Free Special Resources
Get Your FREE Special Report. Download Any One Of These FREE Special Resources, Instantly!
Featured Special Report
Claim Your Free Cost Per Hire Calculator
This handy calculator lets you plug in your expenses for recruiting, benefits, salaries, and more.

Graphs automatically generate to show you your annual cost per hire and a breakdown of where you are spending the most money.

Download Now!
May 11, 2010
A Closer Look at the Sales Exemption: Inside and Outside

In a BLR webinar titled "Reducing Overtime Costs: What You Legally Can—and Can't—Do to Keep Workers at Their Straight-Time Rates," Laura P. Worsinger, Esq., explained how to determine whether an employee qualifies for the inside sales exemption or the outside sales exemption.

For a Limited Time receive a FREE Compensation Market Analysis Report! Find out how much you should be paying to attract and retain the best applicants and employees, with customized information for your industry, location, and job. Get Your Report Now!

Inside Sales Exemption

To be exempt as an "inside sales person" under federal law, workers must be engaged in the sale of "retail products" (e.g. appliances, furniture). Sales of financial products do not come within that definition.

The California inside sales exemption is actually broader. The exemption is not limited to retail sales establishments, but applies to "any industry, business, or establishment for the purpose of purchasing, selling, or distributing goods or commodities at wholesale or retail; or for the purpose of renting goods or commodities."

However, commissioned employees will not qualify for the inside sales exemption under certain circumstances. For example:

  • Employees who earn commissions must actually be engaged in "selling" to qualify.
  • Commissions paid must be equivalent to more then one-half of all compensation received each work week. When calculation and payment of commissions are deferred, the employer will not know if the sales person qualified until weeks later.
  • The sales person must be paid at least 1.5 times the current minimum wage for every hour worked each pay period.

Word of caution: If a company operates in interstate commerce and an action is brought under the Fair Labor Standards Act (FLSA), non-retail sales people would not qualify for the inside-sales exemption outside of California.

Outside Sales Exemption

Under the federal regulations, an employee will qualify for the outside sales exemption if:

  • Making sales is the employee's "primary duty"; and
  • The employee is customarily and regularly engaged away from the employer's place or places of business.

Worsinger explained that employees qualifying for this exemption do not have to be paid overtime or minimum wage.

Laura P. Worsinger, Esq. is Of Counsel with the Los Angeles office of Dykema Gossett PLLC. She has broad counseling and litigation experience and specializes in the defense of employers in individual and class actions involving wage and hour violations, misclassification, discrimination, wrongful termination, and other employment-related proceedings. She can be contacted at

Featured Free Resource:
Cost Per Hire Calculator
Twitter  Facebook  Linked In
Follow Us
Copyright © 2017 Business & Legal Resources. All rights reserved. 800-727-5257
This document was published on
Document URL: