Can I Ask You A Question?

"I have worked at a beautiful studio 20 hours a week for the past 8 years where the two Owners and I have had a great relationship built on mutual respect and professionalism. They are aware that I also work at a studio about 30 minutes away.  About 18 months ago, one of the owners got divorced and moved away with very little notice.  

I know the remaining owner has been through a lot as she adjusts to no longer having a partner.  She's had to adjust, grow staff and take on more responsibility quickly and without much warning.  However there are changes being made that make me uncomfortable and question the relationship I've had with her for nearly a decade.  

I've always been a 1099 contractor and she's moving us all to W2 employee status.  I was unhappy with that change but then she gave us the employee agreement and it includes a non-solicitation.  I'm really offended by this.  I have taught at two studios for over 5 years and have NEVER tried to poach clients from either studio to benefit the other.  I just don't understand where this is coming from.  We worked together without paperwork for all these years without an issue.  And now I feel like she's destroying our relationship with all of this formality" ~ Upset and Offended

Dear Upset and Offended

Your studio has experienced a lot of significant change and no doubt it's been tumultuous for everyone involved.  

The bedrock our business is our relationships.  Relationships with our clients which keep them coming back to us; relationships with our owners who provide us with a safe and happy environment to grow and succeed; and the relationships with our colleagues who we rely on to keep life interesting and for support when we need it.  When any of those relationships feel out of balance we can feel offended, unsteady or not valued.  

But......

Formalizing your relationship with the studio is in EVERYONE'S best interest and not something to take personally.  I'm willing to make a Las Vegas size bet that this owner has just gone through a legal nightmare as she dissolved this partnership. The departing owner's stake in the business was very likely entwined with the ex-spouse and their divorce settlement.  If the two owners didn't have the right paperwork in place, chances are the dissolution of the partnership was difficult and possibly expensive no matter how good of a relationship they had with each other. 

Formalizing the relationship manages everyone's expectations, protects everyone's rights and extends a professionalism to the business that benefits all involved.  

What if....the ex had gotten the studio ownership in the divorce and had "big ideas" for how they were going to staff and pay the teachers?  

What if....the remaining owner is considering a sale of the studio in the near future OR wants to bring in another partner to fill the shoes of the partner who left?  

What if.....one of your colleagues isn't as trustworthy as you are and moves to a studio the next street over and begins poaching the clients who fill your schedule and therefore your income? 

In all of these scenarios, an employee contract would have protected you.  

While relationships are the bedrock of our industry, they are not going to protect you in every possible situation that arises.  I know owners who didn't want to sign a lease with their "friend who had space in their gym", and got kicked out when that friend sold the gym to a franchise. 

I know an Owner who paid for two friends to be trained as teachers, mentored them, gave them clients only to have them open their own studio 5 blocks away.  All without paperwork protecting her financial investment because "they were friends".  

We all approach our personal and professional lives with the best of intentions.  But circumstances, that are often out of your control can and will arise and that paperwork is there to protect your rights and your status if and when something does come up.  My guess is this partnership situation really opened your studio owner's eyes to where she was vulnerable and she's taken it as a lesson to button everything up.  

And one last note....the States are making a huge push to hunting down businesses like Pilates Studios and are penalizing those who employ contractors with HUGE penalties.  The State is soooo over losing out on the payroll taxes employers avoid by only having contractors.  So she really really has to make this change to make you an employee and have the paperwork to back it up should she ever get audited.  

So my advice is not to take it personally.  It's a good thing that your owner is taking her business seriously enough to want to protect it, herself and her employees.  And if it still makes you nervous, then I suggest you spend a few dollars to have your own attorney review it so you can feel confident in the intentions and protections built into the document.