Bartz Law Group

Employee Rights Advocates

California’s “Outside Sales Exemption” – When Does It Apply?

Outside Sales Exemption

California labor laws include specific rules and exemptions for workers classified as “outside salespeople.” This exemption significantly affects employee rights to minimum wage, overtime pay, and mandated rest/meal breaks.

What Employee Rights Are Affected By The Outside Sales Exemption?

California’s outside sales exemption exempts outside salespeople from some of the state’s labor laws. These exemptions can be significant, but it’s important to correctly classify employees to ensure compliance with the law.

The most common employee rights affected by the outside sales exemption are:

  1. Minimum wage laws: Outside salespeople are generally exempt from minimum wage laws in California. This means that employers are not required to pay them at least the minimum wage for all hours worked.
  2. Overtime laws: Outside salespeople are also exempt from overtime laws. This means that employers are not required to pay them overtime pay for hours worked over 40 in a work week.
  3. Rest and meal breaks: Outside salespeople may be exempt from some or all rest and meal break requirements.

What Is An Outside Salesperson?

An outside salesperson is defined as someone who meets all three of the following criteria:

  • 18 years of age or over
  • Customarily and regularly works more than half of their working time away from the employer’s place of business
  • Sells items or obtains orders for products or services

Here are some examples of sales tasks that qualify as outside sales under this definition:

  • Traveling to and from customer locations
  • Meeting with customers outside of the office
  • Stocking a vehicle with products for sale

More Than Half Of The Working Time

California labor laws for exempt employees puts specific emphasis on the amount of time an employee spends working outside the workplace. To qualify as an outside salesperson, the employee must customarily and regularly work more than half their working time away from the employer’s place of business.

Customarily means more than occasionally and as part of the employee’s usual work practice. Then again, regularly means the activity is performed frequently and recurringly.

The majority of an outside salesperson’s workday must be spent on activities like:

  • Visiting customers’ homes or businesses
  • Making sales presentations off-site
  • Attending trade shows or industry events
  • Traveling between sales appointments

Place Of Business

The concept of a traditional office or fixed workspace can be tricky for outside salespeople. California law defines an employer’s place of business as a fixed location belonging to or controlled by the employer.

Job Duties Involving Selling Or Obtaining Orders

For an employee to meet the outside sales exemption, their primary duty must involve either:

  • Selling tangible or intangible items
  • Obtaining orders or contracts for services or the use of facilities

What If An Employer Makes A Mistake In Determining Employee Exemption?

Misclassification of employees as exempt outside salespeople when they don’t meet the necessary criteria is a serious issue. If an employer makes a mistake, there can be significant consequences, including:

  • Back wages
  • Penalties and fines

Misclassified employees may be entitled to sue their employers for damages. These lawsuits can be costly, even if the employer ultimately wins.
What Can Employees Do?

If you suspect you have been misclassified as an outside salesperson and believe you are entitled to overtime and other benefits, here are steps you can take:

Consult an Attorney. An employment lawyer can review your specific situation. You may be able to file a complaint with the California Division of Labor Standards Enforcement (DLSE).

Is There A Federal Law Regarding Exempt Outside Sales Workers?

The Fair Labor Standards Act (FLSA) provides a federal exemption for outside sales employees from minimum wage and overtime requirements. The federal definition of an outside salesperson is generally like California’s, but with some key differences:

The FLSA does not have a “more than half the working time” requirement: Federal law doesn’t specify the percentage of time an employee needs to spend working away from the employer’s place of business. Unlike some other FLSA exemptions, there’s no minimum salary threshold for outside salespeople to be considered exempt.
Important .

If you suspect misclassification has occurred, whether you are an employee or an employer, seeking legal advice is crucial. An employment law attorney can assess your specific circumstances and explain the best course of action.

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