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Beware misclassifying inside sales staff

by on
in Human Resources,Overtime Labor Laws

Do you have employees classified as inside sales employees? If so, you may be courting trouble unless you are absolutely sure they qualify for the exemption.

That’s especially true if you also don’t track any extra hours they work.

Recent case: Brian and other salespeople for ABC Debt Relief solicited members of the public who owed money to credit card companies and other creditors and wanted to negotiate lower payments. They made cold calls, followed up on leads and signed up debtors for the plans.

Other workers managed the accounts, making sure the debtors complied with their debt-reduction plans.

Brian sued, alleging that he and others had worked more than 40 hours per week without being paid overtime. He testified they were required to work the additional hours, sometimes from home, in order to meet quotas and earn commissions.

ABC argued its employees were properly classified as inside salespersons, who are exempt from overtime if they receive at least one and a half times the minimum wage per hour and earn at least half of their pay in sales commissions.

The court said they didn’t fit the exemption because they weren’t engaged in retail sales. ABC didn’t have retail locations and didn’t sell to traditional retail customers. In addition, the salespeople didn’t fit any other exemptions because they worked from a script and didn’t exercise independent judgment.

The court concluded that the employees could provide estimates for the number of hours they worked because the companies hadn’t tracked their hours carefully beyond setting a schedule. (Parker, et al., v. ABC Debt Relief, No. 3:10-1332, SD TX, 2013)

Bottom line: Get expert legal help when classifying employees.

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