Federal Court: Route Salesman Exempt from Overtime Laws
July 24, 2013 by Christopher Hammer
In a recent decision, a Federal Court ruled that a route salesman is an “Outside Salesperson” and thus exempt from overtime laws, which demonstrates a distinction between Federal and State Law. Although both federal and state overtime laws apply to most employees, these laws contain several exemptions that exclude certain categories of workers from receiving overtime pay. One such exemption is for an “Outside Salesperson” — someone employed for the purpose of making sales away from the employer’s place of business. Within the parameters of Employment Law, determining whether a particular job satisfies the legal definition of an outside salesperson exempt from overtime requires a complex factual analysis that depends on the specific responsibilities and duties of the position. Recently, the U.S. Court of Appeals for the Fifth Circuit in the case of Meza v. Intelligent Mexican Marketing, Inc. (June 18, 2013) analyzed whether a route salesman, someone who sells and delivers food and beverage items to convenience stores, met the requirements necessary to be exempt from overtime under federal law, known as the Fair Labor Standards Act (“FLSA”).
Under the FLSA the court applies a “primary duty” test to determine whether the outside salesperson exemption applies. Under this primary duty test a driver salesmen can be exempt simply because she is employed for the purpose of making sales and she is “customarily and regularly engaged in such activity.” Under the federal standard, an employee could be exempt from overtime even if the employee spends 90% of the workday performing manual labor loading and unloading in order to stock the vehicle or deliver the goods sold, which was the case with Mr. Meza who spent a majority of his time delivering products to stores, stocking shelves and re-ordering additional products. Even so, the Court found that he was not entitled to overtime under the FLSA because his “primary duty” entailed additional tasks typically associated with selling, such as offering samples of new products, negotiating for space near the cash register, and visiting new stores to develop additional business.
Job rights differ between states. Had Mr. Meza worked in California labor standards, a state court would likely have reached the opposite conclusion. California’s overtime law differs significantly from federal law with respect to the “Outside Salesperson” exemption. California does not use the “primary duty” test to determine whether an outside salesperson is exempt from receiving overtime. Instead, to be exempt from California’s overtime protection as an outside salesperson, the individual must “customarily and regularly work more than half the working time away from the employer’s place of business selling items or obtaining orders or contracts for products and services.” Therefore, if the activities of the employee during fifty percent of the workday involve anything other than sales-related activity, the individual is entitled to overtime under state law.
The determination of exempt v. non-exempt classification is complicated at best. We at Beeson, Tayer and Bodine (BT&B) are committed to going above and beyond the traditional boundaries of labor laws. If you have questions about your rights as an employee we are available to help you determine which status is appropriate based on your individual circumstances. Contact BT&B today to schedule your free consultation.
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