New York yoga studios are facing a crucial question that could make or break their business: are yoga teachers employees or independent contractors? This has been a hot topic not only recently, but drawn out over the past few years, stemming back to the tax audits which took place in 2011 and 2012. At the time, the New York Department of Taxation and Finance suddenly decided yoga studios resided in the fitness category (like gyms) rather than movement (like dance studios, which aren’t taxed) and needed to start paying sales tax, as well staggering amounts in back taxes. Yoga for NY, the same organization who won the licensing battle in 2009, stepped up and ultimately helped reverse the ruling so that yoga studios that are strictly for yoga would not have to pay sales tax. This was a huge triumph.
But it wouldn’t be long before the government went digging around for other ways yoga studios need to pay up: how they pay their employees, er… independent contractors. One case in particular involving Yoga Vida, a fairly new-ish downtown studio, has reached the highest appeal level in the NY state court system. The government claims the yoga teachers are employees and Yoga Vida claims they are not. What’s vital about the state’s decision is that it could set a precedent for future audits and appeals.
What’s also a big deal is that some studios claim if they have to start paying the state for their employees, class prices could be driven up even higher than they are right now, which could put a huge dent in their business as well as our pockets as practitioners. Then again there seem to be ups and downs to both sides of the employee issue. For example, many yoga teachers struggle trying to manage their own finances and healthcare by being their own business. Being an employee might ease some of the burden. But how does that work when many teachers teach at multiple studios around town and only spend an hour a week at each? Should that matter? Are yoga teachers better off as freelancers?
An article from Well+Good last week shed light on the situation, with quotes from Alison West, Yoga for NY’s executive director, on how everything is a little messier than it should/could be.
The issue of the state not considering how the yoga industry works is key. “The guidelines are completely out of date, so the questions being asked don’t properly reflect how the yoga world works at all,” West says.
When auditors look at whether a worker should be paid as an employee or independent contractor, they try to determine whether the employer exercises “control” over the worker (or if the employee has complete “control” over their own business). In many cases, yoga studios do exert control—if they require teachers to teach a specific method, for example, or only allow them to teach at their one studio or require them to attend meetings—and in these cases, they should be paid as employees.
In a recent newsletter, West clarifies that there has not yet been a ruling reclassifying ALL yoga teachers, but she advises that everyone get involved and informed on what is going down. To that end, Yoga for NY will be holding an important meeting tomorrow, Friday October 17th for all yoga teachers, studio owners, legal advisors and any practitioners interested in getting involved. The meeting will also be available online as a webinar.
Whether you think yoga teachers should be considered employees or independent contractors, something will be going down very soon in Albany and you’d be better off knowing how the cards will fall.
Read the full Yoga for NY newsletter below for more info:
This is a reminder that Yoga for NY is holding an important meeting on Friday October 17 at 12:30pm not only to address issues raised by the article that appeared in Well+Good last week about the re-classification of Yoga teachers as employees, but also about a current case which might well affect the re-classification of teachers in NY State.
The meeting will also be a webinar, so that if you are not in NYC or nearby you can still participate. Click here to log on.
In case you missed the previous email, the Well+Good article gives the impression that there has been some sort of blanket ruling reclassifying teachers, which is not the case. A NY Yoga studio owner is hoping to be heard on appeal and reverse a previous judgment determining that all teachers at his studio are employees. If the verdict stands, this case will be used as a precedent in all future audits and resulting appeals. While the State is making every attempt to reclassify as many people as possible as employees, including Yoga teachers, it is not yet in a position to reclassify all Yoga teachers. This is still a case by case situation.
It is extremely important that you attend this meeting whether by webinar or, if you are in or near NYC, in person, and inform yourself about the issue as it stands now and the larger matter of what constitutes an Independent Contractor vs. an Employee. Do please invite others to attend, including your lawyer, if you are a studio owner, if he or she is willing.
The meeting will be at Yoga Union, 37 West 28th Street, 4th Floor, Friday October 17 at 12:30pm.
Please arrive by 12:15pm, so that we can have unified start at 12:30pm.
It is essential to let us know that you are attending. Please register and spread the word!
(If for any reason, you’re having difficulty registering, shoot me an email to say you’re coming.)
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Earlier…
As a yoga teacher, I am paid as an employees for some of the studios I work for and for some as an independent contractor. Some larger studios in California were taken to task in California for classifying teachers as independent contractorS and they had to pay and reclassify as employees. It would be helpful if the New York State legal classification of an independent contractor would be quoted here. That is what the court will use to determine the outcome of this case. Usually pay teachers as independent contractors because it saves them money and many businesses do the same thing. It doesn’t matter until they are audited and then they realize that their miss classification comes with a heavy fine.