If you’ve ever traded a month of tuition for “some help with social,” you’re not alone. Bartering feels scrappy, supportive, and budget-friendly—until it isn’t. In this episode of the “Fullout Cheer Podcast,” I sat down with Matt Becker of GymLawyers.com to break down why “free” can get very expensive in cheer gyms, and what compliant, low-stress alternatives look like.
The short version: The moment you exchange something of value (like all star tuition) for a service, like cleaning, you’re no longer “just helping each other out.” You’ve likely created a tax and labor relationship with real legal and financial obligations. 😬
The Four Ways “Staff” Are Classified
When anyone assists in your business, they fall into one of these legal buckets:
- Volunteer: Provides service with no expectation of value in return (e.g., a teen earning school-required volunteer hours).
- Independent contractor: Provides a defined service, controls how it’s done, usually has an LLC, invoices you and meets IRS/state requirements.
- Employee: On your payroll; you control schedules, uniform wear, training and provide typical employee benefits/protections.
- Barterer (myth): Not a thing legally. The second you trade value for value, you’ve created a paid relationship—contractor or employee.
Key takeaway: If a mom runs your socials and gets free tuition, she’s being compensated. That triggers tax reporting and potential wage-and-hour, workers’ comp and unemployment issues.
The $600 Tripwire (and Why Audits Rarely Start With the IRS)
Once someone receives $600 or more in value in a calendar year (yes, free tuition counts), you’re generally looking at 1099 reporting for contractors—or W-2 if they meet employee criteria. But most headaches actually start elsewhere:
- Workers’ compensation: If there’s an injury and the person’s not on your books, things can get messy.
- Unemployment claims: A “barter” helper you let go may file for unemployment, prompting your state to ask why they weren’t on payroll.
- State labor tests: Some states (think ABC-test states like California, New York, New Jersey, Washington) make true contractors extremely rare in gyms.
These are just a few of the legal issues you can run into that can end in legal trouble and fines.
Operational Problems Caused by Barter Deals
Even if you’re not worried about being legal (and you should be), barter deals ultimately create friction between the gym and the parent:
- Inconsistent delivery: The athlete takes July off to go out of town, so … does Mom stop vacuuming mats that month? Her tuition would otherwise be due, so you’re probably saying “yes,” but what happens when mom is headed out of town as well?
- Perceived inequity: When I’ve done these in the past (before I truly realized I shouldn’t), it might go great for a free yeas, until one day it doesn’t. Eventually someone feels it’s not fair. Maybe your tuition rates increased, but the barter deal never changed. Maybe the parent got a new job, and their hours now make it hard to predict their availability for cleaning.
I’ve never experienced a long-running barter that didn’t eventually produce tension – even when the terms were in writing. Good relationships with gym parents are worth more than a short-term discount.
Safer Alternatives That Still Respect Your Budget
1. The pay-and-payback loop (cleanest option)
This is what we do in my gym. I love using parent-run businesses so I can support the small businesses that ultimately support me – but they have to be legit. Here’s how that works: The parent pays full tuition like everyone else. We pay them for whatever service their business is providing. Likewise, if they’re on staff, they pay tuition like everyone else, and they clock in and out and receive a paycheck like all the other staff. The net effect occassionally “zeroes out,” but we’ve created a compliant money trail for bookkeeping, taxes and insurance. If their child ever were to get hurt and be out for six weeks, they are still employed and expected to be at work like everyone else. Likewise, if the parent were to pick up a different job and quit at the gym, it doesn’t change our arrangement in any way.
2. Project-based 1099 (only when it truly fits)
Consider this only in non-ABC states and only when they meet contractor tests: clear scope, timeline, deliverables, invoice and their own tools/schedule. This means no benefits, no coverage under your policies and no control over how the work is performed. If ever a parent were to also have a skillset like construction, for example, they could qualify to be contracted for their skills around my gym. Again – we’d pay them like any other contractor, and they’d pay their tuition like any other parent. In most states, you can’t contract someone to do the same relative tasks an employee in your gym does. So, for example, I couldn’t contract someone to work my front desk, coach teams or coach classes. It wouldn’t pass the IRS stress test that defines a contractor. My 20-something coaches aren’t building walls and re-running electrical though, so that would essentially pass.
A Quick Decision Tree for Gym Owners
Are you exchanging value for value (service for tuition)?
→ Yes = Contractor or employee (not volunteer).
Do you control someone’s schedule, training or what they wear to work?
→ Yes = Employee.
Is the work truly specialized and self-directed, and is it a short-term project completed with their tools and methods?
→ Yes = Maybe contractor (confirm with Matt at gymlawyers.com)
When To Call an Attorney or CPA
- You’ve traded value for value (past or present) and aren’t sure how to clean it up.
- Someone helping was injured, filed unemployment, or asked to “switch to 1099.”
- You’re unclear if a role passes contractor tests.
Resource: For more help, Matt Becker and the team at GymLawyers.com, and he can help you structure staff correctly.
Compliance Is Cheaper Than “Free”
I get why bartering is tempting, especially when cash is tight, but it’s important to do it within the confines of the law. It prevents you from being upset with “staff”, having staff who feel it’s a one-way road, and putting yourself in tricky legal situations. Clean systems protect your margin, your gym, and your peace of mind.
Watch or listen to the full episode with Matt now!
📺 YouTube: https://youtu.be/xECEY9Pf8Og
🎧 Spotify: https://open.spotify.com/episode/16P7g1bkzpjZP2QFCT5Cbb?si=JQ2-rcr2SQOfcN7CYurhgA
🍏 Apple Podcasts: https://podcasts.apple.com/us/podcast/the-fullout-cheer-podcast/id1763244914?i=1000726201235
