Due to its complexity and direct impact on legal risk, a review of your Human Resources (HR) and pay practices is a great place to begin filling gaps in your business. Here are four issues you can start with:

Issue #1: LACK OF DOCUMENTATION

A general lack of documentation seems to plague many fitness businesses, even outside of the realm of HR (customer relations, contracts, etc.). When it comes to employees, the two biggies are a failure to outline policies in writing and a failure to document issues. Your Policy and Procedures Manual and/or your Employee Handbook lay out expectations for team members, explain the business objectives behind those expectations, and provide the framework for how to carry them out. Without this, you and your staff are essentially flying blind. If the time comes when employment must end, it also provides a history should a claim arise (unemployment benefits, discrimination, wrongful termination, etc.).

Issue #2: LACK OF TIME KEEPING

This issue generally falls into one of three categories: 1) Connected to a misclassification issue where an employer is treating an employee as exempt when they shouldn’t be. All nonexempt employees should be keeping time records. 2) Time records are being kept in an inaccurate or haphazard manner. This typically comes in the form of written time sheets that don’t capture time in/out to the minute or assumed time clocks that simply plug in the employee’s standard schedule and ignore actual reporting times. 3) Failure to keep time records for piece-rate employees. Current best practice advises tracking actual time worked (including prep and wrap time), paying to the clock, and then adding in a bonus based on total classes taught or sessions completed, if desired.

Issue #3: MISCLASSIFICATION OF INDEPENDENT CONTRACTORS

Here’s the bottom line, in 99% of cases the person you’re dealing with is an employee. Sure, you can manufacture a creative reasoning for paying them as a contractor, but it’s generally not worth the risk given the severe penalties associated with misclassification. In short, if the position requires the person to be directed as to how, when, where and with what to do the job, he/she is an employee.

Issue #4: LACK OF KNOWLEDGE OF AND ADHERENCE TO STATE LABOR LAWS

Every state comes with its own unique challenges for business owners. Minimum wage changes, special break requirements, mandatory check information, employee notices, rules governing final wages, workers compensation requirements… the list goes on. It’s imperative that a business owner investigate the rules in his or her home state. These should be reviewed frequently to plan for and implement any changes. It’s the owner’s responsibility to be informed.