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Inside Sales people - Non Exempt employees- really?

Are inside sales people exempt or non-exempt employees?

Does anyone have a creative and legal idea how to defeat the rules around that force inside sales people to be non exempt? 

I can't believe that i have to treat senior inside sales guys that spend most of their time calling on enterprises, rarely going out, but don't hit their target and so commissions would be less than 50% of their compensation, and thus not meet the exemption below cited and thus are non exempt. 

I do see that it protects the younger junior inside sales guys (so that we don't allow boiler rooms where they slave away but don't get much in either salary or commission), but for a highly paid guy, that doesn't hit commissions, and is very independent, why would we ever want to pay him overtime?

"Under California law, the "commissioned sales exemption" better known as the “California overtime exemption inside sales” does not apply unless (i) the employee is an "outside" salesperson, who spends more than half of their time engaging in sales activities outside the employer's place of business; or (ii) the salesperson makes more than 1 ½ times the minimum wage, and more than half of that employee's compensation represents commissions. More importantly, the "commissioned inside sales exemption" only applies to workers who are employed in the mercantile industry (covered by Wage Order 7) or in professional, technical, clerical, mechanical and similar occupations (covered by Wage Order 4). "



Topic Expert
Malak Kazan
Title: VP, Special Projects
Company: ERI Economic Research Institute
(VP, Special Projects, ERI Economic Research Institute) |

Jeff, absent a full assessment of the job, a few questions to ponder that may get you the result: if their pay structure is less than 50% commission are they "sales people" per se? Do they do other work? is the selling cycle long for the business such that they are more "business development" staff? Hope this helps.


Topic Expert
Wayne Spivak
Title: President & CFO
LinkedIn Profile
(President & CFO, |

HR/PR has become so specialized in the last few years that I strongly suggest to clients that they hire a fully qualified HR employee/consultant as well as develop a relationship with an Attorney whose sole field is Employment and Labor Law.

Here in New York State, the pervasive bias against employer's has gotten to a point that in 2012 employers who don't put their telephone number on pay stubs can be fined incredible amounts of money; and those who fail to have employees not only fill out a form stating their pay, but the correct form, can be fined up to $2500 per employee per year.

These laws were written to increase the revenue stream for the State, but they are impacting and creating confusion for the company and the CFO's.

So, my advice is leave it to the professionals, that is the HR & Employment law professionals.


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