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Salespersons Can Be Entitled To Overtime

The most violated employment law. It has been said the Fair Labor Standards Act ("FLSA")--the federal wage and hour law--is the most violated employment law in the country, and I believe it.  It is a law that we as employment lawyers see even the largest, most well-informed companies routinely violating. Good intentions not enough. The reason?  The FLSA is far from intuitive and seemingly makes distinctions about who is entitled to overtime based on which industry had the best lobbyists in Washington when the FLSA was passed.  Or maybe there is a good reason employees engaged in the processing of maple sap into sugar (but not refined sugar) or syrup are not entitled to overtime, but nothing comes immediately to mind. The distinction between inside and outside salespeople. One of the wage and hour problem areas that trips up employers concerns salespeople.  The FLSA makes a distinction between inside salespeople and what it refers to as the "outside salesman."   It's an important distinction because inside salespeople are entitled to overtime and outside salespeople are not.  Insides salespeople must be paid at least the minimum wage; outside salespeople do not. Telling the difference. Here's how you can know the difference.  An outside salesperson is someone whose primary duty is making sales and who is regularly engaged away from the employer's place of business, i.e., out in the field, making sales.  Resolution of these cases often comes down to determining whether outside sales is the employee's primary duty. Determining primary job duty. For example, a salesperson may spend some of her time cold calling and fielding calls from potential customers while at the employer's place of business and part of her time out in the field.  Which is her primary job duty?  Generally, courts will look at where the salesperson spends more than 50% of her time.  If it's out in the field, she will usually be considered an outside salesperson and will not be entitled to overtime. Other factors to be considered. Other factors a court will look at will be the relative freedom from direct supervision the salesperson has (less supervision weighs in favor of a finding the employee is an outside salesperson), the relative importance of the outside sales duties as compared with the inside job duties (the more relative importance of the outside duties, the more likely the employee is a an outside salesperson) and the relationship between the salesperson's compensation and that paid to the employees performing the same non-outside sales duties as the salesperson (if the salesperson's pay is substantially higher it is more likely she will be found to be an outside salesperson). So, if you are in sales, you may be entitled to overtime.  If you are an employer, it is good idea to check your salespeople's primary job duties and ensure they are being properly compensated.  GSF

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