ACE 6th Edition Chapter 16: Legal Guidelines and Business Considerations 3

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Chapter Goals:

  • Be able to find the advantages and disadvantages of the many business structures and the employee versus independent contractor status.
  • Be able to discuss the proper use of contracts, agreements to participate, informed consent, and waivers. 
  • Discuss the legal responsibilities of a personal trainer, like those related to facilities, equipment, supervision, and instruction. 
  • Find the legal implications of the many business practices, like marketing activities and the use of social media. 
  • Make use of an appropriate protocol for risk management to not only mitigate potential legal liability but also to ensure a safe environment for clients. 

Introduction

Legal issues can arise, as trainers may not consider the legal ramifications when training and instead only consider designing and implementing programs for their clients. 

It is important to understand everything in training, especially regarding business structures, contracts, insurance, and risk management. 

This chapter will cover the many types of business and the things that can lead to legal problems as a personal trainer. 

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Business Structure

Sole proprietorships are for profit business that is owned and operated by only one person. Most businesses that are for-profit are going to be these sole proprietorships. Because these businesses are owned and operated by only one person, meetings are not required, as the only owner decides everything. 

There is no corporate veil in a sole proprietorship. Debts and lawsuits can result in the owner selling personal assets. It isn’t easy to raise capital in a sole proprietorship. 

Partnerships are a business that is owned and operated by two or more people who agree to share the profits and losses. In the training world, this involves trainers coming together to create a company or own a facility as partners.

Operating a partnership without a legal agreement in place is essentially asking for a disaster. Partnerships have the same drawbacks mentioned in sole proprietorships but are split among the people. 

Limited partnerships occur in these where someone invests and takes ownership of a percentage of a company by investing. They may not work within the company.

A Corporation is a business that is designed to create a separate entity from the investors to the business operators. These businesses are regulated by state and by federal laws. 

Creating and maintaining a corporation is significantly harder than that sole proprietorships and partnerships. Each state will have very different rules regarding the rules enforced upon corporations. 

There are three types of corporations. 

  • The first type of corporation is the Subchapter S Corporation. This is the most common type of corporation used in the training world, and its profits flow through the business to the shareholders and get taxed as regular income. Thanks to the corporate veil, shareholders are protected from personal liability past their initial investment.
  • The second type of corporation is both the Limited Liability Companies and the Limited Liability Partnerships. These both require a significant amount of paperwork and incredible attention to detail. These are very similar to Subchapter S corporations because profits flow through the investors and are taxed as ordinary income. The corporate veil protects against personal liability on investors. Tax forms are much easier to fill and file than subchapter S. 
  • The third and final type of corporation is the C corporation. Most of the top 500 largest companies operate as this type of corporation. The corporate veil exists in this type. Unlike other corporations, this corporation is taxed as a company, and the shareholder pays taxes on their profits. There is no limit to the number of shareholders in these companies.

Independent Contractor versus Employees

Once the business structure has been selected and established, the personal trainers must address legal concerns. One major note is the difference between an independent contractor and an employee. 

An independent contractor is someone that is often hired in the short term for them to perform specific tasks for the business. Once those tasks are done, the independent contractor is simply paid, and their help is no longer needed. 

An employee is someone that works for the business and is more regularly employed, not a single project kind of work. The biggest distinction is being paid on a regular schedule instead of a “by the job” basis. 

Contracts

Some trainers who start a business feel that written contracts are not needed, and brief chats and handshakes will be good enough for business negotiation. When it comes to clients, this may be ok. Still, there may often be miscommunications, and it is always going to be preferred to have written and easily interpreted information available. 

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These are the things needed for a binding contract to be created:

  • An offer and the acceptance with a mutual agreement of the terms.
  • Consideration is in the form of an exchange of valuable items like money and services.
  • Legality, meaning that it is acceptable under the law. 
  • The parties’ ability to enter into a contract concerning their age and mental capacity. 

We should have terms set for payments and for issues like bounced checks, rescheduling, and adherence to the instructions and sessions.

Negligence

This is one of the most important parts of personal training. It is related to adherence to the established professional guidelines. 

Negligence is simply the failure to be reasonable and prudent under the right circumstances. 

This is one of the most often reasons a trainer is sued. 

To substantiate the change of negligence in a court, the plaintiff must be able to establish the four elements:

  • The defendant must protect the plaintiff from injury.
  • The defendant failed to uphold the established standard of care necessary for their duty.
  • Damage or injury to the plaintiff happened
  • The damage or injury was caused by the breach of duty

Important Legal Forms

The three forms that should be well understood and utilized by the trainers are participation agreements, informed consent, and waivers. 

The participation agreements are designed to protect the trainer from a client claiming that they are unaware of the possible risks of the physical activity. It is not a formal contract, but it shows the client was made aware of the risks. 

Informed consent is to be used to show that the client has specifically been informed of the risks of the activity they are about to engage in. 

Waivers are for trainers that hire employees and an understanding of the vicarious liability is needed. The employers are going to be responsible for the actions of their employees. When the employee is negligent, this reflects on the employer. 

Waivers do not protect from gross negligence.

Inherent risks are the risks that are usually covered in participation in physical activity. This says that injuries are possible regardless of how careful a person can be. 

Record keeping should include the keeping of medical history, exercise records, incident reports, and correspondence for these. The keeping of records should follow the HIPAA standards that all healthcare workers are held to. 

Trainers are legally responsible for their facilities, equipment, supervision, and instruction. All of these can reflect on the trainer and their ability to be sued if something goes wrong. So, things should be kept up to the trainer’s standards. 

Liability Insurance

Even after all the precautions a trainer can take, the trainers must be well aware of the importance of insurance. 

There has been a recent rise in litigation in the healthcare industry, and since this has happened, it is always a good idea to have legal protection in the form of insurance. 

ACE has many recommended places to get insurance, but they also recommend finding or seeking out information for umbrella policies. This personal trainer coverage is included with your normal insurance outside of the business. 

Employees, as opposed to independent contractors, will sometimes be covered by their employer. It is important to consider this. 

Other Business Concerns with Legal Implications

Trainers should know how to market themselves and maintain high ethical standards for these practices. 

Trainers are also encouraged to use social media to ensure that these accounts are strictly their business accounts. It is important to keep business and private life separate. 

The last thing to be aware of is when the need for transporting your client is required of you. Oftentimes this is not covered by the insurance policies for personal trainers.

ACE 6th Edition Chapter 16: Legal Guidelines and Business Considerations 4
ACE CPT Chapter 1: Role and scope of practice for the personal trainer 2
Tyler Read - Certified Personal Trainer with PTPioneer

Tyler Read


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