Human Resource Blog

Exemptions for Outside Sales in Texas

	Compensation
Employee Payroll Action Form W-4 Employee Withholding Allowance Cert. Employee Payroll Status/Change Form Direct Deposit Form Total Compensation Summary

What does our outside sales team need to do in order to be exempt from coverage in Texas?

Employees may be exempt from coverage under the Fair Labor Standards Act as long as they meet specific requirements for exemption. Outside sales personnel may meet these requirements as long as they are bona fide outside sales folks and not internal sales staff.

The FLSA is a federal Act, which means that it not only applies to employees in the state of Texas, but it may also apply to employees and employers in all states across the country. The Act is in place in order to ensure that employees are able to be compensated fairly for the work that they perform. In order to see that employees are compensated fairly, the FLSA establishes the minimum wage, which is a base rate of pay that employee should be paid for each hour that they work.

Not only does the FLSA establish the minimum wage, but it also establishes overtime pay, which should be used to compensate employees for each hour that they work in addition to the standard 40-hour work week.

Employees may qualify for exempt status if they have a sales position, which means that they would not have to be paid based on the minimum wage or on overtime pay. Instead, their pay could be based on a salary or on commission that they earn for their sales. In order for an employee to qualify for exempt status, the employee needs to meet at least the following criteria:

·         The employee needs to work primary outside of the employer’s office

·         A home office does not necessarily qualify as an outside office, as a home office is still considered to be property of the business

·         The employee’s primary job functions should be in obtaining new customers or clients, getting contracts, maintaining customer relationships, and travelling to promote products. CB