Opinion ID: 4561630
Heading Depth: 3
Heading Rank: 2

Heading: Obtaining Orders or Contracts for Services

Text: Having determined that Plaintiffs were not “making sales,” we turn to whether Plaintiffs were “obtaining orders or contracts for services.” 29 C.F.R. § 541.500. Just Energy argues on appeal that we should find Plaintiffs to be outside salespeople as a matter of law because they were obtaining orders or contracts for services. At issue is whether Just Energy’s business was selling services. The Agreement between Just Energy and Plaintiffs clearly states that Just No. 18-4058 Hurt, et al. v. Commerce Energy, Inc., et al. Page 14 Energy “is engaged in the business of selling (or soliciting the sale of) consumer products (natural gas and electricity),” and testimony from Just Energy representatives confirms that gas and electricity are “commodities.” We have also held that electricity is a commodity. Williams v. Duke Energy Int’l, Inc., 681 F.3d 788, 800 (6th Cir. 2012) (holding that electricity is a commodity for the purposes of the Robinson-Patman Act, which prohibits price discrimination between different purchasers of commodities for those engaged in commerce). The electricity and natural gas that Just Energy sells to customers are commodities. Plaintiffs were not “obtaining orders or contracts for services.” 3. External Indicia and Apparent Purpose of the FLSA Exemption We turn next to the external indicia of salespeople and the apparent purpose of the FLSA exemption. Just Energy argues that these are not appropriate considerations or are at best a secondary analysis of the outside sales exemption. As already explained, we review Defendants’ motions for judgment as a matter of law and for directed verdict de novo, applying “the same deferential standard as the district court: ‘The motion may be granted only if in viewing the evidence in the light most favorable to the non-moving party, there is no genuine issue of material fact for the jury, and reasonable minds could come to but one conclusion, in favor of the moving party.’” Radvansky, 496 F.3d at 614 (quoting Gray v. Toshiba Am. Consumer Prods., Inc., 263 F.3d 595, 598 (6th Cir. 2001)). In analyzing the outside sales exemption, the Supreme Court has considered the “external indicia of salesmen,” which include: whether the workers were hired for their sales experience, whether they were trained to obtain the maximum commitment possible, whether they worked away from the office with minimal supervision, and whether they were rewarded with incentive compensation. Christopher, 567 U.S. at 165–66. Even though the Court considered these indicia as part of its conclusion that pharmaceutical detailers conducted more atypical sales work (qualifying as “other disposition” under the definition of “sale” in the statute, 29 U.S.C. § 203(k)), it did not limit the indicia analysis to exempt salespeople who fall under the catchall sales category of “other disposition.” See id. at 164–66. We apply these indicia to the practices and procedures of Plaintiffs’ Ohio workplace. No. 18-4058 Hurt, et al. v. Commerce Energy, Inc., et al. Page 15 Plaintiffs were not hired for their sales experience—no experience was required. They were required to report to the office each day before going to work in the field, where they were closely supervised. The supervisors controlled Plaintiffs’ daily schedules, including selecting the streets on which they were to work. Just Energy mandated that workers follow a detailed script in their presentations to potential buyers and enforced a compliance matrix that governed discipline and employment itself. The script instructed Plaintiffs to get customers to commit to Just Energy products, but unlike the detailers in Christopher, they were not instructed to “obtain[] the maximum commitment possible.” Id. In the Ohio workplace, Plaintiffs had to end their engagement with the customer and leave the premises after initiating the verification call. They were unable to verify the commitment from the customers, address customer concerns or questions, or provide assurances to the customers. It is true that Plaintiffs were paid exclusively on commission, but unlike the New York solicitors in Flood, their commission income was minimal and they were not rewarded with additional benefits such as incentives to travel around the world. See Flood, 904 F.3d at 226. The totality of the circumstances in this Ohio workplace did not evidence the external indicia of salesmen that would support application of the exemption. In determining whether the workers were “employed . . . in the capacity of outside salesman,” 29 U.S.C. § 213(a)(1), the Supreme Court also considered whether a plaintiff’s capacity “comports with the apparent purpose of the FLSA’s exemption for outside salesmen.” Christopher, 567 U.S. at 166. The Court explained that “[t]he exemption is premised on the belief that exempt employees ‘typically earned salaries well above the minimum wage’ and enjoyed other benefits that ‘se[t] them apart from the nonexempt workers entitled to overtime pay.’ Preamble 22124.” Id. The pharmaceutical detailers there earned an average of more than $70,000 per year, including both a base salary and incentive pay, which was “well above the minimum wage”; they were “not required to punch a clock or report their hours, and they were subject to only minimal supervision.” Id. at 151, 166. The pharmaceutical detailers also performed work that “was difficult to standardize to any time frame and could not be easily spread to other workers after 40 hours in a week.” Id. at 166. The Court concluded that pharmaceutical detailers are “hardly the kind of employees that the FLSA was intended to protect.” Id. No. 18-4058 Hurt, et al. v. Commerce Energy, Inc., et al. Page 16 Plaintiffs’ jobs do not fit this mold of independent workers managing their hours, territory, and income. Trial evidence showed they received no base pay and apparently made much less than minimum wage—a stark contrast to the lead plaintiff in Flood who earned more than $70,000 in commissions per year along with other benefits. See Flood, 904 F.3d at 226. Plaintiffs’ pay was entirely dependent on completed sales, over which they had no control, and trial testimony and compensation data in the record showed that wages were both inconsistent and disproportionately low when compared to hours worked. Plaintiffs did not benefit from minimal supervision—their location and schedules were set and controlled by their supervisors and their selling procedures were dictated by the compulsory script and closely monitored via the compliance matrix. Plaintiffs’ jobs did not comport with the apparent purpose of the outside sales exemption. C. Jury Instructions Just Energy challenges the legal accuracy of the jury instructions, arguing that “authority to bind” should not be a consideration when applying the outside sales exemption. Erroneous jury instructions are generally reviewed for abuse of discretion, but we review the “legal accuracy” of jury instructions de novo. United States v. Blanchard, 618 F.3d 562, 571 (6th Cir. 2010). On appeal, we “review jury instructions as a whole in order to determine whether they adequately inform the jury of relevant considerations and provide a basis in law for aiding the jury to reach its decision.” United States v. Godofsky, 943 F.3d 1011, 1027–28 (6th Cir. 2019) (quoting United States v. Theunick, 651 F.3d 578, 589 (6th Cir. 2011)). “Reversal of a jury verdict based on incorrect jury instructions is warranted only when the instructions, ‘viewed as a whole, [are] “confusing, misleading, and prejudicial.”’” Bridgeport Music, Inc. v. UMG Recordings, Inc., 585 F.3d 267, 274 (6th Cir. 2009) (quoting Romanski v. Detroit Entm’t, LLC, 428 F.3d 629, 641 (6th Cir. 2005)). The district court instructed the jury: In determining whether a particular transaction qualifies as a sale for purposes of the Fair Labor Standards Act, you are required to consider the extent to which the employee has the authority to bind the company to the transaction at issue. However, when governmental regulatory requirements limit an employee’s ability to bind his employer, compliance with those governmental regulatory No. 18-4058 Hurt, et al. v. Commerce Energy, Inc., et al. Page 17 requirements do not disqualify the transaction from constituting a sale for the purposes of the outside salesperson exemption. ... On the other hand, if the employer retains and/or exercises discretion to accept or reject any transactions for reasons that are unrelated to regulatory requirements applicable to the industry, the transaction should not be considered a sale for purposes of the Fair Labor Standards Act. (R. 850, Trial Tr., PageID 15486-87) The district court emphasized consideration of the extent of Plaintiffs’ authority to bind, rather than instructing that the authority to bind is a prerequisite or determining factor. The court also clarified the importance of the relevant regulatory requirements applicable to the industry: if such requirements apply, Plaintiffs’ authority to bind and Just Energy’s discretion to accept or reject transactions will not disqualify the exemption. In this context, we disagree with our dissenting colleague’s conclusion that this question should have been resolved solely on the undisputed fact that Just Energy retained discretion. Instead, it required the jury to evaluate “case-specific factual issues” in the context of the regulatory environment. U.S. Bank, 138 S. Ct. at 967. Read as a whole, the jury instructions are an accurate statement of the outside sales exemption as instructed by Christopher. The district court did not commit reversible error in its jury instructions. D. Evidence of Compensation Just Energy challenges the admission of Plaintiffs’ compensation into evidence, arguing that compensation is irrelevant to the outside sales exemption and unnecessary here because it had already stipulated to the fact that it did not pay minimum wage and overtime. Evidentiary rulings by the district court are reviewed for abuse of discretion. United States v. Jamieson, 427 F.3d 394, 409 (6th Cir. 2005). In discussing its decision to admit compensation evidence, the district court noted that Plaintiffs have the burden to show that there is a failure to pay minimum wages and overtime pay. This is because Just Energy stipulated only that “they do not pay overtime for hours worked over 40 hours per week and do not pay minimum wage in situations where the commissions No. 18-4058 Hurt, et al. v. Commerce Energy, Inc., et al. Page 18 earned during a particular workweek are insufficient to ensure that salespersons’ wage rates meet or exceed the minimum wage.” (R. 763, Stipulation & Order, PageID 11094) Just Energy did not stipulate that Plaintiffs actually earned less than minimum wage in commissions, or that they were entitled to overtime pay at all. Compensation information was therefore necessary for Plaintiffs to establish that they had minimum wage and overtime claims to begin with. Indeed, testimonial evidence showed that a number of plaintiffs worked long hours and received little or no pay. And as already noted, documentary evidence of over 3,800 individuals showed that 69% made under $1,000 in total compensation and 62% made under $500. Compensation information was also relevant to other parts of the outside sales exemption analysis. Both the Christopher and Flood courts noted the yearly earnings of the plaintiffs; in Christopher, the Supreme Court referenced compensation information as part of the analysis of whether the plaintiffs fit the “apparent purpose of the FLSA exemption.” Christopher, 567 U.S. at 166; see also Flood, 904 F.3d at 226. Plaintiffs’ compensation evidence, including the size of the checks that individuals received, was also relevant to determine if and how commissions were paid, and by extension the amount of discretion that Just Energy exercised to accept or reject sales. The district court did not abuse its discretion by admitting compensation evidence as part of the analysis of the outside sales exemption.