Classifying Outside Sales Staff: Do They Actually Make Sales?
October 11, 2010Employers that classify its outside sales people as exempt should make sure that those employees actually make sales.
In In re Novartis Wage and Hour Litigation, the U.S. Court of Appeals for the Second Circuit found that pharmaceutical sales representatives do not meet the outside sales exemption because the representatives’ duties are not actually making sales but rather only promoting a product in an effort to convince doctors to prescribe certain pharmaceuticals. Additionally, the Second Circuit found that these sales representatives do not meet the administrative exemption because the representatives did not exercise discretion and independent judgment as to matters of significance to the employer because the representatives duties — answer questions from the doctors about the products — were merely the result of skills the representatives gained from training by the employer.
As always, the lesson here is that the employer should not rely on the employee’s job title but instead should focus on the employee’s duties. In the case of the outside sales exemption, the employer must make sure the employee is actually making sales and not just promoting a product or service.