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Fact Sheet:
Exemption for Outside Sales Employees Under the Fair Labor Standards Act
(FLSA)
This fact sheet provides general
information on the exemption from minimum wage and overtime pay provided
by Section 13(a)(1) of the Fair Labor Standards Act as defined by
Regulations, 29 CFR Part 541.
The FLSA requires that most employees in
the United States be paid at least the federal minimum wage for all
hours worked and overtime pay at time and one-half the regular rate of
pay for all hours worked over 40 hours in a workweek.
However, Section 13(a)(1) of the FLSA
provides an exemption from both minimum wage and overtime pay for
employees employed as bona fide executive, administrative, professional
and outside sales employees. Section 13(a)(1) and Section 13(a)(17)
also exempt certain computer employees. To qualify for exemption,
employees generally must meet certain tests regarding their job duties
and be paid on a salary basis at not less than $455 per week, although
the salary requirements do not apply to outside sales employees. Job
titles do not determine exempt status. In order for an exemption to
apply, an employee’s specific job duties and salary must meet all the
requirements of the Department’s regulations.
See other fact sheets in this series for
more information on the exemptions for executive, administrative,
professional, and computer employees, and for more information on the
salary basis requirement.
Outside Sales Exemption
To qualify for the outside sales employee
exemption, all of the following tests must be met:
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The employee’s primary duty must be
making sales (as defined in the FLSA), 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
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The employee must be customarily and
regularly engaged away from the employer’s place or places of
business.
The salary requirements of the regulation
do not apply to the outside sales exemption. An employee who does not
satisfy the requirements of the outside sales exemption may still
qualify as an exempt employee under one of the other exemptions allowed
by Section 13(a)(1) of the FLSA and the Part 541 regulations if all the
criteria for the exemption is met.
Primary Duty
“Primary duty” means the principal, main,
major or most important duty that the employee performs. Determination
of an employee’s primary duty must be based on all the facts in a
particular case, with the major emphasis on the character of the
employee’s job as a whole.
Making Sales
“Sales” includes any sale, exchange,
contract to sell, consignment for sales, shipment for sale, or other
disposition. It includes the transfer of title to tangible property,
and in certain cases, of tangible and valuable evidences of intangible
property.
Obtaining Orders or Contracts for
Services or for the Use of Facilities
Obtaining orders for “the use of
facilities” includes the selling of time on radio or television, the
solicitation of advertising for newspapers and other periodicals, and
the solicitation of freight for railroads and other transportation
agencies. The word “services” extends the exemption to employees who
sell or take orders for a service, which may be performed for the
customer by someone other than the person taking the order.
Customarily and Regularly
The phrase “customarily and regularly”
means greater than occasional but less than constant; it includes work
normally done every workweek, but does not include isolated or one-time
tasks.
Away from Employer’s Place of Business
An outside sales employee makes sales at
the customer’s place of business, or, if selling door-to-door, at the
customer’s home. Outside sales does not include sales made by mail,
telephone or the Internet unless such contact is used merely as an
adjunct to personal calls. Any fixed site, whether home or office, used
by a salesperson as a headquarters or for telephonic solicitation of
sales is considered one of the employer’s places of business, even
though the employer is not in any formal sense the owner or tenant of
the property.
Promotion Work
Promotion work may or may not be exempt
outside sales work, depending upon the circumstances under which it is
performed. Promotional work that is actually performed incidental to
and in conjunction with an employee’s own outside sales or solicitations
is exempt work. However, promotion work that is incidental to sales
made, or to be made, by someone else is not exempt outside sales work.
Drivers Who Sell
Drivers who deliver products and also
sell such products may qualify as exempt outside sales employees only if
the employee has a primary duty of making sales. Several factors should
be considered in determining whether a driver has a primary duty of
making sales, including a comparison of the driver’s duties with those
of other employees engaged as drivers and as salespersons, the presence
or absence of customary or contractual arrangements concerning amounts
of products to be delivered, whether or not the driver has a selling or
solicitor’s license when required by law, the description of the
employee’s occupation in collective bargaining agreements, and other
factors set forth in the regulation.
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