Practical insight into California’s outside sales exemption, including definition, legal requirements, misclassification risks, and differences from inside sales roles. Protect your workplace rights regarding overtime, minimum wage, meal breaks, and eligibility as an outside salesperson under California and federal law.
By Brad Nakase, Attorney
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The employment regulation known as the “outside sales exemption in California” shields a business’s “outside salespeople” from several wage and hour regulations that relate to hourly workers who are not exempt. Among these rights is the ability to get a minimum salary, overtime compensation, and meal & rest periods.
Any individual who is at least eighteen years old and routinely works more than half of their working hours away from their employer’s place of operations, selling goods or taking orders for goods or services, is considered an “outside salesperson” or an outside sales worker.
Additional exempt workers consist of executives, professionals, and administrative staff.
If an employer decides on an outside sales exemption in California incorrectly and the employee is not compensated for overtime, the employee may file a wage/hour lawsuit in an effort to recoup any owed overtime compensation. Exempt outside salespeople are subject to a federal statute.
The following employment laws and privileges do not apply to outside sales employees in California:
Here, “exempt” refers to the “exempt worker” not being able to take advantage of the aforementioned regulations. For instance, overtime compensation, which is compensation paid on top of a person’s usual rate of pay, would not be available to an exempt outside salesman.
Similar to the outside sales exemption in California, administrative personnel are exempt under California law.
Keep in mind that workers covered by the legislation above are frequently referred to as nonexempt employees or nonexempt workers.
According to California law, an “outside” salesperson is any individual who:
This definition often brings up questions about the meaning of:
A. Over 50% of the working hours
The amount of time a salesman spends out of “the office” is determined by state legislation using a “quantitative standard.”
“Quantitative” indicates that the emphasis is:
Additionally, this standard determines how much time is spent out of the office by taking into account the worker’s actual workplace, as well as their job names and descriptions.
Example
Joe works as a salesperson for the company. The employee’s main responsibility, as stated in his job description, is to engage with consumers in the field, including at their homes and places of business, in order to perform outside sales activities.
As a matter of fact, however, Joe has to work four days a week as a sales representative in the main location of the business, and spend the other working day visiting the clients. Here, Joe does not work more than fifty percent outside the headquarters of the company. Although the description of his position seems to indicate the reverse, that he did, it is not the case.
If the individual worked in the field for four days per week and made monthly sales trips to New York, a different result would be obtained. This would indicate that Joe spends over fifty percent of his working hours away from the organization by quantitative standards.
B. Location of Business
An “employer’s location of business” for the intent of this law is the place where the employee:
This could consist of:
In actuality, this law covers workers such as:
C. Job responsibilities that include selling or receiving orders
In the definition given above, “selling & obtaining orders” refers to:
Here are some instances of sales tasks:
Any sales work done in an office does not qualify for exempt status.
On the one hand, when the employer does something that deprives the employee of the opportunity to earn overtime, the employee could submit a wage/hour lawsuit to recover any overtime compensation that they are owed.
California employees who are not regarded as outside salespersons and who are not exempted under the overtime exemption limit have to be paid overtime, as they provide their services:
For employees who are not covered by the administrative and professional exemptions, the precise overtime rules are applicable.
Money provided in excess of an employee’s hourly wage or salary level on the basis of salary is known as overtime pay.
Keep in mind that misclassified workers might also be eligible for rest and lunch breaks. If so, their wage/hour case may include a claim for the same remuneration. For every meal or rest period that an employee should have had, employers are liable for one hour’s wages.
Inside sales personnel are excluded under California law if:
Exempted inside sales employees get meal & rest breaks, but they are not paid overtime.
Keep in mind that commissions derived from incentives must be mostly commensurate with the productivity of the salesperson.
The United States has a federal statute about exempting outside salespeople. The Fair Labor Standards Act contains the law. The United States Department of Labor enforces the statute.
Administrative, professional, and external salesmen are legally excluded from laws governing minimum wages and overtime compensation.
Section 13(a) of the FLSA includes the definition of the outside salesman as an employee whose duties primarily consist of selling or acquiring contracts/orders for the services/products for which the customer or the client makes a consideration. He is also regularly and commonly not employed at the place or places of business of the company.
The outside sales exemption in California sounds simple. It isn’t. Real work and real hours decide everything. Not titles or fancy descriptions. Many workers don’t even know they were misclassified. And lose overtime for years. California law tries to balance this. It protects employees but also gives businesses room for genuine field sales roles. If things don’t line up, employees have options. Claims, back pay, and missed breaks. It all adds up. The key is understanding the rule. Where do you work? How much of your day is outside? And what you’re truly hired to do. That’s what finally counts.
1. Working as an outside salesperson: What are the California law conditions?
California requires the following conditions for you to qualify as an outside salesman:
Whatever your job description says is not the most important test, but whether or not you really spend the bulk of your time at work outside of your place of employment.
2. And in case I were classified as an outside salesperson, what rights as an employee would be lost?
Working under the category of an outside salesperson means you waive your right:
The company is not bound to pay you overtime in case you work more than eight hours a day or forty hours a week.
3. My employer wrongly classified me as an outside salesperson: What may I do?
You may initiate a wage and hour claim to claim overtime pay in case you believe that you were unfairly classified and should have been paid overtime. Also, you will be able to be reimbursed for missed rest and lunch breaks; you would typically receive an hour of wages per break.
4. What is the distinction between the outside and the inside sales exemptions in California?
When an outside salesperson spends over half of his time outside the office, he is not exempt. The exemptions can only apply to inside salespeople who work in a particular business, earn at least 1.5 times the minimum wage, and earn less than half of their pay in commissions. Exempt inside salespeople continue to receive meal & rest breaks, in contrast to outside salespeople.
5. Can my employer force me to work “outside” just to fit the outside sales exemption in California?
Not really. The law looks at what you actually do, not what your employer writes on paper. If you spend most of your time inside the office or doing non-sales tasks, you likely don’t qualify as an outside salesperson. Even if the company “labels” you as one. Courts check the real work, the hours, and the routine. Not the title.
6. Do travel hours count toward outside sales time?
Yes. Travel to client sites. Driving between appointments. Even short stops. They all count as outside-the-office time. But travel to the main office doesn’t help the outside sales exemption in California. Only the field activity that’s tied to selling or taking orders matters.
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