“Litigation: A machine which you go into as a pig and come out of as a sausage.” —Ambrose Bierce

In July 2020, the National Federation of Independent Businesses released its quadrennial report rank-ordering the most significant threats that businesses believed they faced. Out of 75 possible choices, threatened lawsuits ranked 69th, a spot down from the 68th position it held in 2016.[1]

This is not overly surprising. Business owners (especially in the fitness industry) have plenty of day-in-day-out concerns to keep them up at night – acquiring and retaining customers, finding and retaining quality employees, making payroll, overhead, taxation, compliance with governmental regulations, anticipating market changes, cash flow – not to mention the occasional once-in-a-century pandemic. The unlikely lawsuit simply isn’t top-of-the-mind. And yet, ironically, the very thing that many businesses discount has a singular ability to utterly destroy them.

Don’t get me wrong – lackluster sales, missing payroll, getting hit with a delinquent tax bill, etc. are bad. But contemplate this scenario for a moment: while grinding through a hard training session (with your encouragement), your 42-year-old trainee, an overweight physician who decided he needed to make a change to his life, suddenly has a stroke, which leaves him unable to work and in need of medical care for life. He hires a lawyer and sues you for $14 million for medical expenses, lost wages (which are huge given his occupation), and pain and suffering…and he has expert witnesses lined up who will testify that your routine contributed to his stroke (whether that’s actually true or not).

Suddenly, that unlikely event that you back-burnered could become not only the end of your business, but of your personal financial life as well. (Yes, if you trained the guy, you can be sued personally and can’t rely on incorporation to protect your personal assets – more on that later.) And here’s the other problem: unlike many other business challenges you may have encountered, you can’t “make up” this one with future actions. Once the trainee is injured, the underlying facts are fixed unless you happen to come across a Doc Brown souped-up DMC DeLorean – you can’t buy insurance retroactively, change the language of your waiver if it is legally deficient, create documentation after the fact, or change the circumstances of the trainee’s injury. Your only hope now is to convince between 6 and 12 members of the laity, who have no expertise in human physiology or coaching, that you did nothing wrong.

I’m not just fearmongering here. Remember that $14 million lawsuit from above? That actually happened…in Stamford, Connecticut in 2016, a jury hit a personal trainer and gym with a $14.5 million verdict after a physician trainee suffered a debilitating stroke during a training session.[2] With a little internet searching, you can find plenty of other high-six and seven-figure judgments and settlements against gyms and personal trainers. But even if your trainee “only” hit you for $200,000, that still ain’t small potatoes, at least for anyone in the gym industry that I know.

Admittedly, many people in the gym industry can go a working lifetime without being sued. But lawsuits against gyms and coaches aren’t uncommon either, and lawsuits’ unique ability to decimate personal and professional lives rationally demands that their threat be taken seriously, and that a coach or gym owner takes proactive measures to mitigate that threat. Especially because, as the proverbial saying in the defense bar goes, once you’ve been sued, it’s already too late to take actions to help your case. Or as business writer Cliff Ennico once noted, “the fee a lawyer will charge you to keep you out of trouble is only a small fraction of the fee a lawyer will charge you to get out of trouble.”

The purpose of this article is to discuss three steps you can take today to help protect your business tomorrow should you find yourself on the wrong end of a lawsuit, irrespective of whether you actually do something wrong. In particular, this article discusses the advantages (and limitations) of: (1) written liability waivers; (2) insurance; and (3) incorporation.

Written Liability Waivers.

A. General waiver rules.

I’ve opined many times that written waiver and release forms are, along with insurance, the most effective means of protecting coaches and gyms against liability from client injuries. They are particularly powerful because, if drafted correctly, they can eliminate a coach’s liability even if he acted negligently.[3] Waivers have been enforced even in the face of catastrophic injuries (e.g., stroke[4]; rhabdomyolysis[5]) and inane actions by personal trainers (e.g., instructing a trainee to remove his support belt while performing squats;[6] instructing a woman to use an incline bench press machine shortly after neck surgery despite her surgeon’s orders that she was not to lift any weight overhead[7]).

But getting a waiver for your business isn’t simply googling “personal training waiver” and copying something that looks good – in fact, when I did that same search to prepare for a presentation to the Starting Strength Coaches’ Association annual conference in 2014, over half of the waivers on the first results page alone had significant errors. Because waivers require a trainee to relinquish significant legal rights, courts have developed strict legal rules governing their enforceability – legal rules which are commonly missed not only by fitness industry professionals, but even many practicing lawyers. After spending much of my legal career analyzing literally hundreds of cases discussing liability waivers, I believe the most critical rules – the ones that have proven dispositive in all but a select few of the cases I have reviewed – can be enunciated in four basic principles.

Principle 1: The waiver must be conspicuous.

Courts require that any contractual provisions waiving liability be “conspicuous,” meaning that it can be discerned from other contractual provisions.[8] There is no one right way to satisfy this requirement. My personal preference is for the waiver to be a completely separate document so there is no question what the trainee is signing. But courts also have honored in bold and capital typeface,[9] preceding the waiver provisions with a clearly discernible heading (e.g. capitalized, bold, and underlined),[10] and offsetting it with a text box,[11] among other methods.

The point is, do not simply include the waiver clause as part of a larger agreement with no offsetting characteristics[12] – do something to make the waiver provisions clearly discernible from other provisions of a trainee agreement. Additionally, waiver agreements should be written in plain English and avoid legalese, fancy Latin phrases, and the like.[13] If you have to look up a word or phrase, you may want to reconsider including it in your waiver.

Principle 2: The waiver must fairly cover the circumstances at issue.

Because waiver of a legal right is so significant, courts require the releases to fairly cover the type of injury involved. This is, in essence, the who-what-where-when requirement, and each should be considered carefully to ensure that a waiver fully covers the fullest range of potential liability a coach or gym might face. For example:

WHO does the waiver protect? Keep in mind that a gym is distinct from the people who run or work for it, employees are distinct from independent contractors, etc. A waiver covering one person, entity, or group will not automatically release liability for different persons, entities, or groups. Thus, gym owners and coaches should be sure to include in their waivers every person or group of people that they want to protect. A failure to do so can have dire consequences because courts will narrowly construe who is released by the waiver. For example, in Bailey v. Palladino, an exculpatory clause “releas[ed] and forever discharg[ed] instructors, officers, agents, employees, representatives, [and executors],” but did not explicitly release the gym itself. The court acknowledged that this was likely a drafting error but held it was limited to the terms of the waiver, which did not bar the plaintiff’s claim against the gym.[14]

WHERE does the waiver apply? Does your gym have a bathroom or locker room for your trainees? Do you lease or own the parking lot outside the gym? Do you conduct training activities outside of the gym facility itself (e.g. running on public streets or sidewalks)? This issue is especially significant if you train clients at your personal residence, since they may enter areas of your residence (for example, a bathroom or the kitchen area to get water) that would not be considered the gym space where they actually train. Point being, your waiver will need language that can be fairly read to cover the specific areas where an injury might occur. The “where” question often dovetails into the next two . . .

WHAT does the waiver apply to, and WHEN does it apply? At first this may seem like a silly point—naturally, you would want to use broad language such that any activities related to training are covered. For example, in Bhardwaj v. 24 Hour Fitness, Inc., plaintiff was injured while using a hack squat machine, which apparently had a manufacturing defect. As a condition of membership, plaintiff signed a waiver stating:

The use of the Facilities . . . naturally involves the risk of injury to you or your guest, whether you or someone else cause[s] it. As such, you understand and voluntarily accept this risk and agree that [gym] will not be liable for any injury . . . or any damage to you . . . resulting from the negligence or other acts of [gym] or anyone on [gym]’s behalf or anyone using the Facilities.

The court held that plaintiff’s injury was “unquestionably one that was related to the use of the fitness facilities,” which was a risk expressly assumed by plaintiff under the release.[15] Bhardwaj confirms that waivers should use broad language to cover a wide range of injuries that may occur during a training session with a client.

But what if a trainee is injured not because of training activities – what if he slips on water in the bathroom after the training session is over? What if he trips over a mat while walking to the drinking fountain or just milling around between sets? These types of premises liability claims arguably present a different type of risk from that encountered during training activities, and some courts have seized upon this distinction to hold that broadly-worded waivers of liability for “use of the facility” or during training sessions do not protect against premises liability claims.[16] For example, in Leon v. Family Fitness Center, Inc., plaintiff signed an exculpatory clause stating:

[The club] and its officers, employees and agents shall not be liable for . . . death, personal injury, property damage or loss of any kind resulting from or related to Member’s use of the facilities or participation in any sport, exercise or activity within or without the club premises, and [the member] agrees to hold [the club] harmless from same.

While plaintiff was reclining on it, a bench in the sauna broke and injured him. The court held that the plaintiff’s injury “was not reasonably related to the object or purpose for which the release was given, that is, . . . injuries resulting from participating in sports or exercise rather than from merely reclining on the facility’s furniture,” and thus the waiver did not release the claim.[17]

For this reason, I recommend that waivers explicitly state that they apply not just to training activities, but also “during rest periods.” I also recommend that waivers have separate provisions specifically applying to premises liability claims (especially if a training facility has separate bathrooms, locker rooms, showers, or the like). Although some courts have suggested that premises liability waivers are not permissible,[18] most states seem to enforce them if they are clearly drafted.[19] One good example is Toro v. Fitness Int’l, LLC out of Pennsylvania, where a gym member was injured slipping on soapy water in the locker room. The court held that this was covered by the waiver, which included “accidental injuries occurring anywhere in the Club dressing rooms, showers, and other facilities.”[20]

Principle 3: The waiver must state that it applies to one’s own negligence.

This third principle is, in my experience, the most common flaw in waivers (especially in the gym context) and accounts for the majority of cases where a court found a waiver unenforceable. In the gym context, a lawsuit will almost always allege some type of negligence on the part of a coach or gym employee, and thus courts are often called upon to exonerate coaches and gyms from their own negligent activity. Doing so, however, has a significant social cost: waiver of one’s own negligence not only denies plaintiff a legal remedy but arguably removes an incentive for gyms and coaches to be more careful.

Courts nearly unanimously have resolved this policy issue by holding that a waiver cannot absolve one of his own negligence unless it clearly and expressly states an intent to do so. Yes, this rule requires use of the magic word “negligence” or a similar variant—it is not enough to simply waive “all liability” or release “all claims” against a coach or gym.[21] For example, the following waivers were held to absolve gyms and their employees of claims based on their own negligence:

• I hereby waive, release and discharge [gym] . . . of any and all liability . . . related to, arising from, or in any way connected with, my participation [sic] [gym’s] fitness programs/classes, including those allegedly attributed to the negligent acts or omissions of the above mentioned parties.[22]

• I do hereby waive, release and forever discharge [gym] and their officers, agents, employees, representatives, executors, and all others . . . from any and all responsibilities or liabilities from injuries or damages arriving [sic] out of or connected with my attendance at [the gym], my participation in all activities, my use of equipment or machinery, or any act or omission, including negligence by [gym] representatives.[23]

There are plenty of similar examples.[24] The point is, coaches and gyms should ensure that their waiver does not rely on broad language like “all liability” or “all injuries,” but expressly states that it releases them from all claims, including those arising from their own negligent acts or omissions.

Principle 4: A waiver cannot absolve intentional misconduct – or, why the waiver isn’t enough on its own.

The final principle is common sense: a waiver cannot absolve liability for intentional misconduct, such as battery, assault, fraud, or sexual harassment.[25] The reason is obvious: there is no public policy advantage to immunizing deliberate wrongdoing. Simply put, don’t even try to include intentional misconduct in your waiver. No court will enforce it, and in some cases it could potentially lead to your entire waiver being thrown out.

There is a complication in this area, however: at what point does misconduct become so egregious that it moves from negligence (which a waiver can release) to something resembling intentional misconduct (which a waiver cannot release)? For example, a waiver would absolve a gym of liability if it forgot to do maintenance on equipment on one particular day and a trainee became injured as a result, since that is ordinary negligence. But what if the gym knew that the equipment was defective but took no steps to warn its members of the danger? Or what if a gym simply decided never to inspect or maintain the equipment at all?

The New Jersey Supreme Court addressed this question in Stelluti v. Casapenn Enterprises in 2011, which upheld a waiver where a spinning instructor failed to inspect a bike before a class, and a patron was injured when the seat fell off the bike. Although the court found the instructor’s omission constituted ordinary negligence, it cautioned:

Although it would be unreasonable to demand that a fitness center inspect every individual piece of equipment after every patron’s use, it would be unreasonable, and contrary to the public interest, to condone willful blindness to problems that arise with the equipment for patrons’ use. Thus, had [a gym’s] management or employees been aware of a piece of defective exercise equipment and failed to remedy the condition or to warn adequately of the dangerous condition, or if it had dangerously or improperly maintained equipment, [the gym] could not exculpate itself from such reckless or gross negligence.[26]

This warning came to fruition in an Ohio court of appeals the next year. In Geczi v. Lifetime Fitness, a plaintiff was injured by a malfunctioning treadmill, which was available for use and had no warning signs on it. She alleged that when she reported the issue to the front desk, they told her that they already knew about the malfunction. She further alleged that when she reported the issue to a manager, he said he knew the treadmill was having problems the previous evening. The court held that the gym’s conduct, if true, went beyond ordinary negligence and thus fell outside the gym’s liability waiver.[27]

In 2015, a California appeals court went a step further and held that a waiver is ineffective if a gym had no evidence other than its say-so that it made efforts to properly maintain equipment. In Chavez v. 24 Hour Fitness USA, Inc., a trainee was injured using a cable machine. Gym employees testified that they performed regular maintenance on the machine, but they apparently never documented the maintenance – in fact, all of the maintenance forms were blank. The court found that a jury “could conclude . . . that [the gym] failed to perform regular preventative maintenance and, on that basis, that it failed to exercise scant care or demonstrated passivity and indifference toward results.” Since a failure to exercise any care constituted recklessness or willful blindness, it could not be waived.[28]

Stelluti, Geczi, and Chavez raise a critical point: a waiver alone is not enough – it must also be backed up with evidence that the gym or coach at least tried to exercise reasonable care. The point of a waiver is to immunize failures of judgment, not abject apathy or the fitness equivalent of Russian roulette. Courts will bypass even the most airtight waiver if a gym doesn’t take quick action to protect its patrons against a known dangerous condition (as in Geczi), or doesn’t make efforts to maintain its equipment (as in Chavez), or otherwise engages in behavior that is egregious enough to cross into recklessness or willful blindness.

And this rule could have implications beyond merely failing to maintain equipment. Although recreational weight training is generally a safe activity (indeed, it has a lower injury rate than many other physical activities like soccer, basketball, or even physical education class[29]), it could also present a significantly elevated danger to people who suffer from certain medical or physiological conditions, such as anorexia or other eating disorders, various types of cardiovascular and intracranial pathologies (such as aneurysms or tumors), seizures, and other similar illnesses.[30] Although I have not seen a case directly on point, it is not a stretch to suggest that training someone with such a condition that ultimately leads to injury, when the existence of the condition was known to the trainer, could be construed as reckless conduct falling outside the permissible scope of a waiver.[31]

Nor is it a stretch to suggest that a coach’s failure to inquire of his or her trainees whether they have any medical or physiological conditions that could adversely impact their ability to engage in weight training or other physical activity could be construed as willful blindness, especially given that pre-training health screening is a very common practice in the fitness industry. Given the potential risks involved, a coach should conduct basic screenings for any potentially problematic conditions, and think carefully before training an individual with any conditions that could potentially increase the danger of them engaging in weight training.

In short, a waiver is important, but so is your common sense. In addition to securing an airtight waiver, make reasonable efforts to protect your trainees (such as in regular maintenance of equipment, programming choices, who you train, etc.), document your actions, and take immediate remedial measures if you even suspect that trainees could be exposed to a dangerous condition (and document that too if you can) . . . your waiver just might depend on it.

B. Exceptions: states that restrict waivers.

Although some states (such as California or Illinois) tend to view waivers with a more critical eye, the legal standards governing enforceability of waivers are, generally speaking, fairly consistent throughout the nation. But there are several notable exceptions that anyone in the gym business should carefully consider.

Louisiana: By statute, Louisiana prohibits waivers that limit or exclude liability for personal injury,[32] which is precisely the type of liability that concerns the fitness industry.

Virginia: Since the 19th century, Virginia courts have held that waivers of future acts of negligence are void and violate public policy.[33] Although some lower courts have attempted to carve out a narrow exception for inherently dangerous recreational physical activities, the validity of this line of cases is unclear, and those cases certainly do not yet have the blessing of the Virginia Supreme Court.

Connecticut: Several Connecticut decisions have indicated that waivers releasing one’s own negligence are void and contrary to public policy for recreational activities such as skiing, snowtubing, karate, swimming, and yoga.[34] Although the courts do not appear to have addressed whether gyms or personal trainers fall within this prohibition, the logic of prior cases strongly suggests that this will be the case – recall that the $14.5 million verdict discussed earlier occurred in Connecticut.

Montana: Montana generally forbids liability waivers, but in 2015 it carved out a narrow statutory exception for inherent risks of recreational or sports activities. Even in this context, however, waivers are only enforceable if they expressly state the inherent risks of the activity and contain a specific paragraph in bold typeface.[35] Although the Montana statutory exception is helpful, it is still unclear whether Montana would allow waivers to release negligence claims based on premises liability or resulting for injuries that occur when a trainee is not directly performing an athletic movement (for example, if they trip over a gym mat during a rest period).

New York: Buckle up, because this one’s going to get messy! New York General Law 5-326 states that for pools, gymnasiums, and other “places of public amusement or recreation,” any release or waiver for the owner’s, operator’s, or person-in-charge’s own negligence, and/or the negligence of his employees, is void and unenforceable. This law seems pretty bad for gym owners, and it is. New York courts, however, have generally acknowledged that G.L. 5-326 invalidates negligence waivers only for places of recreation, but not for places of instruction.

So how do you tell if a gym is recreational or instructional? There are, of course, the easy situations: for example, an unsupervised gym in the basement of an apartment building is clearly recreational.[36] But New York courts have not been particularly helpful or consistent in providing guidance for mixed-use gyms where recreational and instructional activities occur under the same roof.[37] Some New York courts have focused on the plaintiff’s purpose for being at the gym,[38] whereas others have focused on whether the facility’s purpose is primarily recreational or instructional irrespective of the plaintiff’s reasons for being there.[39] These different tests could lead to completely opposite determinations as to whether G.L. 5-326 applies in a particular situation.

So what do you do if you run a gym in New York? Well, the safest approach seems to be to not allow any recreational activities at your gym whatsoever: if a person wants to train at your gym, s/he has to be instructed by one of your coaches, no exceptions. But if your gym cannot stay afloat solely with instructional activities, the next safest option is to present the gym to the public as one that is primarily instructional. The instructional focus can be emphasized in the gym’s name, corporate documents, advertising materials, website, and trainee agreements. This approach is not foolproof, of course – if your gym is objectively primarily recreational, or if the court focuses on a plaintiff’s reason for being at the gym rather than your gym’s primary business, your negligence waiver may not hold up. But if you cultivate an image of an instructional facility, at least a court will be more likely to find that G.L. 5-326 does not apply to you.[40]

Hawaii: Somewhat similar to New York’s G.L. 5-326, Hawaii Revised Statute 663-1.54 states that “[a]ny person who owns or operates a business providing recreational activities to the public, such as, without limitation, scuba or skin diving, sky diving, bicycle tours, and mountain climbing, shall exercise reasonable care to ensure the safety of patrons and the public, and shall be liable for damages resulting from negligent acts or omissions of the person which cause injury.”[41] Although Hawaii permits a business to waive liability for injuries resulting from inherent risks of the recreational activity, this does not apply if the injury “result[s] from the negligence, gross negligence, or wanton act or omission of the owner or operator.”[42]

On its face, these statutory provisions appear to invalidate any negligence waivers for recreational activities. Hawaii courts, however, have not meaningfully discussed Section 663-1.54. It is thus unclear if weight training falls within the Hawaii law at all—and there certainly is an argument that it shouldn’t because of its dissimilarity to the enumerated activities of scuba diving, bicycle tours, skydiving, or mountain climbing (which all occur outdoors and thus involve greater reliance on a knowledgeable guide to protect against unknown risks). Further, it is unclear whether Hawaii courts would draw a distinction between recreational and instructional activities like New York courts have with a similar statute. In short, it is not clear how the Hawaii statute operates in practice, at least as far as the Hawaii judiciary is concerned.

(Dis)Honorable Mention, Vermont: Vermont generally upholds waivers as long as they are not against public policy. Beginning with a 1995 Vermont Supreme Court case, however, Vermont courts have held that waivers are invalid if (1) the business requiring the waiver holds itself out as being available to all members of the public, without regard for training or ability, and a large number of such members use the services, and (2) the owners of the property have control over the venue and are in the best position to assure the safety of visitors.[43] These cases have typically been applied to ski resorts and similar recreational businesses, and Vermont courts do not appear as of yet to have considered the issue for gyms or personal trainers. But coaching services – especially in gyms with numerous members – would seem to check both boxes. At minimum, the validity of waivers in the gym and personal training contexts is an open question in Vermont, and at least some larger gyms could be vulnerable.

C. Special considerations – remote and online training.

So far, I’ve discussed cases involving negligence claims for injuries occurring during an accompanied training session. But trainees aren’t always with their coaches. In fact, it’s quite common for trainees to spend a majority of their time away from an in-person coach, especially with the advent of “online coaching.” Let’s say that a coach creates a program or provides lifting instructions to a trainee and the trainee injures himself lifting alone while following those instructions. Do the legal standards discussed above apply equally to the “remote” or “online” coaching scenario, even though the coach is not physically present?

Logically, the answer seems to be yes. If a trainee proved that his coach negligently provided him with improper or dangerous instructions, and the trainee is injured following those instructions, there is no reason why a negligence claim should not be permitted…and similarly, no reason why the defenses otherwise available to negligence (including written waiver) should not also be available to the defendant. While there is little case law on point (and nothing that appears to explicitly address the online personal training issue), available authority seems to confirm that in-person training negligence is treated the same as remote or online training negligence.

In Layden v. Plante, a trainer instructed plaintiff in various weightlifting moves, and then provided plaintiff with a set of written instructions to repeat later without supervision. Two days later, plaintiff herniated two discs while performing a Smith machine squat following the trainer’s written instructions. The court found evidence suggesting that the trainer negligently instructed and unreasonably heightened the risk to plaintiff and thus allowed her claim to proceed. It also held that the written waiver did not apply because it did not “plainly and precisely” state that it extended to the trainer’s negligence (remember Principle 3?).[44]

In Schlobohm v. Spa Petite, Inc., defendant instructor created an exercise program that plaintiff was to perform unsupervised, which was periodically updated based on plaintiff’s progress. While plaintiff was using a leg extension machine, an unidentified woman (presumably a spa employee) suggested that she increase the weight from 20 lbs to 40 lbs. Plaintiff made the increase and severely injured her back, and she sued for negligence. Although she stated a negligence claim, the court dismissed it based on a written waiver.[45]

But there is a wrinkle for remote and online coaching. Say you live in State X with good waiver caselaw (such as Texas), but your trainee lives in State Y that prohibits waivers entirely (such as Louisiana or Virginia) or allows waivers but interprets them strictly (such as Illinois or New Jersey). If your trainee is injured and sues you, what state’s law applies, State X or State Y? And where can your trainee bring suit against you, State X, State Y, or both?

Needless to say, the question is not merely academic. If State Y’s law applies, you could be limited in, or even precluded entirely from, relying on your waiver. And even if State Y’s law was roughly in line with State X, do you really want to incur the time and expense of litigating in State Y, which might even give your trainee a “home court advantage”?

First as to the litigation forum: a plaintiff can always bring suit where a defendant resides – in our example, State X. But State Y also may be a valid forum. Nearly all states and the federal courts allow a plaintiff to bring suit where a substantial part of the events or omissions giving rise to the claim occurred,[46] or where the injury occurred.[47] Under either standard, a good argument can be made that State Y is a permissible forum. And if a court were to hold that suit in State Y is proper under venue laws, the only way to avoid the forum would be a personal jurisdiction challenge, a complicated statutory and constitutional issue well beyond the scope of this article. Point being, you could very well be stuck litigating in State Y.

Now for applicable law. The United States consists of 50 independent states, all with their own laws and interests. As a show of respect for those interests (known as “comity”), every state has some sort of “choice of law” principle to determine what is the “right” law to apply. Where out-of-state interests are involved, it is not unusual for a state to apply the law of another state based on its choice of law principles.[48] For personal injury tort actions, some states apply the law of the state in which the injury occurred, known as lex loci delicti – which here would be State Y.[49] Most states, however, have adopted the “most significant relationship” test, where courts apply the law of the state with the “most significant relationship” to the suit based on considerations such as the place where the injury occurred, the place where the conduct causing the injury occurred, the residence/place of business of the parties, and the place where the relationship between the parties was centered (if any).[50]

If all this seems complicated, that’s because it is. Law students spend weeks covering choice of law issues in law school, and I spent a lot of billable time wrestling with choice of law principles in private practice. On a couple occasions I devoted several pages of a legal brief solely to the choice of law issue. But we have a tool that could potentially simplify the issue: what if we just contractually set the venue and the choice of law ahead of time? Say that our strength coach lives in Texas and wants to remotely coach someone in Illinois. The coach wants Texas law to apply to both interpretation of the contract and any underlying tort action. He could simply insert the following clause in the coaching contract:

This agreement shall be governed by Texas law. The parties’ legal rights and obligations relating to this agreement and the services provided under in this agreement shall be governed by Texas law. Any suit brought under this agreement or in relation to services provided under this agreement shall be brought in the Texas 30th District Court in Wichita Falls, Texas, and both parties irrevocably consent to venue and personal jurisdiction in that court.

Now if the trainee wants to sue the coach for negligence, the contract requires him to bring the suit in a particular Texas court,[51] and the suit will be governed by Texas law.[52] Easy peezy!

But . . . you didn’t really think that would be the end of the story, did you? Since this is law, of course there is another wrinkle. It’s true that choice of law clauses are generally enforceable as long as the chosen state has some reasonable relationship to the parties (which it would if you lived there), and absent a strong showing of fraud (which hopefully you aren’t doing when you get your trainees to sign contracts).[53] But there is one major caveat: if the chosen law contradicts a fundamental public policy of the state, a court may decide – again, out of comity – not to enforce your choice-of-law provision out of deference to the other state.[54] Needless to say, this “public policy exception” can substantially complicate the situation. Couldn’t one fairly argue that a negligence waiver is fundamentally at odds with the public policy of Louisiana, or Virginia, or Connecticut? And if that’s true, then shouldn’t those states’ laws apply rather than the one in the choice of law provision?

As a nearly 13-year member of the bar who devoted a significant part of a legal career studying these issues, I can assure you that the answer is a definite maybe. The reality is that we don’t really know because there does not appear to have been a test case. This issue is, however, a significant enough potential threat that it should be strongly considered when engaging in remote or online coaching. That is to say, if you live in a favorable waiver state and have been contacted by someone in a non-favorable waiver state, you should strongly consider whether you are willing to accept the risk that a court will refuse to enforce your choice of law provision. You may ultimately decide that it simply isn’t worth the risk. Or you may decide it is worth the risk of a plaintiff drawing an “inside straight”: a trainee gets injured, and the law of the trainee’s state will hose you on the waiver, and the trainee argues that his law rather than yours should apply, and the court agrees with your trainee on public policy grounds. The point is, weighing the risks is ultimately a decision you will have to make.

Insurance

Waivers are extremely important, and I would strongly recommend hiring a competent attorney to prepare one for you. But even if you have a waiver, you still have to pay an attorney to argue for its validity in court (especially if your business is sued—businesses generally cannot represent themselves in court[55]). And of course, there’s always the risk that a court holds that your waiver is not effective, which opens you to a potential judgment.

This is where insurance comes in. With insurance, you pay a premium to an insurance company, and in exchange the insurance company agrees to provide you an attorney of its choosing and indemnify you (that is, pay your legal fees, expenses, judgments, etc.) up to some contractually-agreed amount. Insurance is, at its core, a risk-shifting mechanism – you buy insurance to make a lawsuit (or at least the costs of one) someone else’s problem.

Because insurance is meant to manage risk, there are no absolute rules for what insurance, if any, to get, because everyone’s risk and risk tolerance is different. But before purchasing a specific insurance policy, there are some basic questions below that you should be asking yourself, and should discuss with an insurance broker or your potential insurance company before signing:

How much insurance do I need? Insurance companies offer a variety of coverage amounts. In the fitness industry, the most common amounts appear to be $500,000, $1 million, and $2 million, though I have seen policies for $5 million and $10 million. Your coverage amount impacts your potential exposure based on the final result of a lawsuit. For example, if you have a $500,000 policy but get hit with a $2 million judgment, you would be responsible for the additional $1.5 million surplus. By contrast, if you had a $2 million or greater policy, you would not be responsible for anything.

So exactly how much insurance coverage should you purchase? In some cases, your hands may be partially tied by mandated levels of coverage by employers, licensors, governmental regulations, etc. But putting aside any coverage floors that you may be required to meet, part of the answer depends on what you have that’s worth protecting. If you are married, have kids, and own a house, you will likely need more coverage than a single renter fresh out of college. If you own a lot of assets – real property, personal property, intangible financial assets, etc. – you’ll need more coverage than someone who owns relatively few assets. If you’re nearing retirement age, you’ll probably want more coverage because you don’t have the ability to “make up” any losses to your retirement funds that could be lost to a judgment or legal fees, unlike someone early in his working years.

The other part of the answer is what you’re willing to pay in insurance premiums. The higher the protection, the higher the premium. Sure, in a vacuum, $5 million in coverage is preferable to $1 million—but what if $1 million costs $200 a year, whereas $5 million costs $1,100? (Note: These are actual figures I found with one company for a trainer without a personal training credential from one of six certification groups.) You’ll have to find the “sweet spot” between how much coverage you need versus how much you can actually afford to pay for premiums.

You might be asking at this point: what if you are, as a practical matter, uncollectable? That is, you or your business have so few assets that any plaintiff’s attorney bold enough to sue you would collect little to nothing (especially after deducting the costs incurred to actually pursue the suit), either because there simply isn’t anything there, or because any judgment they’d get would just result in you filing for bankruptcy. At that point, why bother paying insurance premiums when your lack of assets is itself a protection against a lawsuit?

In theory, this situation could arise, but I would submit it is exceptionally rare. Even coaches without any credential could get $500,000 of coverage for less than $200 annually. Unless you are in your early 20s with no bank accounts or car (or a complete junker), living on a shoestring budget, who sits on a five-gallon bucket in a hovel to watch a tube TV and otherwise owns little to no personal property, generally speaking you are better off with insurance.

Okay, you may say, maybe there aren’t many situations where leaving myself uncovered makes sense, but what if I engineer a similar situation through corporate entities? Say you have a gym with a few independent contractors. Could you save money on insurance premiums by incorporating the gym as a corporation or a limited liability company (discussed further below), limiting the gym’s assets (for example, with generous payments to yourself as a salary), and then only purchasing insurance for yourself for when you train people? That way, if one of your coaches injures a trainee and the trainee sues the gym, he’s chasing an uncollectible entity.

I believe this is playing a dangerous game, and that any efforts to reduce collectability risk through corporate structure should be made only under the guidance of a knowledgeable corporate attorney. Forty-five states and the District of Columbia have enacted the Uniform Fraudulent Transfer Act, which provides a statutory means of clawing back assets that were transferred by a debtor to avoid creditors, or were given without receiving reasonably equivalent value;[56] the other five states have similar laws on the books.[57] And every state has common law mechanisms to seek a judgment directly from an owner of a company for misuse of the corporate form (known as “veil piercing” or “alter ego”). Some of the major factors in deciding whether to pierce the corporate veil are undercapitalization, insolvency of the business when a debt or judgment is incurred, and complete control of the business by the owner.[58] If you deliberately remove assets from your gym to avoid paying potential lawsuits, all of these factors could cut against you and potentially cost you limited liability protection.

Who needs to be covered? Like waivers, insurance coverage is a creature of contract—if you aren’t in the contract, you aren’t covered by it. Thus, before purchasing insurance, you should consider who should be covered by the policy. You’ll obviously include yourself and any business entities you use for coaching. But also consider whether to add additional insureds to the policy, such as licensors (this may even be required by the license agreement), owners of facilities you rent, or even related businesses you own that could potentially end up in the crosshairs of a lawsuit.

What should be covered? There are typically two main types of insurance for the fitness industry: general liability and professional liability. General liability insurance covers accidents occurring in a facility, such as customer slips and falls and other types of premises liability issues. Professional liability insurance (sometimes called errors and omissions insurance) protects against negligent acts or omissions by coaches. Professional liability insurance is warranted if you coach trainees. General liability insurance is warranted if you own or control (for example, by renting) gym space, or where you otherwise could experience liability for non-training injuries, which will be the case with most coaching businesses.

Many personal training and gym insurance specialists combine both policies, whereas a lot of more established insurance companies who sell insurance packages to gyms and coaches still separate the two, often for internal administrative reasons. The point is, in most coaching situations, you will want both general and professional liability protection, especially since, as noted above, courts tend to treat premises liability waiver provisions a bit more disdainfully than waiver provisions relating to coaching activities.

Additionally, if you have employees (as opposed to independent contractors), you will need workers’ compensation insurance, although the requirements for that insurance vary from state to state.[59]

Where does the insurance apply? This is one to pay close attention to. Many insurance policies by default only apply to “on-site” activities – that is, coaching that occurs in one particular location (such as a coach’s employer or in a coach’s rented space). These days, however, a lot of coaching occurs outside of specific locations, such as at clients’ homes or even online. This is especially true for people who moonlight as coaches, since renting commercial space often does not make economic sense for them. Although many insurance companies offer off-site coverage, it sometimes has to be specifically requested and purchased as a supplement. Be especially cautious if you are engaging in online training because online coverage may even be separate from “off-site” coverage that presumes a physical training location.

Sexual harassment coverage. Many coaches do one-on-one coaching and also use tactile cues to help trainees learn movements. Unfortunately, this has the potential to give rise to claims of sexual harassment, which, as an intentional tort, is generally excluded from liability policies, and cannot be excluded through a waiver as discussed above. Many insurance companies offering policies to gyms and coaches understand this problem and offer sexual harassment coverage, either as a default in the policy or as a supplemental option. I recommend getting such insurance, but also caution you to read the fine print carefully if you want it. Many of these policies appear to broadly cover sexual harassment claims but the contractual language excludes coverage for those actually accused of the harassment. Under these policies, if you personally are sued for sexual harassment, you would not be covered, which largely defeats the purpose of the policy.

Incorporation

And now onto what may be the most misunderstood concept of business law: incorporation and limited liability protection. If you’ve ever heard a commercial for online legal services, you might have the impression that limited liability protection through a corporation or limited liability company can insulate your personal asserts from any liability of the business. However, in many circumstances relevant to strength coaching, incorporation will not protect you personally. This section will break down the circumstances in which incorporation can and cannot protect you from individual liability and discuss the differences between entity and personal liability.[60]

A. Entity Types

Before examining the nuances of so-called “limited liability,” it might be helpful to discuss the six main types of business entities and the protection from personal liability provided by each: (1) sole proprietorships; (2) general partnerships; (3) limited partnerships, (4) corporations; (5) limited liability companies; and (6) limited liability partnerships.

Sole proprietorship. A sole proprietorship is exactly what it sounds like: one person owns and runs the entire business. There is no legal distinction between the owner and the business. Although sole proprietorships allow for significant flexibility in formation and management of the business, the owner is liable for all debts and obligations of the business. So if someone sues the business and gets a judgment, he can go after the owner’s personal assets to satisfy it. As a result, sole proprietorships are generally disfavored as a business structure.

General Partnerships. A partnership is an association of two or more persons carrying on a business for profit as co-owners – think of it as a sole proprietorship except with two or more proprietors. Partnerships are easy to form – they typically only require an objective manifestation of intent to form a partnership, they often can be formed without filing any papers with the state, and they permit a lot of flexibility in the conduct of the business. Though the partnership is technically a distinct legal entity, partners generally are liable for the debts and obligations of the partnership.[61] Thus, if partnership assets are not sufficient to cover a judgment against the partnership, the judgment creditor can go after the partners’ personal assets. General partnerships thus are likewise disfavored business structures.

Limited partnerships. Occasionally, people want to invest in a partnership, but have no interest in running the business or taking on personal liability. Thus, states have created limited partnerships (LPs). An LP consists of one or more general partners and one or more limited partners. General partners run the business and are personally liable for all partnership debts and obligations.[62] Limited partners provide capital investment but do not run the business, and in exchange they have limited liability – that is, they generally are not liable for the debts and obligations of the LP.[63] Limited partnerships typically require that documents be filed with the state to be formed.

Corporations. A corporation is a means of protecting the owners (shareholders) of a business from personal liability for corporate debts. Generally, owners have limited liability, i.e., they are not liable for corporate debts and obligations even if the corporation lacks sufficient assets to cover a debt or judgment.[64] Unlike sole proprietorships or partnerships that have “pass through” taxation (that is, proprietors or partners report business income on their personal taxes), corporations are separately taxed, which can be financially advantageous for the owners.

Corporations, however, must follow numerous statutory requirements to remain in good standing. For example, the corporation must file certain forms to come into existence, it must have a certain management structure, certain formalities must be followed for business decisions, and the corporation must hold annual shareholder meetings and record meeting minutes. The corporation must keep separate books and file separate tax forms, and not commingle its assets with its owners'. A failure to follow corporate formalities can result in loss of limited liability.

Limited Liability Companies. In the 20th Century, states created yet another type of entity: the limited liability company (LLC). LLCs combine the pass-through taxation and flexible management of a partnership with the limited liability of a corporation. LLCs are separate entities from their owners (known as members), and members have limited liability for LLC debts and obligations.[65] But LLCs are not required to follow many of the requirements governing corporations, such as holding annual meetings or having a certain number of owners.

Limited Liability Partnerships. The Limited Liability Partnership, or LLP, was created in the early 1990s after the Savings and Loan crisis, where numerous partners in professional businesses became subject to substantial personal liability. LLPs are similar to LLCs, but are largely only used by professional businesses, such as law, accounting, and architectural firms.

The question of which entity is best from a business standpoint for a strength coach or a gym is a question for your business/tax attorney, and beyond the scope of this article. However, as a general matter, corporations and LLCs are generally the best choice for incorporating a coaching business—indeed, nearly all commercial gyms are corporations or LLCs. Thus, this article discusses limited liability protection assuming business incorporation as either an LLC or a corporation.

B. Limited liability as applied to strength coaches and gyms.

You’ve filled out your LegalZoom documents (or, even better, hired a knowledgeable attorney to complete all necessary documents) and have filed your papers with your state’s Secretary of State. Congratulations! You are now the proud owner of a new business: RipDrive, Inc. (or RipDrive, LLC). You’re feeling so good about your business that you’ve even hired an employee, Biff Bro, to help you coach. Now, onto the nuts and bolts of liability issues.

Contractual liability. You sign two contracts for RipDrive: a loan agreement with a bank and a personal training contract with Tina Trainee. Unfortunately, you forgot to make a loan payment on time, so the bank declared default and called the entire loan in. Moreover, you got the flu and didn’t show up for six training sessions with Tina, so Tina has sued RipDrive for her money back. Do you have to worry about personal liability?

Owners of a corporation/LLC are separate from the business and not liable the debts and obligations of the business solely by virtue of being owners. Thus, thanks to limited liability, only RipDrive will be liable on the agreements.[66]

Tort liability. Tort liability is a little more complicated. Consider three scenarios:

1. Scenario 1 – Tina Trainee is injured while Biff Bro is coaching her. She sues Biff, you, and RipDrive.

2. Scenario 2 – Tina is injured while you are coaching her. Tina sues you and RipDrive.

3. Scenario 3 – Tina accuses Biff of inappropriately touching her during a personal training session. She sues Biff, you, and RipDrive.

Let’s look at your and RipDrive’s potential liability for each of these three scenarios.

Scenarios 1 and 2: Your Liability.

Although owners of corporations and LLCs are not liable for company actions solely by virtue of their ownership, they are liable for their own acts and omissions.[67] Thus, if an owner personally commits or directs a tort, he can be personally liable for it. By contrast, if an owner had no involvement in a tort, then he cannot be held personally liable.[68]

In Scenario 2, you personally committed an allegedly negligent act, and, therefore, Tina can sue you. By contrast, in Scenario 1, you did not commit or direct Biff’s negligence, and limited liability protects you from being personally liable solely because you own RipDrive.

A caveat, however: if Tina showed that you negligently hired, trained, or supervised Biff, then you might be liable for your own negligence. Admittedly, this is an uphill battle for Tina, since the mere fact that Tina was injured does not alone show that you were negligent in hiring or supervising Biff.[69] Rather, Tina would have to show that (1) your negligently instructing Biff caused him to injure her,[70] or (2) you had notice of Biff’s unfitness or incompetency, and that Biff’s unfitness/incompetency subjected her to an unreasonable risk of harm.[71]

Scenarios 1 and 2: RipDrive’s liability.

There is a legal principle known as respondeat superior, which is Latin for “screw the employer.”[72] Respondeat superior holds that an employer is vicariously liable for actions taken by its employees within the scope of their employment.[73] Respondeat superior only applies to “employees”; it does not apply to “independent contractors.”

Thus, RipDrive’s liability under Scenarios 1 and 2 depends on whether Biff and you, respectively, are “employees” and not “independent contractors.” A full discussion of the employer/independent contractor distinction is beyond the scope of this article, but the short version is that the more control an employer has over someone and the more the employer facilitates that person’s performance of work, the more likely that person will be deemed an employee and not an independent contractor.[74]

Whether a trainer falls into the “employee” or “independent contractor” bucket can get complicated and is beyond the scope of this article. Not only does such an inquiry require consideration of numerous factors, but the determination may be different depending on the legal context. The U.S. Department of Labor, for example, uses a slightly different test from the Internal Revenue Service to determine whether someone is an employee or independent contractor, and those tests may differ from state common law tests to determine if respondeat superior applies. As a general matter, though, if RipDrive covers Biff’s training expenses, makes him wear a shirt that says “RipDrive” while he’s training clients, and controls (or has the option to control) how he trains clients, Biff will probably be an employee, and RipDrive will probably be liable under respondeat superior for his negligence. The same goes for you.

Scenario 3: Your liability and RipDrive’s liability.

Your and RipDrive’s liability gets a little more nuanced for intentional wrongful acts. In contrast to negligence actions, an employer is generally not liable for the intentional torts of his employees unless the employee’s action was not unexpected given the employee’s duties.[75] Whether intentional conduct is expected in one’s job is dependent on the nature of the work. For example, Best Buy would not expect a member of the Geek Squad to use physical force against a customer while installing WiFi but might expect its loss prevention officers to do so when detaining customers.[76]

In general, sexual assaults do not further an employer’s business and, therefore, the employer is not vicariously liable when its employees commit sexual assaults.[77] Thus, you and RipDrive will likely not be liable solely based on Biff’s employee status.

As with Scenarios 1 and 2, however, if Tina could demonstrate negligent hiring or retention, you and/or RipDrive could be liable—for example, if you knew that Biff had previously been convicted of sexual assault, or was fired from his previous employment based on accusations of sexual misconduct. This tort is, admittedly, difficult to prove, and case law confirms that a negligent hiring/supervision claim does not lie where the employer had no reason to suspect that its personal trainer would commit intentional misconduct.[78] Thus, to hold you and RipDrive liable, Tina will have to provide evidence that you/RipDrive knew or should have known of Biff’s violent or criminal propensities.[79]

In short, so long as you had no reason to suspect that Biff might commit intentional misconduct, you and RipDrive will likely be off the hook for Biff’s sexual assault of Tina.

Why This Is Important

Someone asked me a while back why I was bothering to write this article. After all, earlier this year I hung up the spurs in private practice (a decent portion of which involved advising fitness professionals around the country in matters of risk management and litigation) for a career in public service with the Department of Justice. In all likelihood, I will never advise a client on legal issues like those discussed in this article again.

The answer is actually quite simple: strength is a gift, and the world is far better off with more people giving it. Right now, over 120 Starting Strength Coaches, and many other allied strength coaches, are helping innumerable people become better versions of themselves. Strength coaches have a hard enough job even without the potential threat of a debilitating lawsuit, and they certainly don’t have time to wade through decades of case law (with new cases being added to the mix every year) to make sense of the legal quagmires that have been developed over the years and strategize on how to mitigate that risk. If I can do something to prevent strength coach from going out of business, I not only help that coach, but his or her many, many clients.

In my initial article for Starting Strength concerning legal issues, which I wrote more than seven years ago, I observed at the outset that “For the legally-untrained, the law can be a confusing morass, a seemingly random set of rules embodying one of William S. Borroughs’s witty admonitions to a judge: ‘Be just. And if you can’t be just, be arbitrary.’” I hope that this article has somewhat demystified this confusing morass by providing at least a starting point for coaching professionals to seriously consider how to deal with the most pernicious legal threats potentially facing their livelihoods. Knowledge is power, and we are all better off having the knowledge to at least ask the right questions, even if we ultimately need to rely on those with greater expertise to guide us to the right answers.

References

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OBLIGATORY DISCLAIMER/CYA PROVISION: This article is for educational purposes only. It is not legal advice or guidance to be relied upon for any particular matter (especially yours). I am not your lawyer simply because you read this article or talked to me about ideas in it. In fact, given my current position as a lawyer with the Department of Justice, I am not allowed me to be your lawyer for anything, even as a favor. Despite my invariably cogent analyses and inimitable insights on these types of topics that have become the toast of at least three continents, at the end of the day this article contains only my personal opinions and does not represent the views of any other person or organization, including the Department of Justice. Come to think about it, you really shouldn’t try to resolve your own legal issues solely because you read this article, for much the same reasons as why you shouldn’t try to perform surgery on yourself solely because you read Gray’s Anatomy. In short, if you have a specific legal question, consult an attorney. Who isn’t me.

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