Outside Sales Employee Exemption

If you work in sales, it is possible that your employer may have mistakenly classified you as exempt from overtime. Both federal and state law require employers to pay “non-exempt” employees a minimum wage and overtime pay. But federal and state law do not protect every employee; some employees are explicitly exempt. One category of so-called exempt employees includes Outside Sales employees.

What is the Outside Sales Exemption?

The Fair Labor Standards Act (“FLSA”) is the federal law that governs the minimum wage and overtime pay. It is important to note that an exemption is not based on the employee’s job title. An employer cannot exempt a sales person just by calling that sales person an Outside Sales employee. Instead, the exemption is based on the sales person’s substantive responsibilities and pay.

In order to fall under the federal Outside Sales exemption, an employee must meet each of the following requirements:

  • the employee primarily makes sales, which includes any exchange, contract to sell, consignment for sales, or other disposition of tangible property or evidence of intangible property, or the employee primarily obtains orders or contracts for services or for the use of facilities; and,
  • the employee must be customarily and regularly engaged away from the employer’s place of business.

The California Labor Code’s definition of an Outside Sales employee is similar, but California specifies that a sales employee must spend 50 percent or more of the workday making sales away from employer’s place of business in order for the law to consider the employee as “customarily and regularly” engaged in sales.

Not Every Sales Employee is Exempt and Employers Make Mistakes

The Outside Sales exemption seems clear in theory, but can be tricky in practice. For starters, consider that a California employee only qualifies as an exempt Outside Sales Employee if that employee spends 50 percent or more of his time outside of the office. An employee may work in sales, but spend more than 75 percent of his time in the office. Such an employee would not be exempt, even though the employee works in sales. Or consider that an employee is only exempt if her primary duty includes making sales. This means that an employer cannot exempt an employee just because her job description includes sales, if her job practice does not. Unfortunately, employers make this mistake often-- costing employees money.

A Misclassification Attorney Can Help

If your employer has denied overtime pay on the basis that you are an Outside Sales employee, you might be able to recover overtime pay. Luckily, an experienced misclassification lawyer, like the Orange County Employee Misclassification Lawyers at Nassiri Law Group, practicing in Orange County, know the laws very well. One of our skilled misclassification lawyers can help you recover the overtime that you have earned. Call today for a free consultation, at 714-937-2020.