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Yoga, Business and Government: When Corporate Clashes with Grassroots

in Business of Yoga, YD News, YogOpinions

by J. Brown

With all the deserved criticism being leveled upon the yoga industry of late, it’s important to distinguish between the influence of corporate business and what is happening at the grassroots. There is no better example of the disparity between these two mores than the efforts of Yoga for NY, an organization of yoga centers and teachers that have banded together to see that their interests are represented in local government.

In 2009, faced with a decimated budget, the NY State Bureau of Proprietary Secondary Schools sought to re-interpret an old statute and fleece yoga teacher training programs by having them classified as vocational schools. The BPSS sent out 80 cease and desist letters to yoga centers throughout NY state threatening closure and heavy fines. The statute cited had an exemption clause for instruction in “dancing, music, painting, recreation and athletics.” Apparently, they didn’t think to include yoga when the statute was originally written in the 1940′s.

Had the BPSS been successful, the large majority of small independent yoga centers would have been forced to close. Fortunately, the NY yoga community rallied and formed Yoga for NY to challenge the BPSS assault. Yoga for NY was able to raise funds, hire lobbyists and ultimately solicit the support of then Senator and now, Attorney General Schneiderman, who ushered through new legislation that added yoga to the list of exemptions.

Recently, a new set of issues has arisen and, once again, Yoga for NY is being called to action. At a meeting last month, attended by representatives from 55 yoga centers and Senator Perkins, two topics of immediate concern were voiced:

1. Are yoga classes subject to a 4.5% sales tax?
2. Are yoga teachers employees or independent contractors?

When I opened a yoga center in 2007, I was informed by the Department of Taxation that yoga classes are a form of instruction, comparable to say a dance class, and are not subject to sales tax. However, several other centers who are currently under audit are being told something different. Upon further inquiry, the Department of Taxation referred to a vague notice on their website that includes the word yoga and is dated April 20, 2011. When pressed further on the lack of clarity in the notice, they returned that “the matter is under review.”

What I find particularly interesting here is that one of the reasons that yoga centers are being reevaluated for tax liability is the way that yoga is being advertised. There is a specific provision in existing law for taxation of “weight control salons.” So, those who have long lamented the superficialization of yoga in advertising have an even more legitimate gripe. Touting yoga as form of weight loss may well cause yoga classes to become newly taxed, which means that the cost of all yoga classes will go up. The added expense will most certainly be passed directly to the consumer. Smaller centers simply cannot afford to absorb the cost.

The second issue regarding the status of yoga teachers is even more alarming. If it were deemed that yoga teachers must be classified as employees, requiring yoga centers to abide by the corresponding regulations, most smaller centers would again be forced to close or operate illegally.

I made my living as a self-employed yoga instructor for over ten years before I opened a yoga center. In all that time, I never once received a W2. I was always an independent contractor with a stack of 1099′s. Many of the teachers working at my center have only one or two classes a week. Even those that do teach more still have classes at other centers. In order for a yoga teacher to make a living, they must teach at more than one center. Also, yoga teachers have their own websites and contract different pay scales and terms with different centers. Seems to me, yoga teachers are the very epitome of independent contractors.

Both of these issues are unresolved. Senator Perkins has made his office available to help Yoga for NY work through these matters. One important aspect that has become clear is that there is no official, government sanctioned, definition for what a yoga teacher does. From a yogic perspective, this is profoundly appropriate, but when it comes to the taxation of business, it is eminently problematic.

Whether or not a working definition for what a yoga teacher does can be formulated to allow independent centers and teachers to do the small business of yoga in their local communities and still satisfy their civic obligations remains to be seen. However, these issues stem from the common misconception that yoga has become a lucrative career. In a recent study, yoga is listed as the 4th fastest-growing industry in America, just behind generic pharmaceuticals, solar panels and for-profit universities. From 2002 to 2012, the Pilates and Yoga industry grew an average of 12.1% per year and is projected to expand 5.1% in 2012. In the five years to 2017, industry revenue is expected to grow at an average annual rate of 4.8%.

What is lost in these statistics is the hard fact that little of this incredible growth has found its way into the pockets of independent yoga centers and teachers. In fact, the average pay for yoga teachers has not changed in the last fifteen years. These profits are being reaped by corporate entities who are capitalizing on the soul work being done by heart-felt practitioners who do it for love more than money.

I have often been highly critical of the NY yoga community. After attending the last Yoga for NY meeting, I felt proud to be a part of it. On the whole, the NY yoga community is not only earnest in its efforts to help people but is also doing its best to effect good governance. I sincerely hope that the state, and potentially federal, agencies charged with making the pertinent determinations will not simply play into the hands of corporate interests but do right by the constituents they are commissioned to serve.

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J. Brown is a yoga teacher, writer and founder of Abhyasa Yoga Center in Brooklyn, NY.  His writing has been featured in Yoga Therapy in Practice, Yoga Therapy Today and the International Journal of Yoga Therapy.  Visit his website at yogijbrown.com.

In this video clip J. talks about the culture and survival of his studio and discusses how the changing landscape of yoga in NYC is what brought AYC to Williamsburg, Brooklyn in order to thrive.

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Recent articles by J. Brown:

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16 comments… add one

  • brilliant…..

  • Anne

    Independent contractor status is not about how the teacher acts, but how the business acts.
    . Do teachers work under your direction?
    . Do they use your space, equipment, and other materials provided by you to do their jobs? (i.e. your customer list)
    . Is the teachers’ work a key aspect of your business?
    . Do you schedule them to work at certain times?

    These are the sort of questions that assay independent status.

    I find it curious that studios want to have teachers teach only once or twice a week. Wouldn’t they have stronger relationships with your students if they were there more often? Might this not be good for both the students and your business? (And for teachers, in the case of studios that pay per-student bonuses? Not to mention not running all over town.)

    Independent contractors pay self-employment taxes. They are ineligible for unemployment insurance. They don’t receive other benefits that may accrue to owners and full time employees, like health insurance or other benefits.

    Your garden variety yoga teacher is the definition of an employee. Your traveling teachers who may come in from elsewhere to teach a workshop, probably a contractor.

    If you can’t afford to have employees, do you really have a business?

    (And here’s IRS guidance on employee vs. contractor: http://www.irs.gov/businesses/small/article/0,,id=99921,00.html)

  • Anne

    Sorry, here’s the IRS link:

    http://www.irs.gov/businesses/small/article/0,,id=99921,00.html

  • Hey Anne-

    Thanks for giving us this perspective.

    First, I would be happy for teachers to teach more than one or two classes but this is almost always their choice. A lot of folks work other jobs to pay rent and teach yoga because it is fulfilling in ways that their day jobs are not. One or two classes is all the time they can afford to give to it.

    Also, the IRS guidelines are still unclear when it comes to the job of being a yoga teacher. Technically, the yoga center is not providing “equipment” as many students bring their own mats (if mats are even considered “equipment.”)

    The irs website states: “The general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done.” At least at my place, teachers are in full control of what they teach. I am not interested in dictating what teachers are teaching or being an intermediary between the teacher and the students. The role of the center is to provide a place for teachers and students to come together.

    The IRS guidelines also say: “Businesses must weigh all these factors when determining whether a worker is an employee or independent contractor. Some factors may indicate that the worker is an employee, while other factors indicate that the worker is an independent contractor. There is no “magic” or set number of factors that “makes” the worker an employee or an independent contractor, and no one factor stands alone in making this determination. Also, factors which are relevant in one situation may not be relevant in another.”

    What are we to make of that?

    Lastly, to the question of what makes a business a business. I have been able to support my family with the yoga center I own in ways that I never would be able to as an independent teacher alone. Isn’t the fact that my yoga center is providing income for myself and the teachers who contract with me enough to constitute a business? Not to mention the income for my landlord, the companies that provide water and related products (which we do pay taxes on) and the IRS, who I pay approximately 35% to every year. More importantly, the center provides a valuable service to the public. Enough that they are willing to pay for it.

    Yoga centers and teachers are not trying to get away with anything or shirk their civic responsibilities. They simply want to be able to their business. Believe me, if I could make enough money to provide teachers with health insurance and retirement and unemployment benefits, I would be more than happy to do it. Unfortunately, it is simply not feasible for smaller centers.

    If your sentiment is to prevail, I think there will be a lot less independent centers and yoga will become more and more “cookie cutter” like. I can’t help but think that these issues are also indicative of things happening in the broader economy and culture. Will an emphasis on what is good for big business end squelching what is need for small business?

  • Anne

    Thanks for your thoughtful note.

    The prior attempt to license yoga teachers, as well as the state’s search to tax yoga classes, is one thing. While one could argue that increased tax revenues benefits the public good, it doesn’t directly benefit the people providing the service. I salute Yoga for NY for fighting a good fight on licensing, and on work to retain exemption from sales tax.

    On the topic of employee vs. contractor, though, I respectfully disagree.

    The point of the independent contractor rules is to treat people who make businesses possible the same way that owners are treated.

    In my view, the yoga teacher as employee is crystal clear. Whether part time, or full time, they come in on an owner’s schedule, teach students on the owner’s list, in the owner’s space. At some studios, owners may give teaching feedback. Some owners may ask that classes be designed according to a certain template. If a teacher doesn’t show up, you don’t have an offering for students who do come in — unless you teach the class yourself.

    It’s ok if we disagree.

    I would suggest an experiment, though. Heart to heart talks with your teachers to see how many of them are comfortable in a 1-2 class per week status, and how many would prefer to find a yoga “home” where they teach more classes.

    You might also be surprised by what you learn. (Or you might prove me wrong.)

    In this problem, there are also seeds of possibility. Maybe there’s a different way of doing business, and one where people benefit in a way that befits their contribution to the business. For example, people teaching more classes would mean less wear and tear on teachers biking around town. More robust relationships with students, which might equal more student participation. Less schedule juggling, which would mean less wear and tear on you, and more time to devote other endeavors — including creating new ways to grow your business to support itself in a more robust manner.

    Consider how many small studios make it past the 5 year mark, in the current paradigm. Maybe the way that we think we should a run neighborhood studio is unsustainable. (That’s my personal conclusion.)

    I don’t think that this has to mean the death of the neighborhood studio! Nor would I want this. Instead, how about a radical shift in how the small studios organize themselves and conduct business?

    There’s much talk in the yoga community about “abundance thinking” vs. “scarcity thinking”. The risk of using this lens on the world is magical thinking.

    But I don’t think it’s magical thinking to want to create a sustainable business where employees are treated as employees. This doesn’t necessarily mean health insurance and a 401K. (Not every business of any kind offers these benefits.) It does mean unburdening employees who are employees from self-employment taxes and the tiny bit of security offered by unemployment insurance.

    (And I do think it’s scarcity thinking to say, I can’t afford to do this. How might “I can’t” affect the outcome?)

    In recent employment law history, companies like Microsoft have been on the wrong side of this one — it’s pretty google-able (“employee misclassification”), and might be illuminating.

    Treating employees as employees is same sort of request for fairness and respect that’s at the roots of OWS. It’s also the heart of organized labor’s mission. In my opinion, it’s also yoga.

    Thank you for your thoughtful response. May you and your business flourish, for the benefit of all beings.

  • Laura

    As a former manager of a few larger corporate yoga studios, I have agree with Anne. The studio chain I worked for is completely aware of the cost-savings they benefit from by classifying their employees as independent contractors, there by skipping out on paying unemployment insurance and SS Benefits. However, they do treat the teachers within this particular chain of studios as employees.

    This is not true of all yoga studios, though, because many classify and treat teachers as true independent contractors. Many of the larger studio chains need to come into question because of they are breaking the rules that Anne describes above. There is strong demand from these studios for teachers to teach formatted classes, being expected to show up at a certain time, leave at a certain time, follow a specific criteria as outlined by the studio, put under constant review with feedback on performance, be responsible for the sale of studio retail and programming revenue (without additional and fair compensation/commission) — these all fall under the category of employee duties, not an independent contractor.

    While I am not a fan of badly managed government being involved in our decisions as to how we run our studios, I am also strongly against studios with loose morals taking advantage of the system loopholes and of their teaching “staff”. Unfortunately, it is the largest studios that are the biggest abusers, yet it will be the small guys who pay the consequence (as has been the case with most businesses when their ethics go askew)

  • To Anne and Laura-

    It is OK if we disagree and I greatly appreciate your points of view. However, I think there is a bit of a disconnect here.

    Laura- your experience of working at chain centers with “loose morals” goes to my point. That is not the case with most smaller centers. I have been open for 4.5 years. I currently have 14 teachers on staff. 11 of them have been contracted with me for more than 2 years. They are paid according to an agreed cut of the proceeds, of which they make the same or more then the center does. I am close friends with all of them and we have a wonderful working relationship. Is it right or necessary that all of the people, teachers and students, who are benefiting from my center be penalized because of the bad behavior of others?

    To Anne- I hear you on the OWS perspective. Believe me, I am all for unions and workers rights. But that is not what we are talking about here. I’m drawing a distinction between corporate structures and grassroots practice. I think that folks don’t have a clear idea about what the real numbers are. So here are a few laid bear for all to see:

    40 classes a week – I teach 1o of them.
    Average monthly sales= $10,000
    Monthly Rent= $3800
    Average Monthly Pay to Teachers (not including myself)= $4,000
    Utilities and supplies= $500+
    What I take home at the end of the day= $1700/month (maybe)
    The teacher training programs are what pick up the slack and keep us alive (that’s why the BPSS issue was so fundamental to survival.)

    Bad behavior by yoga centers, while regrettable and unfitting, does not constitute “breaking rules” because the rules that pertain to yoga are unclear. Suggesting that all yoga centers be treated the same and subjected to regulations that are ill suited and prohibitive amounts to saying that only those who can effectively exploit the system will survive and those who are just honest practitioners be damned.

    Is not a sustainable business one that continues to serve the people who engage it without doing any harm? Surely, some distinctions can be made between corporate malfeasance, disrespectful studio owners, and the humble work of old time small business people in their own neighborhoods.

    As I stated in my piece, most of the small centers that people love and no one has ever heard of are doing soul work in their communities for love more than money. I just think they ought to be able to do it.

    Much respect.

  • I’ll toss my bone into the ring a bit if that is ok.

    When I first entered the field professionally as a yoga teacher, I formed a LLC for my business. This allowed me to run a very simple business (accounting, tax wise, etc), and to have a little income from the LLC. My description of the business was teaching yoga classes at a variety of venues and in a variety of forms (classes, workshops, retreats, private lessons, on-off classes/exhibitions, etc).

    I currently run a much larger company which includes a studio. The studio rents space to teachers who then teach what they need to. We have Chi Power (which is Tai Chi and Chi Gong), Feldenkrais, Yoga (3 kinds), and soon pilates as well. We also rent rooms to acupuncturists, massage therapists, energy healers, a homeopath, and several others. Each is running their own business.

    A teacher determines what to teach (there are some rules based on safety/insurance/etc issues on our end as a business), when to teach (based on what is available time-wise at the studio), what to charge (though we encourage them to join our pricing scheme because that makes it easier for the students), and ultimately how to market their class (which we do with them as we do publish a cohesive schedule of all offerings).

    I suppose I just like the independence of this process.

  • Anne

    Jenifer, in my view — and I’m a business person, not an attorney — when a teacher rents space from you, you’re like a landlord. The boundary is clear, and there’s no question about whether you employ these people. If they don’t show up to teach their class, it’s not your issue (unless they don’t pay you as agreed! in which case you have a different issue.)

    J and Laura, it’s exactly the issue about size/scale that Laura raises that creates the potential for harm. The way that the law treats businesses doesn’t allow a lot of distinction between Mom & Pop and a behemoth. And whatever service a yoga studio may provide, it’s a business. (Unless it’s a not-for-profit, like the Iyengar Center, but still — I believe — subject to employment law. See disclaimer above. Maybe a yogi who’s an attorney might shout out on this one?)

    The danger of exempting one business from the definition of employee is that it establishes a kind of precedent. Wilier people than we are will be able to use the exemption to define other workers as contractors rather than employees.

    Thus taking from some workers some of benefits of being an employee: they’ll pay an additional 7.65% in taxes, and they won’t be covered by unemployment insurance.

    Let’s say that I’m a major consulting firm. I have thousands of consultants who fly around the country on client engagements. When the client engagement ends, the consultants sit idle until I can re-assign them. It sure would be great if I didn’t have to pay them when they’re not at a client, producing revenue. If I can reclassify them as contractors, I won’t have to. And bingo, I won’t have to pay for their unemployment insurance; they’ll pay for their social security/medicare. This will save me a boatload of money: 7.65% of their compensation. And it will be a lot easier for me to let them go without the potential financial consequence of having to make good on the unemployment insurance. Come on, government, courts. Precedent has been established, let me ride on that.

    It’s a slippery slope from the best of intentions to “harm”. And it also calls to mind another news item regarding exemption from employment laws. At some point, churches received an exemption from discrimination laws when it comes to their clerical employees. Here’s a story of a music teacher in a Lutheran church school whose sexual harassment suit was thrown out (and is still in the courts), because the church classified her as a clerical employee.

    http://www.gazette.net/article/20120416/NEWS/704169930/1022/suit-against-gaithersburg-church-comes-back-to-montgomery-county&template=gazette

    Yes, if you’re a minister/priest and your boss harasses you, you don’t enjoy the same legal protections as other employees. Someone traded them away at some point. Probably with the best of intentions. (Churches might have said, we can’t afford to…and yet I have to wonder how this lack of protection might have enabled other abuses in religious organizations that we know to have have been enabled by silence.)

    Organizations will make an argument: once yoga studios are exempt, why can’t we be exempt? If a small yoga studio is exempt, why isn’t a large corporate studio exempt? Why aren’t Starbucks, Planned Parenthood, Lululemon, Goldman Sachs, or the United Way exempt? (How about firefighters or nurses?)

    Interdependence. What happens here will surely affect the rest of the ecosystem.

  • Anne,

    Yes, it is clear. That’s why I chose the two models that I did in my first business and now with my second. I wanted to be clear in how I wanted things defined.

    One of the points you bring up is that the law doesn’t distinguish between large and small. Tax law does all the time, btw, and it’s entirely possible that employment law might be created in such a way as well.

    It might also be noted that there are corollaries.

    There are accountants who are hired and work as employees of corporations. And, there are accountants who are independent contractors who are contracted by businesses to provide services to that business.

    Like these accountants, a yoga teacher may (eventually) be able to choose the route that s/he wants to take: to be an employee of a large company (which may mean exclusivity clauses and the like) or to be an independent contractor and create independent contracts and provide those services under contract.

    This is the method that I chose. And even my second business here — it is a contract-for-services. It looks like tenancy, but we provide so much more than space. So, it turns out, that it’s actually a contract for services.

    At the end of the day, part of it is understanding why people might want to be independent contractors and independent business people.

    Sure, for some people it doesn’t matter at all either way — folks doing this teaching bit once or twice a week, you know? But for others, who want to make a living at it, being an employee may be limiting to their ability to make a living, might be burdensome from a tax standpoint, and so on and so forth.

    For me, employment is burdensome from a tax standpoint, whereas my business runs clean as a consultant/independent contractor.

  • Vision_Quest2

    Thank you for posting this. I work somewhere in Brooklyn, NY.
    I would gladly wear the Jayson Brown line of yoga pants, as I do a mild practice …

  • I’m going to memorize this paragraph:

    What is lost in these statistics is the hard fact that little of this incredible growth has found its way into the pockets of independent yoga centers and teachers. In fact, the average pay for yoga teachers has not changed in the last fifteen years. These profits are being reaped by corporate entities who are capitalizing on the soul work being done by heart-felt practitioners who do it for love more than money.

    This is all quite normal, of course. Or as Mister Natural would say, <'twas ever thus.” It’s sad and unfair. And it’s the way we roll.

    My own hope and belief is that whatever market fluctuations come to corporate yoga, the indie studios and teachers will always find a place in a corner of the strip malls and warehouses, or under a tree in a park to teach from the heart. And their students will find them.

  • They always have and they always will.
    Thanks for having my back.
    Cheers.

  • Thank you for the valuable information.

  • Really interesting article.

    I’m in Australia, and although the tax details are different, the situation’s pretty much the same. I’m an independent contractor where I teach, and I wouldn’t want it any other way!! Over here we pay more way more tax when we work at more than one place, and seeing as most studios can only give you 1-2 classes a week you’d need to work at close to 10 places to make a living! Not cool.

    Then again, we have socialised health care over here, which helps…

    It will certainly be interesting to see how this develops!

  • Hey J,

    I’d really like to have a Skype chat with you about sustainability in business in a tight/tough market.

    I’m teaching a seminar in business for yoga teachers, holistic health practitioners, and creatives — and I like to take “workshop-able” puzzles into the mix to get the creative mind attuned to how to think creatively about business.

    Interested in having a chat?

    Just follow the link and drop me a line.

    Cheers!

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