New York City Outside Sales Exemption Attorney

man inserting money into a piggy bank

Many employees may not be familiar with the outside sales exemption of the Fair Labor Standards Act (FLSA) and New York law. Most employers in New York must abide by federal and state minimum and overtime laws. Usually, employers must pay their employees the minimum wage per hour for all worked hours. 

Employers must also pay their employees at a rate of time-and-a-half for overtime work, or work exceeding 40 hours a week. Regulations for New York State and New York City impose even higher standards on employers. For example, the minimum wage for New York City employees is $15 per hour. Many exceptions to these general rules exist, however. The outside sales exemption of the FLSA is one of these critical exceptions. 

Employers Misuse the Outside Sales Exemption to Underpay Employees

When an employee qualifies for the outside sales exemption under the FLSA, the employer will not need to pay the employee minimum wage or overtime pay. Unfortunately, many New York City employers abuse the outside sales exemption and wrongly use the exemption to avoid paying minimum wage and for overtime work. If you suspect that your employer is misapplying the outside sales exemption, you may be entitled to remedies under state and federal law. Contact the experienced New York City employment lawyers at Lipsky Lowe LLP  as soon as possible to schedule your initial consultation. 

Understanding the Outside Sales Exemption

The FLSA requires that most employers pay their employees at least the federal minimum wage as well as overtime pay. However, Section 13(a)(1) of the FLSA allows an exemption from both overtime pay and the minimum wage for some employees. The FLSA exempts employers from paying the following employees minimum wage and overtime:

  • Bonafide executives
  • Administrative employees
  • Certain computer employees
  • Professional and outside sales employees

Requirements for the Outside Sales Exemption

To qualify for an exception, the employee must meet certain requirements. The employee’s duties must meet the following standards for the outside sales exemption to apply:

  • The employee’s primary responsibility must be making sales, or
  • Obtaining orders or contracts for services, and
  • A client or customer pays the employee for the services 

Additionally, the employee must be regularly and customarily engaged in conducting business away from the employer’s place of business. 

What Does “Primary Duty” Mean?

Primary duty means the main, principal, major, or most important duty that an employee performs. Should a legal dispute arise about whether or not the employee’s primary duty qualifies, the judge will look at all of the facts in a particular case. He or she will also consider the character of the employee’s job as a whole.

What Does “Making Sales” Mean?

The word “sale” means all of the following:

  • The sale of a good or service
  • Exchange
  • Contract to sell
  • Consignment for sale
  • Shipment for sale
  • Other disposition
  • Transfer of title for a tangible property
  • In some instances, tangible and valuable evidence of intangible property

What Does Obtaining Orders or Contracts for Services or the Use of Facilities Mean?

Obtaining orders for “the use of facilities” includes all of the following actions:

  • Selling time on the television or radio
  • Solicitation for advertising for newspapers, magazines, or other periodicals
  • Solicitation of freight for railroads or other transportation agencies
  • Services extend to selling or taking orders for services

The Employee Must Be Customarily and Regularly Away from the Employer’s Place of Business

Only employees who are customarily and regularly away from the business qualify for the outside sales exemption. How often does an employee need to be away from the business to meet this requirement? The phrase “customarily and regularly” means higher than occasional but less than constant. In other words, one-time tasks away from the place of business are not enough to qualify. To be customarily and regularly away means that the employee’s regular workweek activity does not take place at the employer’s place of business. 

Typically, outside sales employees make sales at the customer’s place of business, not at the employee’s place of business. An example of this would be a door-to-door salesperson who travels to the customer’s home. It is not enough that the employee uses the internet, mail, or the use of a telephone to solicit sales from customers outside of the employer’s place of business. Making calls, emails, and mail requests from a home office will not qualify an employee for the outside sales exemption. 

Do Company Drivers Who Also Sell Door-to-Door Qualify?

Company drivers who deliver company products and also sell products while making deliveries might qualify for the outside sales exemption. The employee will only be eligible if the employee’s primary duty is making sales, not delivery driving. Whether or not the employee qualifies for the exemption will depend on several factors, including the driver’s primary duty and a comparison of the driver’s duty to make sales with the duties of other drivers. 

New York State’s Outside Sales Exemption

The New York state outside sales exemption is similar to the FLSA exemption. New York law exempts employers from paying minimum wage and overtime pay when the employee is customarily and predominantly engaged away from the employer’s premises. The employee must not work predominantly at any fixed site owned by the employer. Also, the employee must participate in the following activities:

  • Making sales
  • Selling and delivering articles or goods, or
  • Obtaining orders or contracts for services or the use of facilities

Under the FLSA and New York state law, there is no salary requirement for the outside sales employee. However, New York imposes an additional requirement for outside sales employees. The outside sales employee must have a written contract establishing the terms of the employee’s compensation. Additionally, when an outside sales employee’s primary pay comes through an hourly wage or salary, the employer is still required to meet the requirements of New York’s wage notice law.

Contact Our Experienced New York City Employment Lawyers Today

The outside sales exemption only applies to a narrow group of employees whose actual duties meet the requirements. A job title itself is not enough to qualify for the outside sales exemption. If you’re a New York City employee and you’re concerned that your employer is underpaying you by wrongly classifying you as an outside sales employee, our law firm can help. Contact us today to schedule your initial consultation.