Opinion ID: 2787908
Heading Depth: 2
Heading Rank: 1

Heading: Outside-Sales Exemption

Text: ActionLink first contends that the brand advocates were outside salesmen. To determine whether an employee fits within a certain FLSA exemption, we apply the appropriate DOL regulation. Fife v. Bosley, 100 F.3d 87, 89 (8th Cir. 1996). An outside salesman for our purposes is an employee [w]hose primary duty is . . . making sales within the meaning of [29 U.S.C. § 203(k)] . . . [and w]ho is customarily and regularly engaged away from the employer's place . . . of business in performing such primary duty.5 29 C.F.R. § 541.500. The regulation further explains that when analyzing the primary duty of an outside sales employee, work performed incidental to and in conjunction with the employee's own outside sales or solicitations . . . shall be regarded as exempt outside sales work. Id. Brand advocates were customarily and regularly engaged away from the employer's place . . . of business. The dispute here is whether the brand advocates' primary duty was making sales. Sale for purposes of the FLSA includes any sale, 5 The regulation also explains that outside salesmen can obtain[] orders or contracts . . . for which a consideration will be paid, but ActionLink does not argue the brand advocates fit within this definition. -8- exchange, contract to sell, consignment for sale, shipment for sale, or other disposition. 29 U.S.C. § 203(k). ActionLink concedes that the brand advocates did not make direct sales. It argues instead that the brand advocates' primary purpose is driving sales and therefore the term other disposition dictates that they are making sales within the statutory framework. The brand advocates, on the other hand, contend that they were simply nonexempt promotional workers. Promotional work in this context is exempt only if it is incidental to and in conjunction with an employee's own outside sales. 29 C.F.R. § 541.503(a) (emphasis added). The brand advocates contend that their activities [were] designed to stimulate sales that [were] made by someone else and were therefore non-exempt. See id. § 541.503(b). To support its argument that brand advocates' activities fit within the concept of other disposition, ActionLink relies primarily on the Supreme Court's discussion of the term in Christopher v. SmithKline Beecham Corporation, 132 S. Ct. 2156 (2012). In Christopher, the Supreme Court determined that pharmaceutical representatives—employees of pharmaceutical companies that contact doctors seeking nonbinding oral commitments to prescribe the companies' drugs—fit the outside-sales exemption. 132 S. Ct. at 2165. The Supreme Court explained that the definition of sale in 29 U.S.C. § 203(k) is broad and encompasses all arrangements that are tantamount, in a particular industry, to a paradigmatic sale of a commodity. Id. at 2171–72. It went on to state that due to the unique regulatory environment of the pharmaceutical industry, when a pharmaceutical representative obtains a nonbinding agreement from a doctor to prescribe a certain company's drugs, it is a sale under the FLSA. Id. at 2172. Because no one can obtain prescription drugs without a prescription, the closest that any person could get to ensure the eventual disposition of the products that [a pharmaceutical company] sells was to obtain a doctor's promise to prescribe the drug. -9- Id. The Supreme Court supported its finding by explaining that pharmaceutical representatives also bear all of the external indicia of salesmen, such as incentivebased compensation and salaries well above minimum wage. Id. at 2172–73. Applying the analysis in Christopher, we agree with the district court that brand advocates were not outside salesmen for FLSA purposes. Unlike the pharmaceutical industry discussed in Christopher, the world of consumer electronics is not subject to a unique regulatory environment that requires a recommendation from a licensed professional to obtain a product. Although a recommendation from a sales person may help a customer decide to purchase a specific brand of electronics, a customer need not obtain a recommendation before purchasing a product, and the customer is not constrained to purchase only recommended products. The same danger that accompanies pharmaceutical drugs is not present in the electronics context—customers generally do not risk their physical health when they fail to purchase the brand recommended by a salesperson or fail to purchase a product at all. Moreover, the electronics industry is not constrained by regulations as to who can sell its products. If it desired, LG or a similar company could likely open its own store and sell directly to its customers. And contrary to ActionLink's assertion, convincing a sales representative to recommend an LG product to a customer is not a paradigmatic sale of a product in this context. Further, our result finds support in Christopher's discussion of the other indicia of outside salesmen. Brand advocates generally made far less than pharmaceutical representatives, and they receive no incentive-based pay. Brand advocates' activities are better understood as non-exempt promotional work. Brand advocates engaged in [p]romotional activities designed to stimulate sales that will be made by someone [other than the brand advocate]. See 29 C.F.R. § 541.503(b). And the DOL's example of non-exempt promotional work accurately sums up the brand advocates' job duties: a company representative who visits chain stores, arranges the merchandise on shelves, . . . [and] sets up displays . . . but does not -10- obtain a commitment for additional purchases is performing non-exempt work unless it is incidental to and in conjunction with the employee's own outside sales. Id. § 541.503(c) (emphasis added). Brand advocates simply promoted products so employees of retail stores could make sales. Those retail-store employees engaged in the paradigmatic sale of electronics—they convinced customers to choose a product and helped that customer pay for it at a cash register. Brand advocates were not outside salesmen under the FLSA.