Santa Monica Based Company Faces Class Action Lawsuit

May 23, 2023 ·

SANTA MONICA—Beachbody, a Santa Monica-based fitness company, is facing a class-action lawsuit where former exercise coaches are claiming that they were used as low-cost labor to help the company earn a profit, as first reported by the Los Angeles Times on Monday, May 22.

Jessica Lyons, a schoolteacher, who is named as one of the plaintiffs in the case, stated, “I thought becoming a coach for Beachbody was my opportunity to add a second stream of income with an added bonus of helping others reach their fitness goals,” Lyons said. “I didn’t realize how much Beachbody would demand of me and how little income I would see in return.” She is being represented by Tycho & Zavareei, a leading consumer protection class-action law firm, as well as L.A.-based Clarkson Law.

During Lyons employment with the company, she earned only an average of $50 a month in commission sales while putting in about 50 hours a month. During her time with the company, Lyons spent $20,000 in personal funds to pay for expenses related to her coaching role with Beachbody, including paying for new products to try out and the monthly service fee and traveling on her own dime to Beachbody’s annual conference for coaches, the lawsuit said.

Another plaintiff named in the suit claims that she was convinced to join the company after discovering a high-earning coach on YouTube living a glamorous lifestyle. She didn’t expect to be rich when she joined, but hoped to be a coach full-time and earn a reasonable income. The work she did included doing Beachbody workouts to maintain her fitness and back up her personal testimonials, creating content for Instagram, reaching out to people and responding to messages, and following up with clients. After being involved for three years with the Beachbody she found a full-time job and diminished her workload with the fitness company. 

Tycho & Zavareei indicated to Canyon News in an email that Beachbody “operates as a multi-level marketing business and relies on the “direct sales” exemption to California’s misclassification law to justify exploitation of sales personnel. The exemption was written decades ago, and is limited only to those making “primarily in person” sales. It does not reach modern e-commerce operations like Beachbody.  Beachbody’s sales personnel work as “Coaches” and market and sell fitness programs and nutritional supplements and other health and wellness-related goods and services, primarily through online channels and its own apps and platforms.”

“Beachbody exercises significant control over its coaches in their role as social media marketers, requiring them to adhere to extensive rules and regulations pertaining to pricing, advertising approaches, and the company’s intellectual property. Beachbody has created systems that funnel all sales leads towards Beachbody’s website and apps, where Beachbody accepts, processes, and fulfills the orders, while also retaining all customer information as well as the exclusive right to track the customers’ online activities for its own benefit. Because of this model, the plaintiffs allege that few people are making money under Beachbody’s compensation system,” the firm added. 

“MLMs are notorious for profiting off the unpaid work of their sellers, and Beachbody is no exception, relying on an outdated statutory exemption to justify exploiting its hard-working coaches by classifying them as independent contractors,” said Kristen Simplicio, a partner at Tycko & Zavareei LLP. “We applaud Ms. Lyons for taking this brave and important step to hold Beachbody accountable and do right by those who worked so hard to make the company what it is today.

A spokesperson for Beachbody issued a statement to Canyon News regarding this lawsuit:

“The independent contractor status of direct sellers is well recognized on a federal and state level. California’s updated contractor law (AB5) includes an express exemption for network marketing distributors as part of a well-established legal framework that allows distributors to remain independent and allows them to work as much or as little as they want, controlling their own schedule. We will vigorously defend ourselves against these allegations.”

By Christianne

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