Are Sales Reps Exempt From Overtime?

Our overtime lawyers are commonly asked a derivative of the same simply question by commission sales representatives: Are Sales Reps Exempt from Overtime? We are asked the question by a large range of salespeople, including telemarketers, credit analysts, loan officers, and generally anyone who works for a company on a commission basis.  Our answer ALWAYS starts out by telling the sales rep that all workers are entitled to overtime unless an employer can PROVE that very narrow exemptions apply to the sales reps’ position.  After providing that information, we explain that two exemptions may make them ineligible for overtime: the “outside sales” and “retail sales” exemption.  If either of those two exemptions apply to a sales representative’s position, no overtime pay is due to the employee. If, however, no overtime exemption applies, the employee may have a big unpaid overtime lawsuit against their employer.

The following information should provide a basic understanding to a sales representative employee trying to figure out if their employer has “misclassified” them as exempt from overtime. Our overtime attorneys, however, highly suggest that you contact us if your position does not CLEARLY meet the test for the exemptions provided below. Our team of overtime lawyers are here to provide answers to all sales reps with overtime questions so that no one ends up walking away from thousands of dollars in unpaid wages. Give us a call today for a free consultation before or after reading the following information. Our lawyers will be happy to advise you regarding your overtime rights and potential recovery in an unpaid overtime lawsuit.

Are Sales Reps Exempt from Overtime? The Outside Sales Exemption

Many employers misclassify sales representatives under the outside sales exemption. Commonly misclassified employees under the outside sales exemption include loan offices, mortgage bankers, credit analysts, and advertising sales representatives. The outside sales exemption is highly complex and courts across the country have thoroughly disagreed on its application to many positions, making it essential that you ultimately speak to an attorney regarding your overtime rights.  With that said, some basic questions you can ask yourself to get an understanding regarding the application of this exemption to your position are the following:

  • Does the sales rep have a primary duty of making sales, obtaining orders or contracts for services?
  • Does the sales rep regular engage him or herself away (i.e. at least three hours a week) from the employer’s place of business for the purpose of making a direct sale (as opposed to marketing activities) to a client?

If a sales rep can feasibly say no to either question, chances run high that the sales rep has been underpaid because his or her employer has likely committed minimum wage and/or overtime violations.  Still confused about the outside sales exemption? Here’s a little more insight regarding whether a sales rep is “regularly engaged away from [his or her] employer’s place of business.”

  • “Regularly” means greater than occasional but less than constant; it includes work normally done every workweek, but does not include one-time tasks.
  • Outside sales does not include mail, telephone or Internet sales unless they are merely a result of in-person off-site work.
  • Any fixed site, whether a home or office, used by a sales representative as a headquarters is considered one of the employer’s places of business.

We don’t expect most lawyers to understand the small nuances involved with the outside sales exemption. Needless to say, we also understand that you may also have your own questions regarding the outside sales exemption. That’s why we always suggest you give our well versed overtime lawyers a call to give you solid free advice regarding your overtime rights and the feasibility of filing a formal overtime lawsuit.

Are Sales Reps Exempt From Overtime? The Retail Sales Exemption

If a sales rep can rule out the sales exemption, his or her employer may still be able to claim an exemption under the Retail Sales Exemption. In order to do a preliminary assessment regarding the applicability of the retail sales exemption, a sales representatives can ask themselves the following questions:

  • Am I working for a traditional retail or service establishment?
  • Are more than half of my total earnings represent commission payments?

If a sales representative answers “no” to either of these  questions, then the retail sales exemption likely does not apply position. If that’s the case, chances run high that they have a claim for unpaid overtime if they worked in excess of 40 hours in a workweek during their employment.

Still Confused? If so, the following may provide clarification to you. The department of Labor has pronounced that the following types of firms are not “retail sales establishments.” If you work for one of these types of companies, you likely have an unpaid overtime claim if you work in excess of 40 hours per workweek and the outside sales exemption does not apply to your position:

  • Advertising agencies including billboard advertising
  • Apartment complexes
  • Auto wrecker and junk dealer establishments
  • Broadcasting companies
  • Credit Repair Companies
  • Debt settlement businesses
  • Establishments engaged in the burglar alarm industry
  • Establishments engaged in the chemical equipment industry
  • Construction contractors
  • Credit companies, including small loan and personal loan companies
  • Dry cleaners
  • Employment agencies
  • Engineering firms
  • Finance companies
  • Gambling establishments
  • Heating and air condition contractors
  • Hospital equipment establishments
  • Insurance brokers, agents, and claims adjustment offices
  • Investment counseling firms
  • Loan offices
  • Medical and dental clinics and laboratories
  • Oil drilling companies
  • Oil surveying firms
  • Plumbing contractors
  • Radio and television broadcasting stations and studios
  • Securities dealers
  • Sheet metal contractors
  • Tax services
  • Title and abstract companies
  • Trust companies
  • Vacation Resorts
  • Watchmen, guards and detectives for industries
  • Water supply companies
  • Water will drilling contractors
  • Wrecking contractors

If you are a sales representative and you believe you may be due unpaid overtime we suggest you give us a call. The legal information provided above is not a total survey of the law and it’s in your best interest to obtain a free consultation regarding your overtime rights and a potential overtime lawsuit. You can reach our Dallas, Texas based overtime lawyers by phone at (214) 790-4454 or by using the contact form found below.

Jack Siegel is the overtime attorney responsible for this website.
The Siegel Law Group’s principal place of business is in Dallas, but the firm’s attorneys litigate wage and overtime lawsuits for employees throughout Texas and the entire country.