Appeals Court Rejects Overtime Lawsuit by “Outside Sales Employee”

The federal Fair Labor Standards Act (FLSA) generally requires Florida retailers and other employers to pay overtime wages to any “employee” who works more than 40 hours per week. There are several exemptions to this overtime rule, including one for any “outside sales employee.” Once referred to as traveling salesmen, the U.S. Department of Labor defines an outside sales employee as someone “whose primary duty” is “making sales” or “obtaining orders or contracts” away from the “employer’s place or places of business.”

It may not always be clear whether a person’s “primary duty” qualifies him or her as an outside sales employee. The Department of Labor and the courts will look to all the facts regarding a person’s employment in making that determination. A recent federal appeals court decisions helps provide some clarity in the matter.

Reyes v. Goya Foods, Inc.

Florida-based Goya Foods employed Jerry Robin Reyes as a “sales broker.” After firing Reyes, he sued Goya under the FLSA for back overtime pay. He claimed he was a covered employee under the FLSA not subject to the outside sales employee exemption.

Reyes said his primary duties consisted of “merchandising,” that is stocking and maintaining shelves at retail stores that carry Goya products. He said that any sales activity he conducted was incidental, primarily placing orders to replenish existing stocks. However, two fellow sales brokers and Reyes’ former supervisor testified in court that “a sales broker’s primary duty is to sell Goya products.” Any shelf maintenance or restocking was incidental to sales, not vice versa as Reyes claimed. These other witnesses added that sales brokers, including Reyes, worked with little supervision and set their own hours. The Goya office only required they meet certain sales targets.

Based on this testimony, a federal judge entered a directed verdict in favor of Goya. Reyes appealed to the U.S. Eleventh Circuit Court of Appeals, which hears all appeals from federal courts in Florida. A three-judge panel reviewed the trial judge’s decision and found no error. “Viewed in the light most favorable to Reyes,” the panel said in a written opinion “the evidence demonstrates that — although Reyes may have personally spent little time promoting Goya products — his position as a sales broker at Goya qualified him as an ‘outside salesman’ under the FLSA.

It’s Not About Nomenclature

A Florida retailer cannot subvert the FLSA by simply declaring an employee is an outside salesman. As the Reyes case demonstrates, a court will look at all available evidence of the employee’s primary duty in deciding whether that employee qualifies for the exemption. If your business uses, or plans to use, outside sales employees, it’s important you develop a detailed job description that leaves no room for misunderstanding later. It’s also critical you work with an experienced Florida business attorney who can advise you on the current state of the law on this subject. Contact John S. Sarrett in Naples today if you have any questions or concerns.

Related Links

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