Articles Tagged with exempt from overtime

“Outside salesperson” in California are exempt from overtime, minimum wage, reporting time and meal and rest break requirements. (Labor Code 1171). Wage Order No. 7-2001(2)(J) defines outside salesperson as “any person… who customarily and regularly workes more than half of the working time away from the employer’s place of business selling tangible or intangible items or obtaining orders or contracfts for products, servies, or use of facilities.” Based on this definition, in order to qualify as an outside salesperson, an employee must (1) work more than half the time away from his employer’s place of business and (2) be engaged in sales. The main reason for this exemption is the fact that outside salesperson generally control their own hours and are paid on commission basis.  A classic example of a correct application of outside sales exemption is a door-to-door vacujm salesperson, who is on the road traveling from residence to residence.

It’s important to note that the “employer’s place of business” is not limited, under California law, to a principal places of business or an administrative headquarters. For instance, in one of their opinion letters DLSE concluded that temporary trailers and model homes located at a tract housing site, although physically separate from the home builder’s or seller’s headquarters office, nonetheless constitute “the employer’s place of business” within the meaning of the definition of “outside salespersons”. Therefore, employees who work out of temporary trailers or model homes and who sell newly constructed tract homes would not fall within this exemption unless they are customarily and regularly engaged in sales work for more than half of their work time away from the temporary trailer or model home, or other property at the housing tract owned or controlled by their employer. In the absence of such work away from their trailer / model home, these facilities would be treated pretty much like an employer’s satellite office, making those workers “inside salespersons” and not qualified to be exempt.  A similar analysis applies to car salesmen who spend much of their time on their employer’s car lot, perform all of their sales work at the employer’s place of business, and thus are not covered by the ouside sales exemptions. (Brennan v Modern Chevrolet Co. (1972)).

However, recently one California Court of Appeal noted in Espinoza v Warehouse Demo Services, Inc. (2022) that the relevant inquiry as to whether an employee works away from the employer’s place of business is not whether the employer owns or controls the work site, but the extent to which the employer maintains control or supervision over the employee’s hours and working conditions. Thus, this factor also must be taken into consideration when determination whether this outside sales exemption applies to any specific employee.