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FLSA - Outside Sales Exemption

by The Human Equation, Inc. on 10/13/2008
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Our outside sales employees travel to prospects' places of business for the purpose of making sales. They are paid strictly on a commission basis and do not receive a fixed salary. Are these employees exempt from the Fair Labor Standards Act's overtime pay requirements?

Yes. Subject to specific exemptions, the Fair Labor Standards Act (FLSA) is the federal law requiring that employees be paid not less than time and one-half the employee's regular rate of pay for time worked over 40 hours in a workweek. One such exemption is the outside sales exemption, which applies when: the employee's primary duty is 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 the employee is customarily and regularly engaged away from the employer's place of business. If an employee satisfies these requirements, then he or she will be exempt from the FLSA's overtime pay provisions.

A unique characteristic of the outside sales exemption is that it does not have a salary requirement, whereas some exemptions, such as the executive or administrative exemptions, require that the employee be paid on a salary basis of not less than $455 per week. Since the outside sales exemption does not contain such a salary requirement, the fact that the employees in this situation are not paid a fixed salary does not call into question their status as exempt from the FLSA's overtime pay provisions.

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