Tuesday, January 27, 2009

Do you know? The FLSA’s exemptions for salespeople

Do you know? The FLSA has two different exemptions that could cover salespeople – the outside sales employee exemption and the commissioned retail employee exemption. If an employee qualifies for either of these exemptions, that employee is not owed overtime for any hours worked in excess of 40 in any given work week.

To qualify for the outside sales employee exemption, both of the following must be met:

  1. The employee’s primary duty must either be making sales, or obtaining orders or contracts for services or for the use of facilities for which a consideration will be paid by the client or customer; and

  2. The employee must be customarily and regularly engaged away from the employer’s place or places of business.

Because sales employees are often commissioned (at least in part), there is no salary requirement with this exemption.

Outside sales typically do not include sales made by mail, telephone, or the Internet. For example, this exemption does not cover telemarketers.

To quality for the commissioned retail employee exemption, all three of the following requirements must be met:

  1. The employee must be employed by a retail or service establishment;

  2. The employee’s regular rate of pay must exceed one and one-half times the applicable minimum wage; and

  3. More than half of the employee’s earnings must be in form of commissions.

For information on other FLSA exemptions, see the following: