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Federal Outside Sales Exemption

From the Complete Payroll Labor Law Library.

 

Overview of Law

To be properly qualified as exempt an outside sales employee must pass the duties test. Unlike other white collar exemptions under the FLSA, outside sales employees are not subject to the minimum salary requirements, nor the salary basis test. As long as they pass the duties test they may be properly classified as exempt.

Outside Sales Employee Duties Test

  1. Employee's primary duty must 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 is customarily and regularly engaged away from the employer’s place or places of business

“Customarily and regularly” means the activity is more than occasional but doesn’t necessarily need to be constant. It includes work that’s normally done on a weekly basis, but doesn’t include one-time or infrequent tasks. A number of states have a specific percentage that they apply to this element of the test. For instance, employees in Oregon must spend at least 70% of their time engaged in those activities, whereas California employees must spend 50%. 

“Away from employer’s place of business” means the employee is at the customer's office or job site, or selling door-to-door. This doesn’t include sales by mail, phone or internet. Most importantly, any fixed location used by an outside sale employee as a headquarters – like their own home office, or a satellite office – will be considered the employer’s place of business. So, if they don’t “customarily and regularly” make it out of their home office, they won’t qualify for this exemption.

The Fair Labor Standards Act (FLSA) establishes minimum wage, overtime pay, recordkeeping, and youth employment standards affecting employees in the private sector and in Federal, State, and local governments. Read the basic requirements of the FLSA here.

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General Disclaimer

The materials and information available at this website and included in this blog are for informational purposes only, are not intended for the purpose of providing legal advice, and may not be relied upon as legal advice.  The employees of Complete Payroll are not licensed attorneys. This information and all of the information contained on this website are provided pursuant to and in compliance with federal and state statutes. It does not encompass other regulations that may exist, including, but not limited to, local ordinances. Complete Payroll makes no representations as to the accuracy, completeness, currentness, suitability, or validity of the information on this website and does not adopt any information contained on this website as its own. All information is provided on an as-is basis.  Please consult an attorney to obtain advice with respect to any particular question or issue. 

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