California Labor Law Defines Salesperson Exemption

Outside Salesperson Exemption

The Fair Labor Standards Act (or 29 USC § 213(a)(1) and 29 C.F.R. § 541.500.) defines the“Outside Salesperson Exemption.”As a person that;

(a) has the primary duty of (a) making “sales” or (b) obtaining orders or contracts for services or facilities usage, and
(b) is customarily and regularly engaged away from the employer’s place of business in performing such primary duty.

It is also important to note that the employee must spend over 50% of their working time actively selling or obtaining new business away from the office and or home office, if applicable. As oppose to delivering product, giving product training or other administrative tasks unrelated to the actual sale of the product or services.

                       

Inside Salesperson Exemption

The other second part of the salesperson exemption applies to primarily commission-based salespeople and is commonly referred to as inside salesperson exemption. Section 7(i) of the Fair Labor Standards Act (29 USC § 207[i]) will exempt a particular employee from overtime compensation if:

(a) the employee is employed in a “retail or service establishment,” and
(b) the employee’s regular rate of pay exceeds one and one-half times the applicable minimum wage, and
(c) more than half the employee’s compensation for a representative period represents commissions on goods or services.

“Regular rate of pay” referenced in the above federal test, applies on a work week basis. This means that the average of compensation for two or more weeks does not satisfy this requirement.

If you feel you are not being compensated properly for your work as a sales person please contact a California labor law attorney to discuss your case.