Who’s an ‘outside sales rep’? Confusion causes $17 million error

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in Human Resources

Make sure you're not shoehorning delivery workers into an "outside sales rep" category to avoid paying them overtime. To be considered exempt under the Fair Labor Standards Act (FLSA), outside salespeople must be "regularly engaged away from the employer's place of business in making sales or obtaining orders or contracts for services."

Note: Newly proposed Labor Department rules would simplify the definition for outside sales reps and other exempt-worker categories.

Recent case: Pepsi Cola Co. will pay more than $17 million in overtime to 700 employees who stock store shelves and deliver products, settling charges that it violated wage law.

The case hinged on whether the workers met the definition of "outside salespeople" for overtime-exemption purposes. Pepsi argued that its fountain drivers, customer representatives and bulk-customer representatives met this exemption.

But because these workers' day-to-day duties involved delivering pre-sold orders and restocking customers' shelves, a judge said they didn't meet the definition and were entitled to overtime. (New Jersey Dept. of Labor v. Pepsi Cola Co., N.J. Office of Administrative Law, No. GE-0471-95, settlement, March 12, 2003)

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