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Debt of a Salesman: 'Outside' Salesmen Are FLSA Exempt

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By Brett Snider, Esq. on June 20, 2013 1:01 PM

Fifth Circuit judges came down hard on traveling salesmen on Tuesday, after ruling that a weekly salary of $300 plus commissions was in accordance with minimum wage laws.

The salesman in question, Florentino Meza, works for Intelligent Mexican Marketing, Inc. (IMM), a company that sells food and drink products to convenience stores doing sales work.

The Fifth Circuit found that Meza’s work qualified under the Fair Labor Standard Act (FLSA) exemption for “outside salesmen,” which exempted him from receiving federal minimum wage and overtime.

Principled Difference

The Meza Court noted that traditional FLSA minimum wage requirements are $7.25 per hour, but that "outside salesmen" work individually and with much fewer restrictions on time and wage.

To support this position, the Fifth Circuit cites a Tenth Circuit case circa 1941 called Jewel Tea Co. v. Williams which describes Willy Loman-type traveling salesmen who work on commission.

These salesmen don't need to be paid minimum wage under the FLSA because, despite the fact that they sometimes deliver products incidental to their sales, it is outside of the "character" of an outside salesman to apply the same hour and wage standards.

Definition of "Outside"

Like the salesmen in Jewel Tea Co., Meza was a traveling sales employee who often took goods with him when attempting to make sales to different vendors.

The Court distinguished "outside" salesmen from route drivers, as their primary purpose was to transport goods and reload vending machines, not sales.

The Meza court also distinguished this case from Skipper v. Superior Dairies, Inc., stating that salesmen who do mostly face-to-face sales with convenience stores customers are exempt, as opposed to those who just deliver the products.

Spirit But Not Letter

If you're thinking "wait, what if his average pay with commission is lower than $7.50/hour?" (see Meza's $6.66/hr) the Fifth Circuit has your answer: Too bad.

The Supreme Court emphasized in Christopher v. SmithKline Beecham that this salesman exemption is premised on exempt employees earning well above minimum wage, but that was only in reference to precluding relief under FLSA for earning too much money.

The Fifth Circuit opines that outside salesmen who earn less than minimum wage with commission are possibly just poor salesmen (poor as in bad, not poor as in impoverished, although they are that too), and all the more reason not to encourage their "poor salesmanship."

Tough break for the Loman's and Meza's of the Fifth Circuit.

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