Sales Personnel Exemption

Editor's Note: Employees who work in sales can be exempt from the FLSA’s minimum wage and/or overtime requirements.

Michael Cardman Overview: The Fair Labor Standards Act (FLSA) has two main exemptions that are available for sales personnel:

  • The outside sales exemption for employees who customarily work outside the employer’s place of business; and
  • The commissioned sales exemption for employees in retail or service establishments who derive most of their earnings from commissions.

The former is an exemption from both the minimum wage and overtime requirements of the FLSA; the latter is an exemption only from the overtime requirements.

Trends: The most significant development in this area in many years came in 2012 when the US Supreme Court ruled that outside salespersons do not necessarily need to transfer a title or directly consummate a transaction to be exempt from the minimum wage and overtime requirements of the FLSA. This made clear that pharmaceutical sales representatives and other similar employees who make "arrangements that are tantamount, in a particular industry, to a paradigmatic sale of a commodity" can qualify for the exemption.

Author: Michael Cardman, Legal Editor

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