In Meza v. Intelligent Mexican Marketing, a welcome decision for employers, the Fifth Circuit Court of Appeals applied the factors set forth in the U.S. Department of Labor’s (DOL) regulations on the outside sales exemption for drivers who both deliver and sell products and affirmed summary judgment for the employer, finding the plaintiff satisfied the criteria for the outside sales exemption.
The plaintiff was hired as an outside salesman at a base salary of $300 per week plus commissions. He drove a company truck six days a week on a predetermined route, delivering goods and making sales at convenience stores and supermarkets. At each stop, the plaintiff inspected goods on the shelf, removed expired goods, and restocked the shelves with goods from his truck. He also took orders and encouraged the store attendants to buy other products and place goods in areas of the store that would stimulate sales. At the end of his work day, the plaintiff loaded his truck with goods to be delivered the next day. In the 13 months that he worked for the company, the plaintiff worked an average of 72 hours per week at an average hourly wage of $6.66 an hour. He filed a collective action under the Fair Labor Standards Act (FLSA), claiming he was a non-exempt delivery driver and entitled to damages for minimum wage and overtime violations. The district court granted summary judgment in favor of the employer, and the plaintiff appealed.
On appeal, the Fifth Circuit Court of Appeals applied the factors listed in DOL regulations. Comparing the plaintiff’s duties with those of other employees engaged as truck drivers and as salespersons, the court found that route salesmen, such as the plaintiff, were the only salesmen employed by the company. The company also employed warehouse drivers who delivered goods, but these employees were not authorized to make sales. “[I]t would make little sense,” the court stated, “for [the company] to have two distinct sets of employees whose primary responsibility was making deliveries. The existence of a formal division of labor suggests that the route salesman’s job description contained something more than that.” In addition, there was evidence that the plaintiff interacted with store attendants or cashiers who had the authority to purchase goods, and he testified about sales tactics he used. In fact, at his deposition the plaintiff explicitly admitted that “[his] responsibility as a route salesman was to sell products to stores.” Additional factors that favored the application of the outside sales exemption included: the position was advertised as a sales position; the plaintiff represented himself as having sales experience; he received sales training; and his compensation included commission and bonuses if sales reached a certain level in a particular week. The Fifth Circuit also examined the examples of exempt work in DOL regulations, and case law, and concluded that the plaintiff was more similar to an outside salesman than to a deliveryman.
In what is perhaps the most significant aspect of the decision, the Fifth Circuit court rejected the plaintiff’s argument that he did not meet the criteria for the outside sales exemption under the Supreme Court’s decision in Christopher v. SmithKline Beecham Corp. because his pay was too low. In this regard, the Fifth Circuit acknowledged that Christopher emphasized “the FLSA’s exemption for outside salesmen . . . is premised on the belief that exempt employees typically earned salaries well above the minimum wage and enjoyed other benefits that set them apart from the nonexempt workers entitled to overtime pay.” However, the court stated, Christopher:
merely found that the employees at issue, who made significantly more than minimum wage, were not the sort of employees the FLSA was meant to protect, thus implying only that earning significantly more than minimum wage may preclude relief under the statute. No aspect of the opinion suggests that earning less than minimum wage is itself sufficient for relief. The fact is that there is no way to eliminate the possibility that [the plaintiff’s] relatively low compensation was due solely to poor salesmanship; in any event (and perhaps for that very reason), the regulations do not indicate that a court should consider a salesman’s effective compensation in determining whether the exemption applies.