Outside sales people who rarely went outside had an FLSA overtime claim

by on March 30, 2009 · 0 Comment POSTED IN: HR Info Center

Here’s one way companies encounter trouble with FLSA overtime claims: Workers are hired to do one job, but end up doing another.

Two employees at a Missouri company were brought onboard by a mortgage company and told they would earn commissions for originating mortgages.

But they ended up spending a lot of their time answering phones, assembling office furniture, and even working on the owner’s rental property.

The two quit after two months and sued, claiming over 100 hours of unpaid overtime under the Fair Labor Standards Act (FLSA).

The employer tried to have the case thrown out, citing the FLSA’s outside sales exemption. Indeed, FLSA overtime regs do exempt outside salespeople from overtime entitlement.

80% rule

But to be a real outside salesperson, according to FLSA overtime rules, you have to spend at least 80% of your time on physical sales calls or work related to them. And inside sales doesn’t count.

When the amount of time these two employees spent on inside sales was added to the other tasks they were given, it came to way more than 20%, the court found. The judge said if the case wasn’t settled and went to trial, the employees had a good chance of winning.

Cite: Belton v. Premium Mortgage, No. 03-0964, W.D. Mo., 3/6/06.

Leave a Reply


Request a Free Demo

We'd love to show you how this industry-leading training system can help you develop your team. Please fill out this quick form or give us a call at 877-792-2172 to schedule your one-on-one demo with a Rapid Learning Specialist.