employee,” “employer,” “wages,” and “work” under section 1 of the B.C. Employment Standards Act (the “ESA”):

  • “Employee” is “a person an employer allows, directly or indirectly, to perform work normally performed by an employee.”
  • “Employer” is “a person who has or had control or direction of an employee.”
  • “Wages” includes various forms of monetary payment such as salaries and commissions.
  • “Work” is defined as “the labour or services an employee performs for an employer.”

Common law principles, while not binding on the Tribunal, may also help determine whether an individual is, in fact, an employee. For example, relevant factors include whether the employer controlled the “what and how” of the work being performed and owned the tools or equipment used by the patrons to complete the work.

Considering these ESA definitions and common law principles, patrons engaged by fitness studios to perform tasks around the studio in exchange for free classes are likely to be considered employees. The types of tasks they perform – cleaning and maintaining the studio, and welcoming guests – are very similar to work normally performed by employees. Additionally, they typically use studio equipment, including cleaning and computer equipment, to perform the work. Lastly, the fitness studios tend to have control or direction over the patrons’ schedules and responsibilities.

What risk does this pose to fitness studios?

If these patrons are determined to be employees, paying them solely “in-kind” may breach the studio’s obligations under the ESA. Section 20 of the ESA requires that employers pay wages in currency. Does offering free fitness courses as compensation satisfy this requirement? Case law suggests it doesn’t.

The case of Skeena Valley Guru Nanak Brotherhood Society and Director of Employment Standards (Re) found that “section 20 does not contemplate the payment of wages ‘in-kind’,” holding that “‘free room and board’ cannot per se be considered ‘wages’ within the meaning of the [ESA].” This decision cited several other Tribunal decisions that found in-kind payments such as free merchandise, clothing and accommodation could not be considered wages.

In Castanelli, Re, an individual performed tasks for a dog grooming business without receiving wages. Similarly, in Selena Elrod (Re), an individual was engaged by a pet care facility as a dog daycare supervisor, but without pay. In both of these decisions, the Tribunal concluded the individuals were employees and ordered the employer to pay the employee their wages owed, overtime, vacation pay and holiday pay.

Be aware of the risks

Fitness studios offering free classes in exchange for work should be aware of the risks they are taking on. If challenged, patrons performing tasks around the studio are likely to fall under the ESA’s definition of employees, and as a result, the studios may be ordered to pay wages retroactively. In addition to being liable for wages, the fitness studios may also face health and safety responsibilities, tax implications and other duties imposed on employers.

The lawyers in the MLT Aikins Labour & Employment group have extensive experience advising employers across Western Canada on their obligations to employees. If you’re considering offering payments in-kind in exchange for work performed at your business, contact us to learn more.

Note: This article is of a general nature only and is not exhaustive of all possible legal rights or remedies. In addition, laws may change over time and should be interpreted only in the context of particular circumstances such that these materials are not intended to be relied upon or taken as legal advice or opinion. Readers should consult a legal professional for specific advice in any particular situation.