Do You Know the FLSA Difference Between Inside Sales (Always Nonexempt Hourly) and Outside Sales (Generally Exempt Salaried) Employees in Business and at Work?

Over the course of my 25+ years ensuring employer Fair Labor Standards Act (FLSA) compliance, a common FLSA classification error is assuming that all sales employees, both inside and outside sales employees, are exempt salaried (e.g., exempt from overtime pay).

Actually, only outside sales employees can be exempt salaried employees; DOL’s Wage & Hour Division is quite explicit / specific on the definition of an outside sales employee:

Outside Sales Exemption

To qualify for the outside sales employee exemption, all of the following tests must be met:

• The employee’s primary duty must be making sales (as defined in the FLSA), or obtaining orders or contracts for services or for the use of facilities for which a consideration will be paid by the client or customer; and

• The employee must be customarily and regularly engaged away from the employer’s place or places of business.

Given the explicit definition of salaried exempt outside sales employees, any inside sales employees (e.g., they take orders and service customers in the employer’s office 100% of their work time) must be classified as hourly nonexempt (e.g., eligible for overtime in NYS for any hours worked over 40 in any given workweek.

Do you know the FLSA difference between inside sales (always nonexempt hourly) and outside sales (generally exempt salaried) employees in business and at work? And are your inside and outside employees correctly classified respectively?