Can a Sales Truck Be a Regular “Place of Business”? Department of Labor Weighs-in On Application of Outside Sales Exemption to Mobile Workers
As you probably know, Florida employers are required to pay most of their employees a certain minimum wage as well as overtime pay when applicable. But many types of employees are considered “exempt” from these rules. One such exempt group is “outside sales” employees. The U.S. Department of Labor defines an outside sales employee as someone who meets both of the following tests:
- The employee’s “primary duty” is to make sales on behalf of the employer; and
- The employee is “customarily and regularly engaged” outside the employer’s normal place of business.
This second test often causes some confusion among employers and employees alike. For example, how often does a sales employee need to be outside of the office to be “customarily and regularly engaged”? Can they work one day per week at the office and still qualify for the outside-sales exemption? And what if the employee uses a mobile facility owned by the employer to make sales? Could that facility be considered the employer’s place of business?
Labor Department: A Truck Is Not a “Fixed Site” of Business
The Department of Labor’s Wage and Hour Division recently addressed these questions in an opinion letter. These letters are issued as replies to employers who seek formal guidance on federal labor laws. While not the same as a binding court ruling, they do reflect the current thinking of federal regulators on these issues.
In this particular letter, an unidentified employer “deploys salespeople to high-population areas,” such as corporate campuses and apartment buildings in order to sell its products. The employer provides “stylized trucks that are stocked with merchandise, marketing displays, and demonstration units,” which the sales employees use as “marketing tools to assist with making sales.” The employer said the typical salesperson spends “four of five days of the week” using these trucks as either drivers or passengers. The salespeople are then paid a base salary in addition to commissions on any sales they make.
Based on this information, the Division said these employees are properly classified as exempt outside salespersons. As noted above, the employees spend 80 percent of their time–4 out of 5 days per week–working in the employee’s marketing trucks. And the remaining 20 percent of their time is spent deciding “where to deploy the truck, when to deploy it there, and how to stock it,” which are all sales-related activities.
More to the point, the truck itself is not the employer’s customary or regular place of business. Indeed, the Division said a place of business must be a “fixed site … used by a salesperson as a headquarters.” The trucks lack any “permanent, or even semi-permanent, physical connection to a deployment site.” So no matter how much time the employees spend in an employer-owned truck, they are still away from the employer’s actual place of business.
Have Questions About Employee Classification?
Florida employers always need to tread carefully when claiming any employee is exempt from federal and state labor laws. If you have any doubts as to an employee’s status, it is best to check first. And should you need advice or counsel in this area, consult with an experienced Florida employment law attorney.