By Michael Homans
For reasons that remain a mystery to labor and employment lawyers, many sophisticated employers continue to believe that inside sales representatives can be treated as salaried employees, exempt from overtime pay laws.
Peloton Interactive, Inc., maker of the wildly popular interactive stationary exercise bikes and related products, learned the hard way in a federal lawsuit settled this month that inside sales representatives and showroom sales personnel generally are not exempt under the Fair Labor Standards Act. That law, and parallel state labor laws, require that non-exempt employees be paid overtime for hours worked above 40 each week.
Peloton agreed to settle a class and collective action for $2.5 million, covering unpaid overtime for inside sales workers in New York and Pennsylvania.
There are overtime exemptions for outside sales representatives and for employees of retail and service establishments who are paid on a commission basis for most of their total compensation. See these U.S. Department of Labor links and Fact Sheets for more guidance on the exemptions. But these apply only if the employer can prove that it has met each element of the exemption.
If in doubt, get legal advice on these exemptions.
Michael Homans is an employment lawyer and litigator based in Philadelphia and Wayne, Pennsylvania. He can be reached at mhomans@homanspeck.com or (215) 419-7477.