Dear HR Executive:
The number of legal cases we see on overtime-reg violations is staggering. The Wage & Hour cops are really serious about making sure you classify workers correctly and pay them OT if they deserve it. The problem is usually with job descriptions. Below is a recent case that shows one of the many ways you can get snagged.
‘Outside sales’ people who rarely went outside had an overtime claim
Here’s one way companies encounter trouble with wage-and-hour laws: Workers are hired to do one job, but end up doing another.
Two employees at a Missouri company were brought onboard by a mortgage company and told they would earn commissions for originating mortgages.
But they ended up spending a lot of their time answering phones, assembling office furniture, and even working on the owner’s rental property.
The two quit after two months and sued, claiming over 100 hours of unpaid overtime under the Fair Labor Standards Act (FLSA).
The employer tried to have the case thrown out, citing the FLSA’s outside sales exemption. Indeed, the regs do exempt outside salespeople from overtime entitlement.
The 80% rule
But to be a real outside salesperson, according to FLSA regs, you have to spend at least 80% of your time on physical sales calls or work related to them. And inside sales doesn’t count.
When the amount of time these two employees spent on inside sales was added to the other tasks they were given, it came to way more than 20%, the court found. The judge said if the case wasn’t settled and went to trial, the employees had a good chance of winning.
Cite: Belton v. Premium Mortgage, No. 03-0964, W.D. Mo., 3/6/06.