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California Salesperson Exemption
Certain salespersons in the workforce have been recognized as having unique work attributes and therefore, California has implemented an exemption for salespersons working in "outside sales." Outside salespersons are employees who are at least 18 years of age and spend more than 1/2 their working time away from the Employer's place of business “selling” (procuring orders or contracts for products, services or the use of facilities). Outside salespersons are not required to meet the same salary criteria that pertain to the professional, administrative, and executive exemptions.
California labor law, unlike federal law, does not consider duties incidental to the Employee's sales or solicitations, including incidental deliveries and collections, as “exempt work”. For route salespeople and others who perform a variety of functions other than sales in an average day, such as delivery, maintenance and repair, this distinction is especially significant.
Also applicable to Employees covered by Wage Order 4 (professional) and Wage Order 7 (retail), is an “inside sales” exemption. An inside sales exemption applies to employees whose earnings are more than one-and-a-half times the minimum wage and who earn more than one-half of their compensation from commissions from a legitimate commission structure. This exemption, however, applies only to overtime and not to other wage and hour laws such as meal and rest breaks.
A crucial point to understand is that the courts may recognize the exemption as inapplicable if the employer pays a guaranteed draw against commissions, because the courts may consider these earnings as salary and not commissions. Also, such earnings must satisfy the definition of “commissions” under the California Labor Code because the inside sales exemption is based in part upon the amount of earnings attributable to commissions. Additionally, those employers who would not qualify as “retailers” may be held liable if they do not meet the classification of "inside salespersons as exempt" that qualify under federal law (known as the “7(i)” exemption).
If you feel your employer may have misclassified you as exempt, and you are employed either in an outside sales or inside sales capacity, you may have a valid wage or commission violation under California labor laws. Contact our California labor law attorneys to discuss your legal matter and take advantage of our free case evaluation.
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