Death of a salesman’s overtime claims

The Fair Labor Standards Act (FLSA) and the New York Labor Law (NYLL) recognize that not all salespeople are created equal for overtime purposes. While “inside” salespeople (those who make sales from a brick-and-mortar office or retail space) are eligible for overtime, “outside” salespeople (those who make sales “from the road”) are not. In a recent case, the New York Appellate Division, Second Department, found an employee was considered to be an outside salesperson and not eligible for overtime. Read on to understand the key difference between inside and outside salespeople and how to avoid a misclassification.

Facts

Leslie Moreno sued AZ Metro Distributors, LLC, a beverage distributor, claiming overtime. AZ asked the court to dismiss the complaint by showing:

• The notice signed by Moreno in which she acknowledged the FLSA exemption for the outside salesperson status; and
• The agreement in which she agreed to compensation at $500 per week plus commissions.

The Supreme Court, Kings County dismissed the complaint based on the proof that Moreno had agreed to be employed as an outside salesperson. On appeal, the Appellate Division affirmed based on the exemptions provided by the FLSA and the NYLL.

More than just a name

While the decision is a great one for the employer, the employee must be properly classified. For example, outside salespeople must meet a two-part test under the FLSA: