Yoga teachers negotiating their employment contracts with yoga studios have many issues to consider. In Part 1 and Part 2 of this series, we looked at what makes a contract legally binding, the importance of "getting it in writing," and what happens if one side violates the contract. Now we can get into the details of the contract itself, highlighting the most important provisions and suggesting some negotiating points.
In considering the legal issues lurking behind contract language, two principles are important to remember. First, the contract should be written clearly, in plain language understandable to both sides. Basically, the contract spells out rights and obligations. Clear and easily understandable language will reduce misunderstandings and facilitate a resolution if any dispute about the contract terms arises later. Second, it is critical to negotiate contract terms that both sides perceive as fair. Some people might think it's "un-yogic" to ask for what they want, and that it's preferable to remain "detached." Others think the best strategy maximizes personal gain but minimizes what the other side gets. Neither view is really helpful.
A contract is the result of negotiation, plain and simple. Yet, while negotiating for strategic advantages is prudent, both sides have to feel satisfied in order for the deal to hold over the long term. A one-sided contract sets up the parties for a lawsuit down the road, exacerbating the possibility of emotional and financial injury. In other words, bargaining for a powerful but fair deal can honor the spirit of ahimsa—nonviolence to one's self and others.
The most important contract provisions concern:
- Type of Hire
- Covenant Not to Compete
One of the most important parts of the contract deals with the duties (or obligations) of each side to the other—the job description. Many full-time employment contracts simply contain a generic description, for example stating that one is expected provide services on a full-time basis and act in accordance with the employer's policies and procedures. If yours is not a full-time contract, it is wise to spell out the minimum or maximum number of hours the yoga studio employer expects.
Even if it is a full-time contract, job description items to spell out might include: what style of yoga can or must be taught? How long are the classes? Is there freedom to innovate? (One organization, for example, mandates that yoga teacher "never alter the teachings [including the set poses] because of personal opinion." Similarly, does the studio provide props, or is the instructor expected to bring them? Do the duties involve a specific number of hours of private teaching, management or deskwork, or even cleaning? Be specific—make sure the provisions reflect your agreement.
It is important to spell out how much the yoga teacher will get paid, and how frequently. Is it an annual salary, for example, or payment per class? Is payment contingent on the number of students that take a given class, or unrelated to enrollment?
Type of Hire
Will the teacher, under the contract, become an employee of the yoga studio, or an independent contractor? Employers are expected withhold salary to pay income taxes for employees, whereas independent contractors are expected to take responsibility for their own income tax withholding. Employers usually do not pay benefits to independent contractors, although they do to employees.
Although the contract will specify the type of hire, the court will also apply various tests to determine whether one is actually an employee or an independent contractor in the case of a dispute. It is best to consult a tax lawyer or accountant for review of the contract regarding potential tax treatment under the agreement. Another thing to look for is whether, under the contract, the yoga studio or the teacher is expected to furnish liability insurance. Employers will typically furnish such insurance for employees, but not for independent contractors.
In legal terms, "breach" refers to violating (breaking) the contract. Typically, a breach terminates the agreement. But what constitutes a breach? Missing one class? Taking too many sick days over a year? Showing up 10 minutes late one day because of traffic? Many agreements do not spell it out, but leave in the mysterious phrase "material breach," or a breach that is so significant that it essentially breaks the contract.
Although, by law, all contracts have an implied obligation of good faith and fair dealing, which means that contracts will be interpreted with a modicum of goodwill and common sense, the phrase "material breach" is ambiguous and thus can lead to litigation. Again, the more the contract spells out in detail, the clearer the situation will be in the event of a later disagreement.
In most states, unless the contract otherwise specifies, employment is considered "at-will," meaning that either side can terminate employment at any time for any reason. Is the contract silent on the question of term, leaving the agreement one for employment "at-will," or does the contract specify a term (for example, six weeks, two months, or one year)? Is the term renewable, and on what factors is that renewal contingent? For example, if renewal is contingent on "satisfactory performance," such language gives the studio the unilateral right to decide not to renew. It is be better to specify what kind of conduct or results will constitute an unsatisfactory performance.
The agreement may specify a number of events that can trigger termination of the contract prior to its expiration. For example, a sufficient disability on the part of the yoga teacher may trigger termination.
An important aspect of any termination clause is the language determining what happens upon termination. For example, at a minimum, the contract should spell out that the studio has the obligation to pay the teacher whatever unpaid salary has accrued for classes taught until the date of termination. In addition, some yoga teachers may be able to secure a promise of certain benefits after termination, such as severance pay. For example, if you are asked to move across the country to teach a six-month yoga course but employment is "at-will," it might be fair to negotiate some contract language providing for severance pay if, before the six months are up, you find yourself terminated.
Covenant Not to Compete
Many yoga studios are now inserting a contract provision requiring the yoga teacher, upon termination, to refrain from teaching or from opening a yoga studio that would be in competition with the former employer. This is known as a "covenant not to compete," or simply a "non-compete clause."
Some states prohibit such clauses while others uphold them. Most courts will refuse to enforce non-compete clauses that are too broad in scope, and they will only uphold such clauses when reasonably restricted in time and scope. For example, it would probably be reasonable to ask that the teacher refrain from teaching or opening a studio for two years within a four-block radius of the old studio; and likewise, probably unreasonable to ask that the teacher refrain from opening a studio anywhere within the state.
Having considered these key provisions, should the yoga teacher hire a lawyer to help negotiate and give advice concerning an employment agreement? That depends on the complexity of the contract and one's available resources. In general, legal advice can be useful for even basic situations, much like professional accounting advice during tax season. To illustrate, here is part of one yoga studio's contract: "Any breach of the agreement may result in suspension of contract whereupon wages are paid only up until the time of breach." Before signing this contract, it would be important to understand what acts might be considered a breach, as one could be in trouble if the studio later seeks to withhold pay based on an alleged breach. These kinds of contract subtleties can make a little bit of advance legal advice go a long way in one's future yoga teaching.
Michael H. Cohen, J.D., M.B.A., is Principal in the Law Offices of Michael H. Cohen and the publisher of the Complementary and Alternative Medicine Law Blog. The materials in this Web site/e-newsletter have been prepared by Michael H. Cohen, J.D., M.B.A., and Yoga Journal for informational purposes only and are not legal opinion or advice. Online readers should not act upon this information without seeking professional legal counsel.