Plaintiffs in this case first alleged in December 2013 that Goldrsquos Texas Holdings Group a franchisee group of Gold39s Gym International misclassified personal trainers as exempt from the Fair Labor Standards Act of 1938 This photo is not of one of the Gold39s Texas locations Photo courtesy of Gold39s Gym International

Plaintiffs in this case first alleged in December 2013 that Gold’s Texas Holdings Group, a franchisee group of Gold's Gym International, misclassified personal trainers as exempt from the Fair Labor Standards Act of 1938. This photo is not of one of the Gold's Texas locations. (Photo courtesy of Gold's Gym International.)

Gold’s Gym Franchisee Settles Overtime Wages Case for $625,000

U.S. District Judge David Ezra concluded Gold's Texas Holdings Group did not offer a “bona fide commission” system to its trainers, and hours worked must ultimately determine compensation.

Gold’s Texas Holdings Group Inc. recently reached a $625,000 settlement with more than 80 of its trainers who collectively alleged the fitness company had not fully paid out earned overtime wages.

U.S. District Judge David Ezra, Western District of Texas, approved the Oct. 21 settlement in Daniel Casanova et. al v. Gold's Texas Holdings Group Inc., which includes $260,000 for attorney fees, according to the Southeast Texas Record. The plaintiffs first alleged in December 2013 that Gold's Texas, which is a franchisee group of Gold's Gym International, Dallas, misclassified personal trainers as exempt from the Fair Labor Standards Act of 1938 (FLSA), divesting the employees of time-and-a-half wages for work weeks exceeding 40 hours.

The initial suit filed by former Gold’s Texas trainer Daniel Casanova also alleged the company further violated FLSA regulations in failing to maintain accurate records of employees’ hours worked.

Gold’s representatives argued the company allowed trainers to earn a percentage of client fees, which were ultimately negotiable and incentivizing. They further defended the pay structure by noting that trainers could gradually raise their training fees by earning industry certifications.

Ezra concluded earlier this year that this was not a “bona fide commission” system, and hours worked must determine compensation.

Ezra’s March 23 order states: “[T]rainers were not paid the percentage upon negotiating and executing a sale, but only upon spending an hour with the client during the actual training session. Accordingly, there was no way for trainers to work more effectively or efficiently—trainers were only able to earn their percentage by working an hour-long session with a client. Therefore, the compensation system was not decoupled from time.”

Ezra subsequently denied Gold’s request to withdraw this partial summary judgment. He argued that the "public, employees and businesses have a tremendous interest in seeking further interpretation” of the FLSA's sway over pay rates, according to Law360 report.

"Health clubs are now on notice that paying employees a percentage of the price of a training session is not a commission under the overtime laws,” said attorney Lawrence Morales II, who represented the plaintiffs in the civil case. “Any clubs that continue to deny trainers overtime based on this argument should expect to defend their payment plans in court."

Gold’s Gym and Gold's Texas representatives had not returned calls for comment on the settlement as of the time of this posting.

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