HR Hotline: How Do We Maintain a Sales Employee’s Exempt Status?

Q: Our outside salesperson has salaried exempt status under existing state and federal overtime regulations. As of Dec. 1, 2016, however, his base salary will no longer meet the new FLSA weekly salary threshold of $913 per week. His anticipated commission earnings will easily bring him way above that amount, but we understand that the new regulation only permits up to 10% of the $913 to be made up of incentive or commission earnings. Does this mean we’d have to raise the base salary to at least $913, or $822 (90% of $913), for our outsides sales employee to remain classified as exempt?
A: Good news! (A rarity in the wage hour world these days.)
Your salary calculation is correct for the new criteria for the executive, administrative, and professional exemptions under the new overtime changes, but the point you’re missing is that to be exempt from minimum wage and overtime, outside sales employees have to meet only the duties test.
The salary basis and salary amount tests do not apply under the current or the new overtime rules.
Besides outside sales employees, doctors, lawyers, and teachers also must satisfy only the duties test and are not subject to the salary test.
For outside sales employees, the duties test is met as long as they are customarily and regularly engaged away from the employer’s place of business and have as their primary duty making sales or obtaining orders or contracts for services or for the use of facilities.

HR problems? Email or call Mark Soycher at the HR Hotline (860.244.1900 | @HRHotline)