Archive for April, 2016

Outside Sales . . . and that’s the end!

The last exemption we are going to discuss is for Outside Sales Employees. And this one is going to be short too. An Outside Salesperson is an employee whose primary duty is:

(a) The term ‘employee employed in the capacity of outside salesman’ in section 13(a)(1) of the Act shall mean any employee:

(1) Whose primary duty is:

(i) making sales within the meaning of section 3(k) of the Act, or

(ii) obtaining orders or contracts for services or for the use of facilities for which a consideration will be paid by the client or customer; and

(2) Who is customarily and regularly engaged away from the employer’s place or places of business in performing such primary duty.

(b) The term ‘primary duty’ is defined at §541.700. In determining the primary duty of an outside sales employee, work performed incidental to and in conjunction with the employee’s own outside sales or solicitations, including incidental deliveries and collections, shall be regarded as exempt outside sales work. Other work that furthers the employee’s sales efforts also shall be regarded as exempt work including, for example, writing sales reports, updating or revising the employee’s sales or display catalogue, planning itineraries and attending sales conferences.

29 CFR §541.500.

So, what does an outside salesperson do to get the exemption? Well to start with they have to “make sales or obtain orders.”

Sales within the meaning of section 3(k) of the Act include the transfer of title to tangible property, and in certain cases, of tangible and valuable evidences of intangible property. Section 3(k) of the Act states that ‘sale’ or ‘sell’ includes any sale, exchange, contract to sell, consignment for sale, shipment for sale, or other disposition.

29 CFR §541.50.

But not just tangible property:

. . . ‘services’ extends the outside sales exemption to employees who sell or take orders for a service, which may be performed for the customer by someone other than the person taking the order. Id.

Wow, outside sales people have to make sales. That’s a shock. Usually no problem there. But where people get caught up and make mistakes is with the word “outside.” Outside means that the sales person is making sales at “the customer’s place of business.”

Outside sales does not include sales made by mail, telephone or the Internet unless such contact is used merely as an adjunct to personal calls. Thus, any fixed site, whether home or office, used by a salesperson as a headquarters or for telephonic solicitation of sales is considered one of the employer’s places of business, even though the employer is not in any formal sense the owner or tenant of the property.

29 CFR §541.502.

So if you have a salesperson who works from a home office and does not call on customers to make sales or solicit orders, that employee is not an Outside Salesperson.

Well, that’s it. No more FLSA . . . at least until the new regulations are published.  Can you see me dropping the  mic and walking off?

Computer Professionals – Calculating the Exemption

This one is going to be short and sweet. Well, maybe not sweet, but certainly short. First, some computer employees, like Software Engineers, for example, may qualify for the Professional Exemption. To put some definition around when they do, the Regs give us this general rule:

(b) The section 13(a)(1) exemption applies to any computer employee compensated on a salary or fee basis at a rate of not less than . . . (remember, I‘m taking out the Salary Level Test because it is about to change). In addition, under either section 13(a)(1) or section 13(a)(17) of the Act, the exemptions apply only to computer employees whose primary duty consists of:

(1) The application of systems analysis techniques and procedures, including consulting with users, to determine hardware, software or system functional specifications;

(2) The design, development, documentation, analysis, creation, testing or modification of computer systems or programs, including prototypes, based on and related to user or system design specifications;

(3) The design, documentation, testing, creation or modification of computer programs related to machine operating systems; or

(4) A combination of the aforementioned duties, the performance of which requires the same level of skills.

29 CFR §541.400.

The first thing you need to know is this. These are people who write code, design systems, or do systems analysis at very high levels. This is not your help desk guy. Your help desk guy is not exempt, and if you are paying him that way, you need to fix that. The second thing you need to know is this exemption only applies to these very highly skilled and trained computer professionals, not to other skilled people who do other work that is dependent on computers.  29 CFR §541.401.

And that, is that