Opinion ID: 804084
Heading Depth: 3
Heading Rank: 2

Heading: FLSA’s Outside Salesman Exemption

Text: Lederman argued at trial that he was an employee entitled to overtime pay. The FLSA requires employers to pay covered employees overtime equal to oneand-one-half times their normal pay for work in excess of forty hours in a week. See 29 U.S.C. § 207. Employers who fail to do so are liable to the employee for the unpaid overtime, plus “an additional equal amount as liquidated damages.” § 216(b). But the FLSA exempts employers from this requirement for certain kinds of employees, including “any employee employed . . . in the capacity of an outside salesman.” § 213. The definition of an outside salesman is established by federal labor regulations: (a) The term “employee employed in the capacity of outside salesman” in section 13(a)(1) of the [FLSA] shall mean any employee:
(i) making sales within the meaning of section 3(k) of the [FLSA], or (ii) 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 -7- (2) Who is customarily and regularly engaged away from the employer’s place or places of business in performing such primary duty. (b) The term “primary duty” is defined at § 541.700. In determining the primary duty of an outside sales employee, work performed incidental to and in conjunction with the employee’s own outside sales or solicitations, including incidental deliveries and collections, shall be regarded as exempt outside sales work. Other work that furthers the employee’s sales efforts also shall be regarded as exempt work including, for example, writing sales reports, updating or revising the employee’s sales or display catalogue, planning itineraries and attending sales conferences. 29 C.F.R. § 541.500; see Clements v. Serco, Inc., 530 F.3d 1224, 1227-28 (10th Cir. 2008) (“The touchstone for making a sale, under the Federal Regulations, is obtaining a commitment. This can be done by making a sale or obtaining an order or contract for services.”); see also Christopher v. Smithkline Beecham Corp., No. 11-204, slip op. at 20-21 (U.S. June 18, 2012) (finding that “[o]btaining a nonbinding commitment” may qualify as a sale if it “is the most that plaintiffs were [legally] able to do to ensure the eventual disposition of the products that respondent sells.”). Thus, determining whether an employee is an outside salesman for the purposes of the FLSA can be a fact-intensive endeavor, turning on, for example, the extent of the employee’s authority to enter contracts, the amount of time spent away from the employer’s place of business, or whether the employee’s other duties were incidental to the employee’s sales. See, e.g., Clements, 530 F.3d at 1228 (military recruiter not exempt because he lacked authority to obtain a -8- binding commitment from recruits); Ackerman v. Coca-Cola Enters., 179 F.3d 1260, 1266-67 (10th Cir. 1999) (employee’s promotional work exempt where employee consummated sales at same location). Such determinations may also be affected by the “regulatory environment within which [the employer] must operate.” Christopher, No. 11-204, slip op. at 21. The question of Lederman’s status was one of the central fact questions at trial. It was Frontier’s burden to establish its entitlement to an exemption from FLSA’s overtime requirements.