The FLSA’s “outside sales” exemption from minimum wage and overtime is among the more straightforward exemptions, in that it contains only two requirements: that the employee be “customarily and regularly” away from the employer's place of business; and that the employee primarily be engaged in making sales. This simple-sounding test does not preclude disputes regarding its application, most notably in the decade-long litigation battle over whether or not pharmaceutical sales representatives qualify for the exemption,” a dispute ultimately resolved by the Supreme Court. In a recent decision, the United States Court of Appeals for the Fifth Circuit applied the exemption, rejected a challenge to the “sales” prong and held the position in question did in fact make sales. Meza v. Intelligent Mexican Mktg., 2013 U.S. App. LEXIS 12416 (5th Cir. Tex. June 18, 2013).
Defendant was engaged in the business of selling and delivering food and beverage items to convenience stores. Plaintiff was a “route salesman” for Defendant. Plaintiff did not dispute that in the course of delivering orders he would try to sell new products to the store and improve the placement (and thus sales) of existing merchandise. Plaintiff however alleged that his delivery schedule was such that he “had only twenty minutes at each stop on his route to perform his duties, leaving him little time to deliver meaningful sales pitches,” and, thus, he was not engaged to make sales. Following a detailed analysis of the DOL regulations concerning the outside sales exemption, the court concluded that “for purposes of the FLSA, Meza was more similar to an outside salesman than to a deliveryman” and upheld the Defendant’s classification of him as an exempt outside salesperson.
FLSA exemptions continue to serve as a basis for significant litigation, with employees contesting their application and alleging that they are used by employers to mask overtime work. Employers with large exempt-classified workforces must continually monitor their classifications and current statutory, regulatory and case law developments at a federal and state level, as well as consider other risk management tools, to minimize the likelihood of a costly challenge.