FLSA: What is the Outside Sales Employee Exemption?
The Fair Labor Standards Act (FLSA) is the key federal law that establishes basic wage and hour protections for workers. Most notably, this includes minimum wage guarantees and a right to overtime pay. Both employers and employees should understand the implications and limitations of the FLSA. One of the key limitations is the outside sales employee exemption.
As explained by the United States Department of Labor (DOL), “outside sales employees” are not covered by overtime pay regulations. In this article, our top-rated West Palm Beach employment law lawyers explain the most important things employers and employees should know about the outside sales employee exemption.
Outside Sales Exemption: Who Qualifies Under the FLSA?
In applying the Fair Labor Standards Act, the Department of Labor emphasizes that employers do not have the authority to decide whether or not an employee falls under the outside salesperson exemption. Instead, an employee only qualifies under the exemption if the following two basic tests are satisfied:
- The employee’s primary job duties must be direct sales, obtaining orders, or getting service contractors; and
- The employee must be regularly engaged in work outside of the employer’s ordinary place of business.
The Primary Duty Matters: Understanding the Exemption Through an Example
One of the most important things to know about the FLSA’s outside sales exemption is that an employee cannot be exempted from overtime pay simply because they make some sales as part of the job—even if they are offered a commission payment for making those sales. Instead, an employee can only be exempted from overtime regulations under the FLSA if sales is a “primary” job duty.
In clarifying the test, the DOL uses the example of drivers who deliver products to third party businesses. It is not uncommon for these types of drivers to do sales as part of their job. The DOL is clear that this type of employee can only be exempted if the “sales” part of the job is a more significant duty than both the “driving” and the “deliveries.” In reviewing disputes, the DOL may conduct a careful assessment of exactly how an employee spends their time.
Misclassified Workers May Be Entitled to Back Overtime Pay
Employers should take care to ensure that all of the workers classified as outside salespeople actually meet the legal requirements. Otherwise, those employees may be entitled to back pay and liquidated damages for unpaid overtime. Workers who believe that they were improperly classified under the outside sales exemption should speak to a wage and hour attorney.
Call Our South Florida FLSA Lawyers for Immediate Assistance
At Pike & Lustig, LLP, our Florida wage and hour attorneys are standing by, ready to advocate for your interests. We represent both companies and workers. If you have questions about the outside sales employee exemption, please call us for a confidential initial consultation. With an office location in West Palm Beach and an office location in Miami, we handle employment law claims throughout Southeastern Florida.