Hourly employees in California have certain employee rights, including the right to be paid at least the minimum wage and overtime pay, and the right to receive meal periods and rest breaks. Employees who meet the criteria to be considered Outside Salespersons are exempt from these employee rights. California law requires employees to be paid at least minimum wage and overtime pay if they do not customarily and regularly spend more than half of their working time away from their employer’s place of business selling, obtaining orders or making contracts for the sale of products, services or the use of facilities.
Some California employers misclassify employees as Outside Salespersons when they are not, either by accident or to cut costs by not paying overtime pay. If you believe that your employer has misclassified you as an Outside Salesperson, contact a Carlsbad employment attorney. An employment attorney can help you understand the legal options available to you.
Employers sometimes disregard employee rights. At Clapp & Lauinger LLP, our attorneys have represented employees in Carlsbad and throughout California for 30 years. We are proud to provide legal representation and support to California employees. We have experience in negotiating settlements and defending employee rights in litigation. Our attorneys have the experience and knowledge of employment law necessary to protect your interests and fight for your right to compensation.
Employees in California who are considered Outside Salespeople must satisfy the criteria of the Outside Sales Exemption law. This means that those employees are exempt from certain wage and hour protections such as:
In addition to outside salespeople, there are other employees exempt from these employee rights. This includes salaried employees whose work is primarily administrative, executive, or professional. Salaried employees who are exempt must have the additional qualification of high wages to be exempt. However, outside salespeople do not have this requirement. A misclassified outside salesperson, therefore, is in a much more vulnerable position and could be losing significant income.
California law outlines the following requirements for a worker to qualify as an outside salesperson:
All the above requirements must be met for an employee to be considered an Outside Salesperson.
To be considered an Outside Salesperson, more than half the employee’s time must be spent away from the employer’s business. California uses a quantitative standard to determine half of working time. This method means that:
If less than half an employee’s overall working time is spent on sales, they cannot be exempt. Time spent away from the workplace is based on the employee’s job description, what they actually do, and where they actually work.
To be considered an Outside Salesperson, and not an inside salesperson, employees must spend significant time away from their main workplace. To determine how much time an employee spends away from the workplace, the employer’s place of business is defined as:
A workplace or place of business may include an office building, the company’s headquarters, the employee’s home office, or the place where facilities are in use. This ensures that employees who qualify as Outside Salespeople are those who generally go door to door or visit other businesses to conduct their sales or contractual work.
When a salesperson is working at the employer’s place of business, even if it is sales work, this does not count toward their time spent out of the place of business.
During the COVID-19 pandemic, many salespeople did their work from their home office rather than in the field. Because this work was not away from their place of business, this may make them nonexempt employees, and they may qualify for overtime pay and additional back pay.
Over half of the employee’s total work time must be spent doing sales-related work. The job duties of an Outside Salesperson must include selling tangible or intangible items, or obtaining orders or contracts for products, services or use of facilities. This includes any sales tasks done outside the place of business. Sales tasks completed in the place of business do not count. Sales tasks outside the place of business may include:
Time spent away from the place of business doing non-sales work does not count toward the requirements of an outside salesperson. If less than half an employee’s overall work is sales work, then they likely do not count as an exempt employee.
However, employers cannot require an employee to meet the requirement of selling for more than half their work time if it is unrealistic.
California law also requires employers to reimburse employees for work-related expenses. In most cases, Outside Salespeople are included in this requirement and should be reimbursed for their expenses. These may include:
Always review what reimbursements you’re entitled to with a qualified tax or legal professional.
Outside Salespeople are also governed by federal law. The Fair Labor Standard Act (FLSA) includes an Outside Sales exemption like the California exemption. Federal law defines an Outside Salesperson as an employee who:
Federal law uses a qualitative standard to calculate the time a salesperson spends away from the place of business rather than a quantitative standard like California. Overall, California law and federal law provide similar exemptions.
Frequently, employees are misclassified as Outside Salespeople. Employment attorneys can help. If you were misclassified, it means that you may have missed out on wages, overtime, meal and rest breaks and possible penalties. This can add up to a substantial amount of lost income. You deserve to recover that back pay and be classified correctly.
An attorney can determine whether you have been misclassified, help you file your claim, and represent you in negotiations or in litigation. Filing a wage and hour claim doesn’t require an attorney, but working with one ensures that the form has the correct information and meets filing requirements. This can help expedite the process by preventing mistakes and increases the chance that your claim succeeds. An attorney can represent you and improve your chances of earning compensation.
Misclassification happens when an employer labels an employee as an independent contractor or outside salesperson when they do not meet the criteria. Although this may be done by mistake, it is often done to cut costs and make things more convenient for the employer. The employer may avoid providing overtime pay, paying minimum wage, and providing rest and meal breaks to employees. This is unacceptable. Employees are entitled to recover back pay, and possibly penalties, for however long they were misclassified.
It can be difficult to calculate the exact percentage of time that an employee spends doing sales-related work, and this can often lead to misclassification. An employee who does not primarily do sales work when out of the office, or who spends more than half their time in a home office, cannot be considered an Outside Salesperson.
Employers must take precautions to ensure that they are not misclassifying their workers and depriving them of their rights and income. Misclassifying workers is a form of fraud. Employers may face civil penalties from governmental agencies as well as individual or class-action employee claims.
There are several fields that are vulnerable to misclassification in sales industries. Employees who are often misclassified as outside salespeople include:
If you are a sales employee who believes that you may have been misclassified, talk with an Outside Sales Exemption employment attorney. They can review your situation and determine what legal action is appropriate.
California has some of the strongest worker protections in the country. If an employee disputes their classification as an outside salesperson, it is the responsibility of the employer to prove otherwise. The employer must prove clearly that they were correct in classifying the worker as an exempt salesperson.
When a dispute is raised about whether an employee is considered an exempt salesperson, it requires the court to review how their time is spent during a work day. This is because, in most cases, the dispute centers around whether the employee spends more than half their time completing sales-related work outside of the business location. The court may look at factors such as:
If an employee’s lackluster work is the reason they fall short of the exemption qualifications, some courts will consider them to be an exempt employee.
Any employee rights violations deserve compensation. Misclassification, even when unintentional, can lead to detrimental effects on employees. You deserve accurate and complete compensation for your work. At Clapp & Lauinger LLP, we can walk you through every step of your claim. Contact our team today so that we can review your situation and determine the right legal route.