220 | 2024 Cal-Peculiarities ©2024 Seyfarth Shaw LLP www.seyfarth.com In California it’s different. While California has a statutory overtime exemption for outside salespeople,212 its Wage Orders define the term narrowly, as an adult “who customary and regularly works more than half the working time away from the employer’s place of business selling tangible or intangible items or obtaining orders of contracts for products, services or use of facilities.”213 This definition does not mention the primary function for which the person is employed and focuses, quantitatively, on whether “more than half the working time” is devoted to “selling ... or obtaining orders or contracts.” Moreover, the California definition does not reclassify intrinsically nonsales work as exempt based on the fact that it is incidental to sales. In its 1999 Ramirez v. Yosemite Water decision, the California Supreme Court held that California’s exemption for outside salespersons—by not tracking the language of the federal exemption and by using its own definition of “outside salespersons”—intends to deviate from federal law, to “provide, at least in some cases, greater protection for employees.”214 At issue was whether a routeman delivering bottled water was exempt from overtime as an outside salesperson. While remanding the case for further proceedings, Ramirez strongly implied that the plaintiff could be nonexempt under California law even if he was exempt under federal law. Ramirez left unresolved several questions: What does it mean to “customarily and regularly” spend more than one-half of the work time on outside sales? FLSA regulations define “customarily and regularly” as “more than occasionally but less than constantly.” If an employee has a habit of often spending two or three days working away from the employer’s place of business, but spends the overall majority of all work time at the employer’s place of business, would that qualify as “customarily and regularly” spending more than one-half the work time outside? How does one attribute time that the employee spends before a sales visit preparing to make the visits, or the time spent after the visit to complete paper work on the sale? Ramirez mentions that the employer argued that it would be absurd to exclude those tasks from the “outside sales” calculation, but did not explain how those duties should be analyzed under the exemption. What constitutes “away from the employer’s place of business”? Clearly delivering water to a customer’s home would qualify, but what if the employee is in a job making customer contact by telephone? Is any time selling outside the employee’s designated “office” considered time “away from the employer’s place of business”? How does an employer enforce reasonable expectations that its employees spend most of their time outside selling? Where the employer encourages selling, but allows the employees to make sales any way they want without tracking their movements, what is the employer’s reasonable expectation as to “outside sales” activity? In 2022, the California Court of Appeal held in a class action case that the “pertinent inquiry” regarding whether an employee works away from the employer’s place of business is the degree to which the employer “maintains control or supervision” over the working conditions and employee’s hours.215 Noting that the exemption was created to address the difficulty employers have in overseeing salespeople who control their own schedule, the court held that the outside salesperson exemption thus does not apply where, at the direction of the employer, an employee works at a fixed site not owned or leased by the employer.216 Sick pay implications. See § 7.7.5 below.
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