Thursday, 03 October 2013 12:58
By Lee Williams
Aspects of the employment in question
In this case, the employer was in the business of selling food and beverages to convenience stores. The employee was hired by the employer as a “route salesman.” The employer advertised the available position as a sales position and required employees working in the position to attend weekly sales meetings. The route salesman’s job involved visiting stores along a route determined by the employer. At each stop, the route salesman rotated the items his employer sold to the stores according to date and restock necessary items from his company assigned vehicle.
The route salesman was also tasked with pitching new items to the stores or convincing stores to purchase the additional products sold by the employer which were not stocked at particular locations. As route salesmen, the employee and those with the same job title were the only sales personnel the employer used to sell its products. While the company also employed delivery drivers, those individuals were not permitted to complete sales.
Although the route salesman was paid a salary and commissions, he generally worked 72 hours a week, averaging a wage of $6.66 an hour. Claiming he was not in “outside sales,” the route salesman sued the employer under the FLSA, claiming he was entitled to minimum wage and overtime pay.
Sales versus delivery
Courts impose a seemingly simple two part test to determine whether an employee qualifies under the “outside sales” exemption of the FLSA. First, the employee must be an individual who is “customarily and regularly” away from the employer’s place of business. Second, the employee’s primary purpose must be engaging in sales activities. The Fifth Circuit engaged in an extended analysis of eight suggested factors used in determining whether the route salesman was a delivery man or outside salesman. Of those eight factors, one weighed in favor of the route salesman’s claims, two were inapplicable, and five weighed in favor of the employer’s “outside sales” exemption claim.
Although simple calculation of the number of factors favoring either party is not the controlling determination in such cases, the Fifth Circuit decided the weight of the evidence favored the employer. In particular, the Court focused on the formal division of labor between the employer’s route salesmen and delivery drivers, the route salesmen’s responsibility as the only sales staff for the employer, the fact the job was advertised as a sales position, and the incentive based pay system for the route salesman position – which offered higher pay for above exceptional sales numbers.
Proper protection for employer classifications
Employers must take care to protect themselves when classifying certain employees as exempt under the FLSA. Whether a classification is proper or not often turns on highly stylized regulations published by the Department of Labor, and employers are encouraged to seek legal advice on what exemptions are available or potentially applicable to their workforce. Regarding the “outside sales” exemption, protections such as advertising the position as sales based, a commission and incentive driven pay scale, and having an exclusive sales team are all factors weighing in favor of the employer.