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The battle that could put yoga studios out of business


Yoga Vida
(Photo: Yoga Vida)

Yoga studio owners in New York may have been successful in convincing state government that their classes shouldn’t be subject to city sales tax (like gym memberships). But there’s a new regulatory battle that they say could majorly affect the industry—and it’s about to come to a head.

“It is extremely serious for New York state yoga studios. If this case is not heard and won on appeal, it’s going to set an incredibly bad precedent,” says Yoga for NY founder and owner of Yoga Union Alison West. “It really will put a lot of studios out of business.”

The case she’s referencing is popular downtown studio Yoga Vida’s, and it concerns whether the state should require all yoga teachers be paid as employees rather than independent contractors (or freelancers), the latter of which is the way most studios—especially small ones—currently classify them. If studios were forced to do this, owners say the costs of providing unemployment insurance and worker’s compensation for every teacher on the schedule would be prohibitive.

After a lengthy process that began in 2010, Yoga Vida owner Mike Patton has arrived at the highest appeal level and is waiting to find out whether the appeal board will grant the case a hearing or will simply issue a written decision. And the state has indicated, in some instances, that the final outcome of this case will be used as precedent in others, making its significance greater.

“What we’re hoping for is an opportunity to have a conversation with a judge or court to explain how the industry operates,” he says.

Yoga Union
Alison West has led the charge for yoga studios to band together through Yoga for NY. (Photo: Yoga Union)

Breaking down the issue

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 “The guidelines are completely out of date, so the questions being asked don’t properly reflect how the yoga world works at all,” West says.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.

But West says the state uses measures that don’t make sense in the yoga world to determine whether teachers “control” their own business. For example, she says, they ask teachers if they bring their own “tools” to teach, and since teachers say no, that the studio provides mats and blocks, the state uses that as evidence that they are not independent. (Maybe teachers could start having Uber SUVs full of Manduka mats follow them around?)

And in Patton’s case, the state used the fact that he said “he would personally address instructors regarding their manner of instruction if it posed a risk of injury to the students” as evidence he was in control of teachers. Monitoring the safety of his clients was considered “controlling” teachers.

Plus, Patton explains, a blanket ruling would force him to pay a traveling teacher who teaches one handstand workshop a year at Yoga Vida as an employee. If a teacher teaches two classes a week at five different studios (a common scenario in New York) and picks up and goes to India whenever he or she wants, they’d still have to be on the payroll at all five studios. “They are literally going to run studios into the ground, so the so-called protection of employees is going to result in the lack of employment for yoga teachers,” West says.

Dana Flynn
“Other industries aren’t required to do this, so how could they do this to our industry?” Flynn says. (Photo: Laughing Lotus)

The cost?

Patton estimates that paying every teacher as an employee would force him to raise class prices 10 to 15 percent, which could definitely affect business. And an even bigger issue is looming: If during studio audits the state decides studios have been paying their teachers incorrectly, it often slaps them with a bill for unpaid unemployment insurance spanning a huge chunk of time.

Laughing Lotus owner Dana Flynn is still fighting the results of an audit from 2006–2008, which determined that many of her teachers she considered independent should have been classified as employees. She was hit with a bill upwards of $25,000, a sum that she says her business didn’t exactly have ready in the bank. “Right now it’s a problem, and we’ve got to find a solution,” she says.

A solution, all of the yogis say, that respects teachers’ rights as employees and the state’s mandate to protect them, while also allowing the yoga industry to thrive. “We’re going to have to go up to Albany and put up a hell of a fight,” says Flynn. Currently, they’re not that interested in savasana. —Lisa Elaine Held