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IHRSA Advocate

The IHRSA Advocate is your guide to knowing and understanding the policies that influence daily health club operations. We analyze the action, so you know when to take your own.

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Entries in Automatic Renewal (3)

Tuesday
Oct242017

Clubs Caught in the Crossfire: IHRSA Thwarts States Seeking to Restrict Automatic Renewal Contracts

As IHRSA predicted, state legislatures were very active this year and passed a high volume of bills. In 2017, our team saw a rise in the number of bills seeking to place restrictions on automatic renewal of membership contracts. The good news is the majority of bills are not aimed at clubs specifically. The bad news is these bills are broadly written and clubs get pulled in as a result. Fortunately, IHRSA has enjoyed success in 2017, beating back these proposals and securing victories for health clubs in the following states:  

Minnesota

Following a request by IHRSA’s advocacy team, the Minnesota legislature rejected a proposal temporarily inserted into House File 676 that would have required businesses to send stand-alone automatic renewal notification mailings to consumers. Unfortunately, similar proposals are pending in the legislature, and are eligible for consideration when the legislature reconvenes in 2018.

Wyoming

House Bill 227, legislation proposing regulation of automatically renewing contracts, did not advance into law. IHRSA submitted testimony opposing the bill to key leaders in the Senate, who opted not to consider the House proposal. If passed, the bill would have required clubs offering certain contracts to provide written or electronic notification of contract renewal between 30-90 days prior to the cancellation deadline.

Alabama

House Bill 405 would have required health clubs and other businesses to send written notification to consumers between 30-60 days before contract renewal, provided that the original contract lasted 12 months and was renewing for a specified period of more than one month. The notification would specify the methods by which a consumer may obtain details of the automatic renewal provisions and cancellation procedure. In addition, the bill would have required clubs to disclose automatic renewal terms in the contract. After the bill’s introduction, IHRSA contacted the sponsor and expressed interest in the legislation, which did not receive a committee hearing or advance into law.

Virginia

House Bill 2430 would have prohibited a business from charging a consumer for an automatically renewing contract unless the business first obtained affirmative consent from the consumer, among other restrictions. After the bill’s introduction, IHRSA contacted the sponsor, who agreed to exempt health clubs on the basis that the Virginia Health Club Act already regulates renewal of contracts for health club services. The sponsor re-drafted the bill to exclude health clubs ahead of a committee vote, and ultimately, the committee voted not to advance the legislation.

Even though these threats have been neutralized, it is common for harmful policy proposals to spread across state lines. IHRSA will continue to monitor proposals that could hurt clubs in D.C., New York, and Vermont and will continue to protect all club businesses from harm in the coming year.

If you have specific questions or want more information on how you can get involved in IHRSA’s advocacy efforts, contact the public policy team.

Tuesday
Nov082016

Why the 2016 State Legislative Elections Matter

When Americans cast a ballot in the November election, where will that leave each state’s health club industry? Let’s take a look at trends to watch as 43 of the state senates and 43 of the state houses are up for election on November 8, 2016.

Democratic-leaning state legislatures may correspond the greatest with taxes and consumer protection. In these states, IHRSA monitors threats of a sales tax expansion to health club memberships and monitors consumer legislation, such as facility inspections for health clubs. IHRSA looks for opportunities to support PE and increased physical activity opportunities for children.   

Republican-leaning state legislatures may have comparatively less inclination to impose new business regulations and to expand the sales tax to health club memberships. They may avoid enacting government mandates, such as required PE for school children. In these states, IHRSA monitors legislation that would deregulate the industry, in addition to the major public policy concerns of health clubs.

There are more Republican-leaning state legislative bodies than Democratic this year. It is predicted that Democrats will gain certain states after the election, although they are not estimated to surpass the Republican lead. Currently, out of the 99 state senate and state houses, Republicans control sixty-eight (Nebraska is unicameral, containing only one legislative chamber).

In both Democratic and Republican leaning states, IHRSA supports financial incentives to exercise, such as business tax credits for wellness programs and individual tax deductions for the cost of joining a club.

And, there are certain bipartisan trends that pose challenges to the health club industry.

State legislatures across the country are considering legislation to curb the use of automatic renewal contracts. In these states, bills are introduced that would require businesses to notify a member before the renewal is schedule to take effect, either by electronic or written mail. On this issue, IHRSA supports contract provisions that allow for automatic continuation of service at the end of the original term on a month-to-month basis.

In recent years, legislators have considered requiring personal trainers to obtain state licenses or other certification. Many professions are licensed and regulated by the state for consumer safety and quality control, but IHRSA advocates that requiring certain education and licensing for personal trainers would inhibit a club’s ability to attract and retain excellent staff.

And, the number of states considering nondiscrimination protections for transgender individuals, impacting locker rooms, may continue to grow. In 2016, Massachusetts enacted a law that allows individuals to access areas traditionally segregated by sex, such as locker rooms, in accordance with their gender identity. With advocacy by IHRSA, the law required the state Attorney General to issue clarifying guidance for businesses

The good news is that whatever the results of the election, the health club industry is positioned for success. The benefits of exercise continue to be proven and published, and health clubs are publically recognized for the critical role they provide to enable people to live healthier lives. Nationally, more than 60 million Americans are health club consumers and the number of individuals seeking wellness continues to grow. And, when legislative threats do arise, advocacy by IHRSA, IHRSA member clubs, and IHRSA lobbyists protects the industry from harmful legislation.

Tuesday
Oct252016

Team IHRSA Steps up to Defend the Industry in October 

It’s hard to believe that it’s already the end of October, and with election season right around the corner, it is important to consider all the current legislative issues at play that could impact your daily health club operations—in addition to the ones that could emerge in the future.

In October, IHRSA worked diligently to eliminate all of the following legislative roadblocks that could have significantly impacted your daily business operations if they had gone undetected:

Overtime regulations - The new federal overtime rule is scheduled to go into effect on December 1. This new rule would grant overtime eligibility to more than 4 million workers—who have a salary of $47,476—as exempt from overtime rules under the executive, administrative, or professional exemptions.

Unfortunately, this new rule could be costly for clubs, and it does not give businesses an adequate amount of time to comply with the new regulations. IHRSA joined the Partnership to Protect Workplace Opportunity (PPWO)—an organization that is committed to protecting the economic interests of businesses and individuals—in order to delay implementation of the new rules. In addition, IHRSA supported the PPWO in encouraging the Senate to pass Senate Bill 3462 (SB 3462)—which would delay implementation of the overtime rule until June 1, 2017. We will continue to keep you updated as more details become available.

Sales tax expansions - Often times, legislatures propose a tax on health clubs when they are in need of an alternative revenue stream or are under pressure to resolve a budget deficit or finance a new legislative priority.

However, legislators should be encouraging physical activity and its benefits—which include lower healthcare costs, a healthier population, and stronger economic stability.

IHRSA has continually lobbied against the expansion of the sales tax in Pennsylvania. At the beginning of the month, another legislative proposal to expand the sales tax to consumer purchases—like health club memberships—was introduced.

Due to the lack of days remaining in the state legislative calendar, House Bill 76 (HB 76), which would have expanded the sales tax to health club memberships and increased the state sales tax from 6 to 7 percent, is no longer a threat for the remainder of this year. However, this is an issue IHRSA will once again be closely monitoring in 2017.

Automatic renewal provisions - IHRSA supports automatic renewal provisions that allow for contract continuation at the end of the original term on a month-to-month, at-will basis. Provisions that allow for automatic renewal offer consumers the greatest choice and flexibility because clubs are not forced to sell long term contracts to avoid the costly process of renewing existing members.

Unfortunately, automatic renewal is once again an issue IHRSA is fighting in New Jersey. Assembly Bill 2450 (AB 2450) would establish standards for contracts containing an automatic renewal clause, as long as the renewal exceeds a period of one month and the original contact lasted a minimum of 12 months. The legislation passed the Assembly and is awaiting consideration in the Senate. Because the bill requires electronic or written notification, IHRSA is making legislators aware of the negative impact that the bill’s passage would have on New Jersey health clubs and their members.

Sales tax repeals - In addition to our efforts to prevent the expansion of a state sales tax to health club dues and services, IHRSA also looks for opportunities to repeal existing sales tax provisions that create barriers to healthy behaviors.

In September 2015, the Ohio Senate introduced a bill that would exempt health club memberships from the 5.75 percent sales tax if the health club facility had filed a 501(c)3 tax-exempt status with the IRS. House Bill 334 (HB 334) passed the House in May and is currently being considered by the Senate Ways and Means Committee.

Right now, for-profit and nonprofit health clubs in Ohio are subject to the tax. Although the legislation would remove the tax from nonprofit facilities, it would leave the tax on services provided by a for-profit club. IHRSA opposes taxing health club memberships at any facility, as they would discourage people from being regularly active. We will continue to fight for legislation that encourages healthy lifestyles and makes physical activity affordable and accessible for everyone.

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