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May 18, 2017
Getting Fit… Legally – How to Manage Your Legal Risk as a Fitness Business Owner
It is no surprise that there are many challenges to running a fitness business. One aspect which often troubles fitness business owners is how to go about ensuring compliance with all the different legal requirements that come with having employees and customers. As a client service industry, a fitness business’s employees and customers are at the core of what it delivers on a day-to-day basis.
It is also the case that many fitness activities are inherently dangerous – another challenge of running this type of enterprise. It is not surprising that any prudent fitness business owner would want to know how to protect themselves from the downside risks created by their fitness activities.
Fitness business owners in Ontario should therefore be aware of a number of important legal requirements affecting their employees and customers, as well as understand that there are a few steps they can take to protect their business from exposure to liability. Below are some of the key legal points a fitness business should be aware of in this regard.
Non-competition and non-solicitation clauses
Post-employment “restrictive covenants,” such as non-competition and non-solicitation clauses, generally attempt to restrict the former employee’s ability to compete against the employer or solicit the employer’s employees, customers or potential customers.
There are several common situations specific to fitness businesses for which a restrictive covenant might be appropriate. For example, a fitness instructor may decide to leave her current position and start up a new fitness business which provides the same services and targets the same potential customers as her old business. Sometimes this new fitness business might even be next door to the old one! In this case, a non-competition clause may be appropriate.
In other cases, the fitness instructor may leave to go to another already established fitness business. She may also tell all of her clients to follow her there (in other words, she would be hoping to “poach” the customers from her old business). In this instance, a non-solicitation clause may be appropriate to restrain this kind of behaviour.
Canadian courts will enforce non-solicitation clauses if they are reasonable, and will enforce non-competition clauses if they are reasonable and a non-solicitation clause is not sufficient to protect the employer. The factors which go into determining whether a non-competition/non-solicitation clause is “reasonable” are based on the duration, the geographic scope and the scope of the activity covered.
The key point with respect to these kinds of clauses is that a properly drafted non-solicitation/non-competition clause can prevent an employee (or even an independent contractor) from many forms of competition following their departure. This will be important for any fitness business given the highly mobile nature of the fitness marketplace.
In Canada, privacy is an ever evolving and complex area which is governed by several different sources of law, including federal and provincial legislation and the common law.
One of the more important pieces of legislation which applies to certain employers is the
Personal Information Protection and Electronic Documents Act (PIPEDA). Employers not subject to PIPEDA commonly adhere to its requirements as a best practice.
PIPEDA applies in respect of personal information that the organization collects, uses or discloses in the course of “commercial activities.” Under PIPEDA, organizations are required to “… collect, use or disclose personal information only for purposes that a reasonable person would consider are appropriate in the circumstances.” The knowledge and consent of the individual are also required for the collection, use or disclosure of personal information, except in certain limited circumstances.
Fitness businesses often wonder whether they can collect certain kinds of information, including photographs of their customers. Such photographs are often uploaded to the Internet and disseminated through Facebook or Twitter, or sent out to others via promotional emails.
A photograph in which a person is identifiable conveys personal information. Compliance in this case would include obtaining the express consent of the individual, and requires the fitness business to limit collection for purposes that a reasonable person would consider appropriate in the circumstances.
Privacy requirements can also be impacted by what occurs beyond Canadian borders. Where electronic data might be, via “cloud computing,” processed, used, stored or accessed in, e.g. the United States, fitness businesses should make it clear to individuals that their information may be processed in a foreign country and that it may be accessible to law enforcement and national security authorities of that jurisdiction.
Lastly, fitness businesses should be aware of two common law workplace torts which would potentially give a customer a private right of action. The first is “intrusion on seclusion.” This privacy tort is triggered where someone “intentionally intrudes, physically or otherwise, upon the seclusion of another or his private affairs or concerns … if the invasion would be highly offensive to a reasonable person.”
The second privacy tort is “public disclosure of private facts.” This tort has only recently been recognized by Canadian courts. Under this tort, one person will be liable to another for invasion of the other’s privacy rights if the matter made public or the act of the publication (a) would be highly offensive to a reasonable person; and (b) is not of legitimate concern to the public. This tort has been specifically used in a previous case to find a person liable for posting to the Internet a privately-shared and highly personal intimate video recording of his former partner.
Both torts are concerning for employers because of the doctrine of employer “vicarious liability.” In certain circumstances, vicarious liability can apply so as to hold an employer liable for the tortious actions of their employees, which are committed at the workplace. It is therefore possible that in the future, the doctrine of vicarious liability might be applied to hold a fitness business liable for the actions of one of their employees, where during working hours that employee commits the tort of “intrusion on seclusion” or “public disclosure of private facts” against a customer.
There are many privacy law requirements applicable to businesses in Ontario and a good checklist is the first step in achieving compliance.
Canada’s Anti-Spam Legislation (CASL)
The anti-spam legislation that came into force in 2014, known as
Canada’s Anti-Spam Legislation (CASL), applies to all commercial electronic messages sent by businesses.
Even though businesses might be aware that CASL applies to emails they send out to their customers, they often overlook the fact that CASL may also apply to their posts on social media, including Facebook and Twitter posts. This is because CASL defines a “commercial electronic message” as
“… an electronic message that, having regard to the content of the message, the hyperlinks in the message to content on a website or other database, or the contact information contained in the message, it would be reasonable to conclude has as its purpose, or one of its purposes, to encourage participation in a commercial activity, including an electronic message that … offers to purchase, sell, barter or lease a product, good or service….”
The very broad definition of “commercial electronic message” means that CASL likely applies to many more business emails, Facebook posts and Twitter “tweets” than one might think.
It is important to know that in order to send a “commercial electronic message,” a business generally needs (a) consent, which is either express or implied, and (b) to comply with mandated content/unsubscribe information.
The onus of proving consent remains with the person sending, causing or permitting the sending of the commercial electronic message. Senders of commercial electronic messages must therefore keep a hard copy or electronic record of, among other information: (a) all evidence of express and implied consent (e.g. audio recordings, copies of signed consent forms, completed electronic forms) from consumers who agree to receive CEMs (b) documented methods through which consent was collected (c) policies and procedures regarding CASL compliance, and (d) all unsubscribe requests and resulting actions.
The penalties for non-compliance can be severe. In a case in Quebec, a business was fined $1.1 million in 2015 for sending spam emails to individuals whose email addresses it had found through “scouring” publicly available websites. These emails were found to contravene the CASL provisions because they were sent without the recipient’s consent and were sent with a non-complying “unsubscribe” function.
As a result, businesses (and particularly fitness businesses) should ensure that they have the proper CASL compliance measures in place. These may include, among other things, having a properly prepared standard form express consent request, having a consent tracking system in place, and complying with the mandatory identification and unsubscribe requirements. Businesses must also ensure that their staff are properly trained since CASL also imposes “vicarious liability” on employers, meaning that employers may be liable for non-compliance by their employees.
Waivers and Releases
A waiver (also known as a release) is a contractual clause intended to prevent a person who signed the contract from taking legal action, such as suing for personal injuries sustained as a result of participating in a fitness activity.
The importance of waivers and releases is evident when one considers the fact that many fitness activities are inherently dangerous. The validity of a properly executed waiver is of the utmost importance to businesses providing physical activities as it protects them from costly and time-consuming litigation.
The Ontario Court of Appeal has confirmed that if a waiver is correctly drafted, presented and properly executed by the participant, courts will enforce the terms of the release.
On the other hand, having a badly-drafted waiver can potentially lead to serious liability down the road. In a 2014 Ontario case, a participant in a “zip-lining” activity signed a waiver – and even initialled the waiver eight times! However, in this case, the words “Participant Agreement” were in capital letters, but the more important words “(including assumption of risks and agreements of release and liability)” were in small type and the waiver language was only on the last page of the agreement.
There were also other mistakes in the waiver involving typographical errors and the failure to describe the specific legal rights being waived. The court in the zip-lining case found that a full trial was necessary because of the “potentially confusing language” in the waiver. It is almost certain that this trial would be a long and expensive one for the activity provider!
As a “best practice” for having an enforceable waiver or release, a fitness business should ensure a few things. First, it is important that there is “consideration” and “meeting of the minds” when signing the waiver or release. This includes providing the waiver or release before the person engages in the activity and bringing it to the attention of the person. This requirement for bringing it to the person’s attention is especially important for standard form (“boilerplate”) waivers or releases.
A properly drafted waiver or release must also describe the kind of conduct amounting to negligence, which is intended to be covered. It should also be able to be understood by the person reading it. Lastly, employees who ask participants to sign waivers or releases should receive training in order to ensure that all the foregoing requirements are met when a customer is presented with the waiver to review and sign.
AODA and OHSA Policies
Like other businesses, fitness businesses must comply with the provisions of the
Accessibility for Ontarians With Disabilities Act, 2005 (the AODA). The AODA requires that “every provider of goods or services shall establish policies, practices and procedures governing the provision of its goods or services to persons with disabilities…,” also known as the “Customer Service Standards.”
Fitness businesses must provide training for employees about the provision of goods or services to persons with disabilities. They must also post notices on premises (a) that the documents required under the Customer Service Standards are available upon request, and (b) if there are any temporary disruptions in facilities or services which may affect persons with disabilities.
In addition, fitness businesses are required to comply with the
Occupational Health and Safety Act (the OHSA), which includes preparing and reviewing, at least annually, a written occupational health and safety policy, and developing and maintaining a program to implement that policy. Fitness businesses must also post in a conspicuous location in the workplace a copy of the occupational health and safety policy.
Fitness businesses need to be aware that there are new rules for workplace violence and harassment under the AODA. Under these rules, employers must (a) prepare a policy with respect to workplace violence (b) prepare a policy with respect to workplace harassment, and (c) review the policies as often as is necessary, but at least annually.
Both the AODA and the OHSA impose penalties for non-compliance. As such, it is important for fitness businesses to ensure that they are aware of and comply with the applicable legislation, including training their employees to meet these requirements.
There are many legal requirements which a fitness business must comply with in Ontario, and many of these extend to the employees and customers of the business. Some of these requirements, such as complying with privacy law obligations or AODA or OHSA policies, exist to protect employees and customers alike, and have serious repercussions for the employer if breached.
In other cases, compliance with the law is not strictly required, but is almost always a “best practice” for fitness businesses looking to limit their liability. A properly drafted waiver or release (to give just one example) is an important part of ensuring that fitness businesses are not exposed to potentially ruinous lawsuits from their customers. Given the downside risks involved, fitness business owners who want to protect themselves in this regard should consider getting appropriate legal advice.
*With assistance from Pavle Levkovic, an articling student at Aird & Berlis LLP.