Mass-Peculiarities: An Employers Guide to Wage & Hour Law in the Bay State 2022 Edition

112 | Massachusetts Wage & Hour Peculiarities, 2022 ed. © 2022 Seyfarth Shaw LLP period, but does not include credit for board or lodging, payments for medical or life insurance, or contributions to retirement plans or other fringe benefits. 615 If an employee fails to earn $107,432 in the year—for example, if a commissioned employee receives less in commissions than anticipated—the employer may make one payment to the employee during the last pay period, or within one month after the end of the 52-week period, to bring the employee’s total annual compensation to at least $107,432. 616 B. Other Exemptions 1. Outside Sales Exemption Both the Massachusetts Minimum Fair Wage Law and the FLSA provide an exemption from overtime requirements for outside sales employees. Outside sales employees are those who spend time calling on customers and sales prospects outside of the office. The Massachusetts and federal exemptions for outside sales employees overlap considerably, but their specific requirements differ. Accordingly, employers must confirm that an employee is exempt from both the state and federal requirements to avoid liability for overtime pay. The DOL’s 2019 Final Rule did not impact the outside sales exemption. a. Federal Outside Sales Exemption The FLSA exempts outside sales employees from both its overtime and minimum wage requirements. 617 To qualify for this exemption, an individual must satisfy two criteria: (1) the employee must be employed either to make sales or to obtain orders or contracts for services or for the use of facilities ; 618 and (2) the employee must be customarily and regularly engaged away from the employer’s place or places of business. 619 With respect to the first criteria, “making sales” can include any “sale, exchange, contract to sell, consignment for sale, shipment for sale,” or other transaction involving goods, and can also include the transfer of property titles. 620 Obtaining orders or contracts for services or for the use 615 29 C.F.R. § 541.601(b)(1). 616 29 C.F.R. § 541.601(b)(2). 617 29 U.S.C. § 213(a)(1). 618 29 C.F.R. § 541.500(a). 619 Id . 620 29 C.F.R. § 541.501(b). In Christopher v. SmithKline Beecham Corp. , the U.S. Supreme Court rejected the argument that pharmaceut ical sales representat ives do not sell drugs, but instead promote them, because they are prohibited by law from selling prescript ion product s direct ly to physicians or pat ient s. 567 U.S. 142, 165-68, 132 S. Ct . 2156, 2173-74 (2012). The Court found that the out side sales exempt ion requires a “ funct ional, rather than a formal, inquiry [] that views an employee’s responsibilit ies in the context of the part icular indust ry in which the employee works,” and concluded that a pharmaceut ical sales representat ive’s work is “ tantamount” to a sale in the pharmaceut ical indust ry. Id. at 161. Since the Supreme Court ’s decision in Christopher , the Circuit Court s have taken divergent approaches concerningwhether, and to what extent , the decision applies beyond the pharmaceut ical sales context . Compare Flood v. Just Energy Mktg. Corp. , 904 F.3d 219, 230-31 (2dCir. 2018) (holding that representat ives who t raveled to customers’ homes to persuade them to purchase energy product s were subject to out side sales exempt ion and reject ing argument that Christopher must be “confined to the peculiarit ies of the pharmaceut ical sales market”) with Hurt v. Com. Energy, Inc. , 973 F.3d 509, 519 (6th Cir. 2020) (affirming jury verdict that employees performing highly