Unlike most other FLSA exemptions, an outside sales exempt employee does not have to be paid on a salary or fee basis. Unfortunately, this means that such employees do not get overtime pay and can be paid less than the current minimum wage rate of $7.25 per hour.
To be exempt from the FLSA overtime and minimum wage requirements under the Outside Sales Exemption, the employee must be:
- Making sales OR obtaining orders or contracts for services or for the use of facilities for which a payment will be made by the client or customer; AND
- Customarily and regularly engaged away from the employer’s place or places of business in performing such primary duty.
A windshield glass sales employee who goes to an oil change shop to try and sell customers there replacement windshields for their cars who is paid a salary of $400 per week is an exempt outside sales employee and is not due overtime or minimum wages under the FLSA.
An employee who works from home making phone calls to prospective customers provided by the employer to try to sell them extended automobile warranties who is paid $800 per week is NOT an exempt outside sales employee. That is because the sales are not being made away from the employer’s place of business (the work from home is considered being at the employer’s place of business) or at the customer’s workplace.
An employee making sales calls from within an employer’s call center who is paid a salary $600 per week plus a 5% sales commission is not an outside sales exempt employee because the sales calls are being made at the employer’s place of business. Also, when calculating the overtime hourly rate, then employer must include both the salary and the commissions earned in weeks when more than 40 hours are worked in order to calculate the time and one-half overtime hourly rate of pay.