Gold’s Gyms loses in Texas FLSA Overtime Ruling
According to a federal judge for the Western District of Texas, personal trainers who work at Texas locations of Gold’s Gym, which are owned by Gold’s Texas Holding Groups Inc., are not exempt employees, based on definitions laid out in the Fair Labor Standards Act (FLSA). What that means is, they are eligible to receive overtime pay.
The owners of Gold’s Gyms in Texas attempted to claim an FLSA exemption for retail or service establishment employees whose compensation is more than 50 percent based on commissions, but that didn’t apply, according to the recent ruling, which was handed down on March 23 by Judge David A. Ezra. The ruling said that, even though the trainers received a cut of the fees paid by gym customers, they only receive that pay after they have provided those customers with hour-long training sessions. Because of this, payments to the trainers are not separate from their actual working hours, which means the company doesn’t qualify for that exemption.
Gold’s Texas Holding Groups Inc., which operates 41 Texas Gold’s Gym locations, attempted to argue that its trainers fell under the FLSA exemption because they receive a percentage of the fees charged to the Gold’s customers they train. Apparently, the fee paid varied, based on a trainer’s certification level and the type of training offered. They claimed that amounted to a commission, since the trainers themselves negotiate the price of a session and compensation is based on a trainer’s expertise. They said the system they use incentivizes trainers to train more people at a time and to charge higher rates.
Judge Ezra, however, disagree. He ruled that, if a “commission” is fully dependent upon hours worked and isn’t payable at the time the employee makes the sale, the company doesn’t fulfill the requirements of the FLSA commission exemption. Under the compensation system Gold’s Gym used, it wasn’t possible for a personal trainer to become more efficient and increase their pay without working the hours. They still had to complete the full hour of the training sessions to receive compensation. That means they were essentially paid an hourly wage, not a commission.
This ruling, which immediately affects more than 80 current and former Gold’s trainers, is considered potentially very important, since it clarifies FLSA rules when it comes to determining when retail employees can qualify for the FLSA exemption for “working on commission.” If their pay is dependent primarily upon the number of hours worked, they are entitled to overtime pay.
If you work in a retail environment and you believe you have been denied your rights under the overtime provisions of the FLSA, please call the FLSA Overtime Lawyer atthe Hill Law Firm today for a free consultation. We can look at your case and advise you as to your next step in protecting your rights under the law.