DALLAS — Personal trainers working at Gold’s Gym locations in Texas are not exempt employees under the Fair Labor Standards Act (FLSA) and therefore may seek overtime pay, a federal district court in Texas has ruled. Gold’s Texas Holding Groups Inc., which operates 41 Gold’s Gym locations in Texas, were sued by trainers who receive a percentage of the fees charged to Gold’s customers they train, with the fee varying based on a trainer’s certification level and type of training offered.
However, the trainers are only paid after providing hour-long training sessions to those customers.The suit covers more than 80 current and former trainers who alleged they were denied overtime pay despite working more than forty hours per week.
Exemption for Commissioned Employees
Gold’s Gym argued that its trainers fell under the FLSA exemption for retail or service establishment employees whose compensation is more than 50% based on commissions. The company states that the pay for the trainers amounted to a commission because the trainers negotiate the price per session with the customer and compensation varies based on a trainer’s expertise. According to Gold’s Gym, the system gives the trainers incentives to train more people at a time and to charge higher rates,
However, the court observed that although the trainers receive a share of fees paid by gym customers, they only are paid after providing hour-long training sessions to those customers. The trainers’ pay therefore isn’t “decoupled” from their actual working hours so Gold’s Gym can not claim the exemption for commission-paid employees. According to the court, a bona fide commission can not depend on hours worked and must be payable when an employee makes the sale. The court ruled that Gold’s Gym’s compensation system reflects nothing more than an hourly wage, where the employee’s rate of pay changes based upon his or her qualification
Gold’s argued the compensation system provided performance-based incentives for trainers to increase their income, which is a common feature of commission-based pay. However, the court said Gold’s misconstrues the application of performance-based incentives to bone fide commissions. In this case the trainers have financial incentives to earn more certifications to increase their share of the customer’s training fee. This does not amount to a performance-based system, but rather a qualification-based system which differs from incentive structures found in genuine commission arrangements. The court found that the qualification-based incentives under the facts of this case simply qualify the trainer to earn a higher hourly-rate.
If you or someone you know is misclassified as exempt and therefore not paid overtime as required by FLSA, you should call (855) 754-2795 or complete the Free Unpaid Overtime Case Review form on the top right of this page. Our top-rated team of wage lawyers will evaluate your situation to determine your best course of action. We will also determine if it is in your best interest to file a lawsuit against your employer. There are strict time limitations for filing, so it is important that you call our experienced attorneys today.