The Outside Sales Exemption Under FLSA

Outside Sales Exemption Requirements

The outside sales exemption under 29 CFR § 541.500 is the simplest of the five white-collar exemptions but has unique characteristics:

No Salary Requirement

This is the only FLSA white-collar exemption that does not require a minimum salary. The employee can be paid commission, salary, hourly, or any combination.

Two Duties Requirements

1. Primary Duty Is Making Sales

The employee's primary duty must be:

• Making sales as defined by FLSA Section 3(k), OR
• Obtaining orders or contracts for services or for the use of facilities for which consideration will be paid

2. Customarily and Regularly Away from the Office

The employee must be customarily and regularly engaged away from the employer's place or places of business in performing their primary sales duty.

What Counts as "Sales"

Under FLSA Section 3(k), "sale" or "sell" includes:

• Selling goods or products
• Transferring title to tangible property
• Leasing real property
• Obtaining orders for services
• Securing contracts for the use of facilities

What Does NOT Count

Sales made at the employer's place of business generally do NOT qualify, even if the employee traveled to get there. Specifically:

• Phone sales from the office — inside sales, not outside
• Internet/email sales — inside sales
• Retail sales at a store — not outside sales
• Trade show sales — may or may not qualify depending on specifics

The "Away from the Office" Requirement

The employee must spend the majority of their working time physically away from the employer's premises making sales. This typically means:

• Visiting client sites
• Meeting prospects at their locations
• Traveling between accounts
• Door-to-door sales

Working from home is generally not considered "away from the employer's place of business" for this purpose. The key is that the selling activity happens at the customer's location.

Who Typically Qualifies

• Pharmaceutical sales representatives calling on doctors
• Insurance agents who visit clients
• Real estate agents showing properties
• B2B sales representatives visiting client offices
• Route sales drivers (combined delivery and sales)

Who Typically Does Not Qualify

• Inside sales representatives (phone, email, web)
• Retail sales associates
• Telemarketers
• Sales managers who primarily supervise (may qualify under executive exemption instead)
• Marketing representatives who promote but don't close sales

The "Incidental" Work Rule

Activities incidental to and in conjunction with the employee's outside sales are considered exempt work, even if done at the office. This includes:

• Writing up orders
• Making follow-up calls to close a sale
• Completing paperwork for a sale made in the field
• Planning routes and territories

However, if these office activities become the primary duty, the exemption may no longer apply.