After selling and delivering bottled water for more than three years, Peter Ramirez quit his job and sued his employer, Yosemite Water Company, for back overtime. His lawsuit, which went all the way to the California Supreme Court, highlights how difficult it can be to determine whether or not outside sales personnel qualify as exempt from overtime – especially when they perform a mix of sales and non-sales work. Although Ramirez ultimately won his case on appeal, the court’s ruling may actually benefit employers by shedding some light on how to classify your workers properly.
Mixture Of Sales And Other Work
The case raised a dilemma often faced by employers who use outside salespeople. As a “route sales representative” for Yosemite Water in Los Angeles, Ramirez was responsible for making deliveries to customers, cleaning water coolers and maintaining his delivery truck. He was also expected to solicit new customers and encourage existing ones to increase their orders. Yosemite Water took the position that Ramirez was an outside salesperson and, therefore, not entitled to overtime. But Ramirez contended that he spent most of his time performing non-sales work such as making deliveries and removing empty bottles. He claimed that he therefore didn’t qualify as exempt under California law, which applies only if a worker spends more than 50% of the time performing sales work away from the employer’s place of business.
One Straightforward Question
In a ruling last year, the California Court of Appeal sided with Yosemite Water and denied Ramirez’s overtime claim. The appellate court relied on federal law believing it to be more favorable to employees than California law. The court ruled that if an employee’s “chief or primary purpose” is sales, other “incidental duties” like driving and delivering products also count as time spent on outside sales. But in its new decision, the California Supreme Court overturned the appeals court decision and ruled that California rather than federal law controls. The Court said that to decide whether someone qualifies for the outside sales exemption, you should consider only one straightforward question: Does the employee spend at least 50% of their total work time performing purely sales-related activities? If the answer is yes, then you don’t have to pay overtime. The case will now return to the lower court to determine whether Ramirez met this 50% threshold.
Outside Sales Checklist
In light of this ruling, here’s a checklist to make sure your outside sales workers are classified correctly:
- Does the employee spend at least 50% of work time doing sales on the road, away from any fixed place of business? To be exempt from overtime, workers must spend at least half their work time selling or obtaining orders or contracts for products or services. Time spent delivering products or merchandising doesn’t count.
- Do you allocate incidental work appropriately? Tasks directly related to sales work – such as traveling to and from a sales call – should count when analyzing how many hours are spent on outside sales. But travel time that relates both to sales and non-sales work – for example, an appointment to deliver products and make a sales pitch – should be allocated between the two types of work.
- Do you monitor performance? Disputes sometimes arise because of a difference between how an employer expects employees to spend their time and what the workers say they actually do. To avoid the problem of a poor performer spending less time than expected on sales work – and falling below the 50% threshold – make sure your job descriptions are accurate and realistic. Also, carefully monitor performance and promptly inform workers of any problems so there’s no confusion about your standards.