ACE 6th Edition Chapter 16: Legal Guidelines and Business Considerations
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ACE 6th Edition Chapter 16: Legal Guidelines and Business Considerations 1

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    Chapter Goals:

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

    Introduction

    Legal issues can come up, as trainers may not consider the legal ramifications when training, and instead only think about the designing and implementation of programs for their clients. 

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

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

    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, it does not require meetings, 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 is difficult 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.

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    Operating a partnership without a legal agreement in place is essentially asking for a disaster. Partnerships hold the same drawbacks mentioned in the sole proprietorships, but they 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 of 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. Shareholders are protected from personal liability past their initial investment, thanks to the corporate veil.
    • 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 an incredible attention to detail. These are very similar to Subchapter S corporations in the sense that profits flow through the investors and they are taxed as ordinary income, and 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 all of the top 500 largest companies operate as this type of corporation. The corporate veil exists in this type. Unlike the other corporations, this corporation is taxed as a company and then 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 structure of the business has been selected and established, the personal trainers need to address the legal concerns. One major note is the difference in 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 single project kind of work. The biggest distinction is being paid on a regular schedule, as opposed to the “by 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, but there may often be miscommunications, and it is always going to be preferred to have written and easily interpreted information available. 

    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 in the form of an exchange of valuable items like money and services.
    • Legality, meaning that it is acceptable under the law. 
    • The ability of the parties to be able to enter into a contract with respect to 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 related to the adherence to the established professional guidelines. 

    Negligence is simply the failure to perform as a reasonable and prudent person under the right circumstances. 

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

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

    • The defendant has a duty to 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 the agreements to participate, informed consent, and waivers. 

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

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

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

    Trainers have a legal responsibility for their facilities, equipment, their supervision, and their 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 have to be well aware of the importance of having insurance. 

    There has been a recent rise in the 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 that you find or seek out information for umbrella policies. This has the personal trainer coverage included with your normal insurances outside of the business. 

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

    Other Business Concerns with Legal Implications

    Trainers should be aware of the ways they can market themselves and maintain high ethical standards for these practices. 

    Trainers also are encouraged to make use of social media, but 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 2
    ACE CPT Chapter 1: Role and scope of practice for the personal trainer 2

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