Reprinted from Fitness Business Canada magazine July 2017
By Fiona Brown and Pavle Levkovic
Laws exist to protect employees and customers alike and can have serious repercussions for employers if breached.
It’s no surprise that there are many challenges to running a fitness club. One aspect which often troubles fitness business owners is complying with the many legal requirements that come with managing employees and customers. It’s not surprising that prudent fitness business owners want to be aware of a number of important legal requirements regarding their employees and customers and how to protect their businesses from exposure to liability.
Here are some of the key legal points that a fitness business owner should consider.
Post-employment non-competition and non-solicitation clauses generally attempt to restrict a former employee’s ability to compete against the former employer or to solicit the former employer’s employees, customers and potential customers.
For example, a fitness instructor may decide to leave her current position and start a business that provides the same services and that targets the same potential customers as her former employer. This new business might even be next door to the old one. In this case, the former employer will benefit from including a non-competition clause in his/her employment contracts.
In another case, a fitness instructor may leave for another already established fitness business and ask her current clients to follow her there. In this instance, a non-solicitation clause may help to restrain this kind of behaviour.
Canadian courts will enforce non-solicitation clauses and non-competition clauses if they are reasonable and if a non-solicitation clause is not sufficient to protect the employer.Determining what is “reasonable” is based on the duration, the geographic scope and the scope of the activity.
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 important piece of legislation 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 to personal information that an 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 photographs of their customers. Such photographs may be uploaded to the internet and posted on Facebook or Twitter or used in promotional emails.
A photograph in which a person is identifiable conveys personal information. Compliance in this case requires the consent of the individual and requires the fitness business to limit collection for purposes that a reasonable person would consider appropriate.
Privacy requirements can also be impacted by occurrences beyond Canadian borders. If, for example, electronic data is processed, used, stored or accessed in the United States via the cloud,businesses should make it clear to clients 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 potentially give customers a private right of action.
The first is “intrusion on seclusion.”This privacy tort is triggered when 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.” Under this tort one person will be liable for invasion of another’s privacy if the matter made public is highly offensive to a reasonable person and 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 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 hold an employer liable for tortious actions of their employees that are committed at the workplace. It is therefore possible that the doctrine of vicarious liability might hold a fitness business liable for the actions of one of its employees, where during working hours that employee commits the tort of “intrusion on seclusion” or “public disclosure of private facts” against a customer.
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 to their clients, they often overlook that CASL may also apply to their posts on social media. 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 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….”
This very broad definition of means that CASL likely applies to many more business emails, Facebook posts and Twitter posts than one might think.
It is important to know that in order to send a “commercial electronic message,” a business generally needs to receive consent (either express or implied) from participants and to comply with mandated content/unsubscribe information.
Senders of commercial electronic messages must keep a record of all documents of consent, methods through which consent was collected, policies and procedures regarding CASL compliance and all unsubscribe requests and resulting actions.
The penalties for non-compliance can be severe. One Quebec 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.
Appropriate CASL compliance measures may include having a proper consent form, consent tracking system, and identification and unsubscribe requirements in place. Businesses must also ensure that their staff are properly trained since employers may be liable for non-compliance by their employees.
A waiver (also known as a release) is a contractual clause that prevents a person from taking legal action, such as suing for personal injuries sustained as a result of participating in a fitness activity.
The importance of waivers is evident when one considers that many fitness activities are inherently dangerous. A properly executed waiver can protects a business 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, 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 in initialed the waiver eight times. However, in this case, while the words“participant agreement” were in capital letters, the more important phrase “including assumption of risks and agreements of release and liability” was in smaller type and the waiver was on the last page of the agreement.
There were also typographical errors and a failure to describe the specific legal rights being waived. The court found that a full trial was necessary because of the potentially confusing language. It is almost certain that this trial would be a long and expensive one for the activity provider.
To ensure you have an enforceable waiver or release, provide the waiver before the person engages in the activity and, especially if it is a boilerplate waiver, bring it to the attention of the person.
A properly drafted waiver must also describe the kind of conduct amounting to negligence that it covers and it should also be easily understood. Lastly, employees should receive training to ensure that all the requirements are met when they present clients with a waiver.
All Ontario businesses must comply with the provisions of the Accessibility for Ontarians with Disabilities Act, 2005 (AODA). Also known as the Customer Service Standards, it 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.”
Fitness businesses must provide training for employees about the provision of goods or services to persons with disabilities. They must also post notices stating that the documents required under the Customer Service Standards are available upon request, and it must notify employees if there are temporary disruptions in facilities or services which may affect persons with disabilities.
In addition, businesses must comply with the Occupational Health and Safety Act (OHSA), which includes preparing, reviewing and posting a written occupational health and safety policy and developing a program to implement that policy.
Fitness businesses also need to be aware that under new rules, employers must prepare policies regarding workplace violence and workplace harassment and review them with staff at least annually.
There are many legal requirements with which a fitness business must comply. Many of these exist to protect employees and customers alike and have serious repercussions for the employer if breached.
Don’t expose your business to a potentially ruinous lawsuit. Protect yourself with appropriate legal advice.
Fiona Brown is a litigation lawyer at Aird & Berlis LLP in Toronto. She represents employers across various industry sectors on employment and labour law issues, including discipline, termination, severance issues, strategic restructuring and the development, interpretation and application of forward thinking workplace policies and procedures.
Pavle Levkovic is an articling student at Aird & Berlis LLP.