Reinventing Risk Management

As both a lawyer and a personal fitness trainer and manager, I have found that laws and regulations often seem incongruous with an industry built on endorphins. I suspect that’s why the topic “Legal Issues” tends to be the concluding chapter of certification textbooks—almost an afterthought. Aspiring fitness professionals get excited about VO₂max studies, body fat testing and target heart rates, and it’s easy for them to assume that when a problem arises, someone else will take care of it.

These pros are the people you’re hiring. They’re smart, capable and motivated to help clients achieve fitness goals. However, they also can and should be educated and empowered to be part of your risk management team. You can’t learn this key principle of a well-run fitness program from a textbook. Rather, it’s derived from leadership, trust, communication and experience.

The risk we are trying to manage in this five-part series is the likelihood of your business becoming involved in a costly legal battle. Countless articles have been written about risk management in the fitness industry. Yet even a prudent manager who regularly inspects equipment, remedies safety hazards, hires appropriately credentialed employees and has adequate paperwork in place is still at risk of exposure if troublesome issues are not promptly addressed. If litigation arises, your facility might have a complete defense. However, from economic and productivity standpoints, once there’s a lawsuit, you’ve already lost.

What Is Risk Management?

Generally, risk management can be defined as “the identification, assessment, and prioritization of risks followed by coordinated and economical application of resources to minimize, monitor, and control the probability and/or impact of unfortunate events” (Hubbard 2009). The American College of Sports Medicine advocates a practical application, instructing fitness professionals to “consider all the points of provider interaction with clients in the context of exercise and other services, where insult or injury may occur, and how they might be perceived by clients as attributable to some professional failure” (ACSM 2000).

Risks vary with the activity, location, facility and clientele. Liability issues do not come in neatly labeled packages. They sneak up on you, often disguised as innocuous occurrences. As a lawyer, I’ve spent nearly 17 years practicing “defensive” tactics, putting out fires for businesses. A more cost-effective approach is the “offensive” tactic of employing human and technological resources to identify potential problems and take quick action to resolve them. This is risk management from the ground up.

Preventive Principles

Start building your risk management foundation with the following principles:

Never assume. If a circumstance appears to be out of the ordinary, don’t assume that someone else is taking care of it. Investigate it yourself, or ensure that a trusted colleague or employee does so. You can do this without being overbearing and intrusive. Just strike up a lighthearted conversation or ask seemingly innocent questions. It shows that you care.

Observe. As managers, we can easily fall into the office routine. Spend some time on the floor. Do your own workouts in the facility. Build a rapport with members. This creates an environment of mutual trust. Disgruntled members are less likely to take formal legal action if they believe they are a valued part of a facility’s community.

Think. As you observe and inquire, consider situations from the perspectives of employees/trainers and clients.

Empower. Teach your staff the procedure for reporting issues, conflicts and incidents that affect your facility in any way.

Document. Identify the time, date, location and people involved in incidents, key meetings and significant events. This may reveal patterns within your facility, and it can be essential when making employment-related decisions.

Winning the Battle; Losing the War: A Case Study

Jessica H. v. Equinox Fitness Club, 2010 NY Slip Op. 30004(U), illustrates how applying the above principles could have helped a fitness facility avoid a lawsuit. Plaintiff, a club member, sued after alleged multiple sexual assaults perpetrated by a trainer employed by the club. Here are the details:

• After Plaintiff balked at the club’s regular training fees, Trainer offered to train her “off the books” at half price, pocketing the cash.
• Plaintiff and Trainer maintained this arrangement for several years, training at the club up to 4 times per week.
• On 13 separate occasions, Trainer brought Plaintiff to a club spa room, ostensibly to do stretches in a heated environment. Each time, Trainer sexually assaulted Plaintiff.
• Maintenance employees repeatedly witnessed Plaintiff and Trainer going into the heated spa room together, but they never reported any unusual activity to management.
• Plaintiff never reported Trainer’s actions, because she “felt ashamed” and she feared her club membership would be terminated if it were known that she was paying Trainer under the table.
• Trainer’s background check revealed no unlawful activity, and his employment records with the club showed only minor incidents involving personality conflicts with co-workers.

The court ruled in favor of the club on all counts. The doctrine of vicarious liability provides that an employer is liable for unlawful acts committed by an employee within the scope of employment. The court explained that sexual assaults were not within the course and scope of Trainer’s employment, and that Trainer was also outside the scope of employment because he was training Plaintiff on the side.

An employer can be liable for negligent hiring and supervision when it places an employee in a position where the employee can cause foreseeable harm. The court found nothing in Trainer’s background or employment history that would have put the club on notice that he had a propensity for sexual misconduct.

Though the club prevailed on the merits of the case, it “lost” in terms of legal fees, resources and time spent defending this matter over the course of 3 years. This lawsuit could have been prevented. The following questions reflect poor management and risk management awareness:

• How could management not be aware that Trainer was training Plaintiff “off the books” at its facility, up to 4 times a week for nearly 3 years?
• Why did the maintenance staff not report the unusual activity of a trainer accompanying a member to a heated spa room on 13 separate occasions?
• What was it about the club environment that prevented Plaintiff from reporting the offensive conduct or made her want to circumvent the rules in the first place?

Be vigilant about evaluating risks in your facility. The best defense against legal exposure isn’t your lawyer. It isn’t your insurance company. It isn’t your bulletproof waiver form. It’s you and the environment you create for your employees and members.

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