Avoiding Legal Pitfalls in Your Massage Practice

By James Cappio, February 22, 2016

Whether you’re a small-businessowner or sole proprietor, there are a variety of legal issues you need to think about when starting and maintaining your massage therapy practice. The following are some of the most important legal matters every massage therapist should consider.

Contracts: Dot Your i’s and Cross Your t’s

Virtually everything you do involves a contract. Here are just a few examples:

• Purchasing services, such as website development and Internet service
• Renting the space where you work
• Employing other massage therapists
• Providing massage therapy services

Whenever you enter into a contract, keep these imperatives top of mind:

Get it in writing

You may be friendly with the other party to the contract, but you need to separate the personal from the professional. “If you go into business with a childhood friend, a handshake deal may seem safe enough,” says Rachel Rodgers, principal attorney at Rodgers Collective, P. C., in Tenafly, New Jersey. “But what do you do if the friend starts missing payments?” Without a written contract, it’s much harder to collect, even on a small claim.

Don't just copy a form

Kathy van Every, principal of the Law Offices of Kathy van Every, PLLC, McKinney, Texas, notes that many small-business professionals don’t pay enough attention to their contracts. “They download a form or copy it from a book and think they’re covered. That’s a document, not a solution,” she says. Relying on a form can result in misalignment with business objectives or worse. Van Every cites the example of a client who had farmed out the design of a logo without even executing a contract. “Without a contract that specifies the logo was a ‘work made for hire,’” she explains, “the copyright belongs to the maker of the logo. So the businessperson couldn’t trademark his own logo.”

This caution also applies to the many forms massage therapists use in the course of business, such as intake forms, SOAP notes and client service agreements. Lauren Turner, an attorney with Rodgers Collective P. C., observes that a client service agreement should include provisions covering payments and how they are made, missed appointments, refunds, disclaimers about what the massage therapists can and cannot do, as well as the goals of a massage therapy session.

Be aware, too, that forms can raise legal issues. For example, any form that records information that a client provided to you must be held in confidence.

Top Tip: With your lawyer, determine who you need contracts with, and customize and review them together. That includes suppliers, employees and clients. Be ready to negotiate to tailor the agreement to your specific business conditions, and don’t sign before you understand what you are committing to. Conduct a similar review of all the forms you use in the course of your business.

Top Tip: Review your compliance requirements with your attorney. Are you subject to HIPAA? Does your state licensing board or any other regulatory body impose its own requirements?

Choose the Right Entity for Your Business

You may not have thought about doing business in any form other than as a sole proprietor, but you should: The right business form can pare down your tax burden and insulate you from personal liability.

• An individual can do business as a corporation, operating as a shareholder. The big advantage is that a corporation is a separate business entity from its shareholders, so they are not liable for acts committed by the business, or for its debts. The disadvantage is that the shareholder’s income comes in the form of taxable corporate dividends, which results in double taxation because the corporation’s profits are taxed, too.
• To get around this drawback, limited liability companies (LLCs) were devised. Their advantage is that the corporation does not pay taxes; profits and losses are passed through to the shareholders and taxed only once. One big disadvantage is that the LLC owner must pay self-employment tax (currently 15.3 percent) on the LLC’s entire income.
• For this reason, Rodgers strongly recommends that small-business owners do business as what’s known as a Subchapter S corporation (after the Internal Revenue Code provision that created it). The advantage of an S corp over an LLC is that self-employment tax only applies to the salary that the S corp’s owner takes, rather than the entire income of the business.

Top Tip:  “Operating agreements for a corporation are also contracts,” van Every cautions, so here, too, you need to take the time to do it right. Don’t just download a form. Rather, tailor the agreements to your needs with your lawyer. And be aware that you’ll have administrative duties: bylaws under which you conduct business and annual meetings (even if you are the only shareholder), for example.

Employment Issues

If you employ other massage therapists, be sure you understand state and federal employment laws. Some of the most significant issues include:

• State and federal laws: Each state has its own requirements regarding workers, and federal regulations may come into play, such as those overseen by the Occupational Safety and Health Administration (OSHA).
• Harassment and discrimination: These issues can be nuanced, so be sure you fully understand what’s expected of you as an employer when you consider hiring.

Top Tip: Employee relations are like contracts: No matter how friendly the parties are, their obligations should be set out in writing. Thus, you would do well to consult with your lawyer to draft an employee handbook that sets out the mutual expectations of you and your workers. It may not cover every eventuality that might arise and probably will not be binding, but as van Every says, something is always better than nothing.

Build Your Brand and Defend Your Intellectual Property

“Intellectual property” is a lawyer’s term, but it means something that’s crucial for your business to protect—now more than ever in the age of the Internet. Here are the top issues you need to consider:

Trademarks

A trademark is basically a distinctive symbol (logo), such as the Nike swoosh, or a word or phrase, such as “Just Do It,” that is used to distinguish a business’s goods or services.¹ Your business name is a trademark, for example. A trademark can be registered with the U.S. Patent and Trademark Office. The benefits of doing so include nationwide recognition,

access to the federal courts to litigate infringement claims and remedies that include confiscation at customs, among others.

Copyright

Copyright applies to anything “fixed in a tangible medium of expression,” which for our purposes means written down or recorded so as to be reproducible.²

Patents

A patent is a monopoly granted by the federal government for a limited time (currently, 20 years from application) to allow the inventor of a device the exclusive benefit of his or her intellectual labor. To be patentable, the device must be a “new and useful process, machine, manufacture, or composition of matter” or “improvement thereof,” as judged by the U.S. Patent Office.³

Trade secrets

The U.S. Code defines a trade secret as information whose owner makes a reasonable effort to keep secret and derives economic value from its secrecy. The standard example is the formula for Coca-Cola, which is rigorously guarded because the company would likely collapse if it were disclosed.⁴

Protect your trademarks. They are your most precious intellectual property because they play the biggest role in building your brand. Your lawyer should conduct a trademark search to be sure that you are not infringing on an existing trademark, which could mean making big adjustments to your practice. As Rodgers says: “If you have to change your business name, you need to revamp your whole brand, changing your website, the name on your product and even your letterhead.”

Be mindful of your copyrights. You have copyrightable material, whether you realize it or not: the copy for your website and any other promotional materials you produce, for one example. Take special care to protect against Internet piracy.

Protecting massage techniques you develop can be a little less clear-cut, but can be useful when looking at ways to develop commercial potential while also safeguarding your idea. Turner suggests that for a device or massage therapy product, it’s possible but not likely that you could get a patent. Further, a patent for a technique would be tricky to obtain—and may not be the best form of protection.

• A manual, video or podcast related to the technique could be copyrighted, but not the technique itself.
• Additionally, securing protection as a trade secret requires keeping the innovation confidential, so that’s out, too.
• Finally, the innovation by itself could not be trademarked, but if you do keep it confidential and make it a strong part of your brand, especially if you register the trademark of which the innovation is a part, you should have some protection.

Massage therapists rightfully focus on what they are in business to do: provide massage and educate their clients on the many benefits of massage therapy. When you are a small-business owner or sole practitioner, however, spend time to make sure you understand the myriad legal issues that can help make—or break—your practice.

References

1. 15 United States Code §1127: Construction and
definitions; intent of chapter.
2. 17 United States Code §102: Subject matter of
copyright: In general.
3. 35 United States Code §101: Inventions patentable.
4. 18 United States Code §1839(3): Definitions.