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What are the Overtime Exemptions for Sales Employees?

Posted on behalf of Arnold Law Firm in
Woman staring intently at computer screen. While many employees are eligible for overtime pay when they work more than 40 hours in a week, some may not be. However, workers are only exempt from overtime pay requirements if their jobs fit the criteria for an overtime exemption. Employers often make the mistake of treating some employees as overtime exempt when they are not. For example, they may assume all salespeople who are paid on commission are exempt from overtime. This is not always true, and this assumption may result in some salespeople being denied overtime pay when they should be receiving it. Below, our Sacramento wage and hour attorneys discuss overtime exemptions for sales employees. If you think you were wrongly denied overtime pay, give us a call today to discuss potential legal options.

Inside Vs. Outside Salespeople

Generally, inside salespeople are not exempt from overtime pay laws. Department of Labor (DOL) regulations say the DOL does not have the legal authority to exempt inside sales employees from federal minimum wage or overtime laws. Inside salespeople should be paid time-and-a-half for hours they work over 40 in a week. If an inside salesperson is non-exempt, but he or she was misclassified, his or her employer must pay for unpaid overtime for the last two or three years. Employers are required to keep detailed records of hours worked to ensure employees are properly compensated. Inside salespeople are those who make sales from an office environment. That means they often make sales over the phone, email or other online channels. Usually, there is no in-person contact between the salesperson and the potential client. Salespeople who work from home may also be non-exempt and eligible for overtime pay. Some inside salespeople may be exempt if the employer can prove:
  • The employee is employed at a retail or service establishment
  • The salesperson’s regular rate of pay is one-and-a-half times the minimum wage or more
  • Over half of the employee’s earnings are from commissions on goods and services
On the other hand, outside salespeople are generally exempt from overtime pay requirements. There are two criteria for an outside sales employee exemption from overtime pay:
  • The employee’s primary duty is making sales or securing orders or contracts for services or the use of facilities when a consideration will be paid by the client
  • The employee is regularly working away from the employer’s place of business
The phrase primary duty means the principal, main, major or most important duty of an employee. The phrase “making sales” encompasses:
  • Selling things
  • Exchanges
  • Contracts to sell
  • Consignment for sales
  • Shipment for sale
  • Transfer of title to tangible property
  • Tangible and valuable evidence of intangible property
Outside salespeople sell at the customer’s premises, such as his or her place of business or home. This does not include sales made over the phone, by mail or over the internet. Promoting something may be considered outside sales work, but it depends on the circumstances under which you are performing the work. If you are doing promotional work that is incidental and in conjunction with your outside sales or solicitations, it may be exempt from overtime pay requirements. Drivers who deliver and sell products may be exempt from overtime if their primary duty is making sales. There are multiple factors to consider about whether a driver’s primary duty is selling things:
  • Comparing the driver’s duties with the duties of other employees who sell things or drive
  • Whether there are contractual arrangements about the number of products to be delivered
  • If the driver has a license to sell or solicit when the law requires it
  • How the employee’s job is described in collective bargaining agreements
  • And other factors

How Employers May Try to Get Around Overtime Requirements

Employers often misclassify inside salespeople as exempt from overtime. If they learn they are wrong, they may try to make their inside salespeople go on the road a few times per month to qualify as outside salespeople. However, this does not make an employee exempt from overtime pay requirements.

Call Us Today to Discuss Possible Legal Options

For decades, our experienced attorneys have been securing compensation for workers who were denied overtime pay, those injured by asbestos, and those injured by the negligence of others. If you have questions about filing a claim, give us a call today to discuss possible legal options. The initial consultation is free of charge and there is no obligation to take legal action after meeting with us.

We are ready to help. Call 916-777-7777 today.

Settlement - $3,767,000

Truck Accident

A 20-year-old man who had been married for just 12 days left home on his way to work. He was driving on Pleasant Grove Road in Sutter County in the early morning when he came upon a slow-moving truck. As he pulled out to pass the truck, the truck driver turned left in front of him. The young man attempted to steer back into his lane but his vehicle struck an un-flagged piece of metal extending from the back of the truck. He died in the resulting crash.

Expert witnesses brought in by the Arnold Law Firm proved that the truck, owned and operated by a hauling firm, should never have been on the highway that morning. Specifically, the rear and side turn signals did not work and the rear-view mirror was in a poor state of adjustment at the time of the collision. As a result, the driver, who had failed to properly inspect the vehicle before setting out that morning, couldn’t see the young man’s vehicle as it attempted to pass.

The poor condition of the truck, its lack of maintenance and the manner in which it was operated were found to be substantial factors in causing the collision that killed the young man. The testimony also established that the man had been making a lawful pass at the lawful speed limit and acted reasonably when he attempted to avoid the collision.

The man’s 20-year-old widow was awarded $3,767,000.77, his parents were awarded $185,131 and the family was reimbursed $11,899 in funeral expenses. Though money is a poor substitute for a young man’s life, this verdict demonstrates that drivers who endanger the lives of others will be held accountable for their actions.