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Outside Sales Employee
Practical Law Glossary Item 6-517-5360 (Approx. 3 pages)
Glossary
Outside Sales Employee
A classification of employee under the federal Fair Labor Standards Act (FLSA) (and some state law equivalents) that is exempt from minimum wage and overtime requirements (29 C.F.R. § 541.500).
To qualify for the outside sales employee exemption under the FLSA, each employee must satisfy the following:
- Have a primary duty that is:
- making sales (as defined by FLSA Section 3(k)); or
- obtaining orders or contracts for services or for the use of facilities in exchange for consideration paid by the client or customer.
- Be customarily and regularly engaged away from the employer's place or places of business.
The exemption is based on the individualized nature of an outside salesperson's work. For example, they typically:
- Work alone.
- Work away from the employer's place of business and are not under the employer's direct supervision.
- Have no restrictions on hours of work and work irregular schedules, and their hours are not tracked by the employer.
- Receive commissions instead of overtime pay as compensation for additional hours worked.
- Have a greater ability to affect their earnings through individual ambition.
For more information, see Practice Note, Sales Exemptions Under the FLSA.
State and local law may impose additional or different exemption requirements for outside sales employees. For more information, see Wage and Hour Laws: State Q&A Tool.