The Beachbody Coach Classification Class Action challenged whether Beachbody, the fitness streaming and supplement company, illegally misclassified its California-based coaches as independent contractors instead of employees. The lawsuit, filed on May 22, 2023, by former coach Jessica Lyons, alleged that Beachbody required coaches to perform substantial work—including promoting products on social media, handling customer service, organizing support groups, and driving traffic to the website—while paying them only small commissions that often failed to cover their out-of-pocket business expenses.
For example, a coach who spent hours recruiting customers and managing their accounts might earn $50 from a customer’s purchase while spending $100 on their own promotional materials and internet. The case raised critical questions about Beachbody’s multi-level marketing structure and whether the company’s coach network constituted employees owed wages, overtime, and benefits under California law. After the lawsuit was filed in May 2023, Beachbody responded dramatically by announcing in October 2024 that it would eliminate its entire multi-level marketing model and transition coaches to a simplified affiliate program starting November 1, 2024, with the MLM network fully sunset by January 1, 2025.
Table of Contents
- What Were the Core Allegations Against Beachbody?
- How Did Beachbody’s Multi-Level Marketing Model Contribute to the Misclassification Issue?
- What Did Beachbody’s Response and Business Changes Reveal?
- What Happened to the Lawsuit After the Business Changes?
- What Were the Specific Economic Harms Alleged in the Lawsuit?
- How Did This Case Compare to Other MLM Worker Misclassification Lawsuits?
- What Does This Case Mean for Current and Future Beachbody Coaches?
What Were the Core Allegations Against Beachbody?
Jessica Lyons, who served as a Beachbody coach from 2016 until May 2023, alleged that the company systematically misclassified coaches as independent contractors to avoid paying wages, overtime, and providing employee benefits. The lawsuit asserted that despite their independent contractor status, coaches had minimal control over how they worked and were required to perform specific duties for the company. Coaches were tasked with promoting Beachbody’s brands on social media platforms, recruiting and referring customers, providing customer service, helping virtual support groups, and directing traffic to Beachbody’s website—all activities that resembled traditional employment. The lawsuit further claimed that Beachbody’s compensation structure was fundamentally unfair.
Coaches received only a commission on the products they sold, sometimes as little as 25% on certain items, but these commissions were often reduced by mandatory out-of-pocket expenses including personal product purchases, promotional materials, website hosting, and internet costs. A coach might recruit a customer who made a $200 purchase, earning only $50 in commission while spending $80 on their own business costs, resulting in a net loss. This model differed significantly from traditional affiliate programs where participants have genuine freedom in how they operate and are not required to purchase inventory or pay recurring fees to participate. The case was represented by two law firms: Tycko & Zavareei LLP and Clarkson Law Firm PC, known for employment misclassification cases. Their complaint focused on whether California’s ABC test for employee classification was satisfied—a legal framework that presumes workers are employees unless the company can prove they control their own work, perform services outside the company’s usual business, and operate independently.
How Did Beachbody’s Multi-Level Marketing Model Contribute to the Misclassification Issue?
Beachbody’s structure as a multi-level marketing company created inherent tensions with proper worker classification. In the mlm model, coaches earned income through two channels: direct sales commissions and commissions from coaches they recruited (downline commissions). This created pressure for coaches to constantly recruit others, transforming the network into a pyramid-like structure where financial success depended more on recruitment than on selling actual products. The lawsuit challenged whether this arrangement gave coaches true independence or simply masked employment through complex commission structures. A key concern highlighted in the case was that while Beachbody called coaches “independent contractors,” the company maintained significant control over essential aspects of their work. Coaches could not set their own prices—Beachbody controlled all pricing.
They could not establish their own sales territories or methods entirely freely; the company’s online platform and tracking systems dictated much of how business was conducted. This centralized control conflicted with the legal definition of independent contractor status in California, which requires that workers have substantial control over their working arrangements and methods. The financial reality for many coaches illustrated the problem with Beachbody’s model. According to the lawsuit allegations, many coaches earned minimal income despite investing considerable time and money. Some coaches worked 10-20 hours weekly yet earned less than $200 per month after expenses—well below minimum wage. The lawsuit warned that Beachbody’s compensation structure essentially subsidized the company’s business model through unpaid or underpaid coach labor, creating a scenario where the company benefited while workers absorbed the financial risk.
What Did Beachbody’s Response and Business Changes Reveal?
In October 2024, approximately 18 months after the lawsuit was filed, Beachbody announced it would eliminate its multi-level marketing model entirely. This represented a dramatic business pivot, effective November 1, 2024, with the existing MLM network to be fully sunsetted by January 1, 2025. The company transitioned coaches to a simplified single-level affiliate program rather than continuing the recruitment-based MLM structure. While the company did not explicitly attribute this change to the litigation, the timing and nature of the shift suggested the lawsuit’s claims had significant weight and business implications. This business restructuring acknowledged what the lawsuit had alleged: the previous MLM model was unsustainable and problematic.
By moving to a single-level affiliate program, Beachbody eliminated the recruitment commission structure that had driven the pyramid-like nature of its coach network. Coaches in the new affiliate model would earn commissions solely on direct sales they generated, without the ability to earn from recruiting others. However, the shift did not automatically resolve the classification question or provide retroactive compensation to affected coaches. A coach who earned minimal income as an MLM participant from 2016 to 2024 would not automatically receive back wages or employee benefits simply because the business model changed going forward. The company’s willingness to fundamentally restructure its business model demonstrated that the misclassification claims had merit and posed real legal and financial risks. Traditional affiliate programs, when structured properly, may more closely align with independent contractor status because affiliates genuinely have independence in how they operate and the economic risk-reward relationship is more balanced.
What Happened to the Lawsuit After the Business Changes?
Despite Beachbody’s October 2024 announcement and business restructuring, the lawsuit continued through the courts. On December 29, 2025, Jessica Lyons filed a declaration in support of dismissing her own case. This decision indicated that either a settlement had been reached with confidential terms, or Lyons decided to pursue other remedies outside of litigation. On January 12, 2026, the court granted the dismissal request, concluding the case in the parties’ favor without a public ruling on the merits or a publicly disclosed settlement agreement. The lack of available settlement details means the specific compensation, if any, that Beachbody provided to Lyons or what (if any) broader class relief was negotiated remains confidential.
This stands in contrast to some high-profile employment misclassification settlements where the terms are publicly disclosed, allowing affected workers and observers to assess whether the resolution adequately addressed the legal violations. The confidentiality surrounding this case’s resolution limits what future coaches can learn about how courts might have ruled on Beachbody’s practices. However, the case’s impact may extend beyond Lyons herself. The lawsuit created legal exposure for Beachbody and prompted the company to restructure its entire business model, suggesting that the claims were serious enough to force significant action. For coaches who were part of the MLM structure before November 2024, the dismissal does not prevent them from pursuing their own claims if they meet the time limits and other requirements for filing individual or class actions. The case serves as a reference point for understanding how courts and employment attorneys view MLM coach compensation structures.
What Were the Specific Economic Harms Alleged in the Lawsuit?
One of the lawsuit’s central arguments was that coaches suffered quantifiable economic damage through unpaid wages and violation of wage and hour laws. California law requires that all workers classified as employees must receive at least minimum wage for all hours worked, plus overtime compensation when working over eight hours daily or 40 hours weekly. The lawsuit alleged that if coaches had been properly classified as employees, many would have earned far more than their MLM commissions when adjusted to account for hours worked. For example, consider a coach in 2022 who worked 40 hours weekly managing their sales network, recruiting customers, providing customer service, and completing administrative tasks. If that coach earned $800 in commissions over a month while working approximately 160 hours, they earned $5 per hour—well below California’s minimum wage, which was over $14 per hour at that time.
The differential between minimum wage and what the coach actually earned represented unpaid wages. Additionally, the lawsuit alleged Beachbody failed to provide meal breaks, rest breaks, and other workplace protections required by California law. Coaches also received no unemployment insurance, workers’ compensation insurance, health insurance, or retirement benefits—costs that proper employee classification would have required the company to provide. The cumulative financial harm for affected coaches could be substantial. A coach who participated from 2016 through 2024 and earned below-minimum-wage compensation for approximately 2,000 working hours could be owed $10,000 to $30,000 or more in unpaid wages and damages, depending on the specific hours worked and compensation received. This financial reality explains why Beachbody’s decision to restructure was significant; continuing to operate the previous MLM model while facing litigation over wage claims posed escalating financial exposure.
How Did This Case Compare to Other MLM Worker Misclassification Lawsuits?
The Beachbody case followed a pattern established in several other MLM misclassification lawsuits, though each case involves unique facts and legal arguments. Herbalife, Young Living, LuLaRoe, and other MLM companies have faced similar allegations that their distributors and consultants were misclassified workers. However, each case involves different state laws, business structures, and compensation models, so precedents from one case do not automatically determine outcomes in another.
What distinguished the Beachbody case was the company’s relatively swift and comprehensive business model change in response to the litigation. Rather than contesting the lawsuit for years or attempting to defend its MLM structure in court, Beachbody proactively dismantled the model. This strategy may have reduced its legal exposure going forward, but it did not erase the company’s potential liability for years of prior misclassification. The case demonstrated that when presented with a credible misclassification claim and the attendant legal risks, even large companies with MLM business models may choose restructuring over protracted litigation.
What Does This Case Mean for Current and Future Beachbody Coaches?
For coaches operating under Beachbody’s new affiliate model beginning in November 2024, the classification question may be easier to answer. A simplified affiliate program where participants earn only on direct sales, have no recruitment component, and are not required to purchase inventory more closely resembles traditional independent contractor arrangements. However, the outcome still depends on specific facts about how much control Beachbody maintains, what duties are required, and whether the economic relationship is truly independent.
Looking forward, the Beachbody litigation serves as a cautionary example for other MLM companies and a potential roadmap for workers and attorneys challenging misclassification. As worker classification standards continue to evolve—with states like California maintaining strict standards and federal regulators becoming more active in the gig economy—companies operating MLM models face continued risk. The case also signals that settling or restructuring may be preferable to prolonged litigation, as the Beachbody company’s decision suggests. For workers who participated in Beachbody’s MLM coach program during the years of misclassification, the case highlights the importance of understanding their potential legal remedies and the limitations on how long they have to pursue claims.
You Might Also Like
- Rodan and Fields Consultant Classification Class Action
- doTerra Essential Oils Pyramid Scheme Class Action
- Young Living Essential Oils Health Claims Class Action
Open Settlements You Can Claim Now
Browse current class action settlements accepting claims — several require no proof of purchase: