Authored by Barry Miller
How do you classify the outside salesperson who fails to sell? The administrative employee who can’t or won’t exercise discretion and independent judgment? The manager who would rather perform manual labor than manage others? Plaintiffs often stress – and Department of Labor regulations state – that a job description alone doesn’t dictate exempt status; rather, it’s how an employee actually performs his job that controls.
Strict adherence to this paradigm could lead to absurd results. The salesperson who doesn’t sell could be entitled to an hourly minimum wage, while her peers in the same job are not. The administrative employee who won’t think for himself might get back overtime pay, while his co-workers who make decisions don’t. The manager who stocks shelves himself for 60 hours a week becomes non-exempt, but those in the same position who delegate and supervise that work remain exempt.
A recent ruling from the 11th Circuit, however, shows that an employer’s expectations do have an important role in determining exempt status, even where the employee claims he rarely or never did what his employer instructed.
Jerry Reyes sued Goya Foods for overtime under the FLSA, claiming that he had been misclassified as an exempt outside salesman. Goya asserted that, as a “sales broker,” Reyes was assigned regular sales goals, paid on a commission basis, and was responsible for meeting with managers of retail stores where Goya’s products were sold to promote new products and request better product placement. Reyes disputed Goya’s account and contended that he was not an outside salesman because he spent most of his time restocking shelves, cleaning products, and rotating merchandise.
The case was tried to a jury, and at the close of the plaintiff’s case, Goya moved for judgment as a matter of law, arguing that no reasonable juror could conclude that Reyes was entitled to overtime compensation. The court heard oral argument on Goya’s motion on the spot (excerpt here). In responding to Goya’s motion, Reyes’ counsel pointed to Reyes’ testimony that he did not engage in significant sales activities, admissions from Reyes’ supervisors that they did not know what Reyes was doing while he was in the field, and the undisputed fact that Reyes had never met his assigned sales goals in five years on the job.
In granting the employer’s motion, the trial judge succinctly adopted the employer’s argument: “The incompetence of the employee to sell does not change the nature of the position.” The court also pointed to testimony from Reyes’ peers and supervisors, who uniformly testified that Goya expected sales brokers to focus their efforts on increasing sales of the company’s products. On appeal, the Eleventh Circuit affirmed the trial court’s ruling, effectively holding that an employer’s expectations regarding an employee’s job duties can render the employee exempt, even if the employee did not perform the duties that made the job an outside sales position. While several courts had reached similar conclusions under state overtime laws, the Reyes case is the first federal appellate court to apply the outside sales exemption in this matter.
Employers relying on the outside sales exemption often face the dilemma that played out in Reyes. An outside sales person is — by design — generally not in his supervisor’s line of sight on a day-to-day basis. Because the outside sales exemption is defined in terms of whether an employee is “customarily and regularly” engaged in “making sales” “away from the employer’s place or places of business,” questions of what an employee was doing, where he was doing it, and how often he engaged in certain activities are the key points in most disputes regarding the application of the exemption.
While modern technology can make it easier to keep tabs on employees in the field, many employers still find themselves at a disadvantage when faced with an employee who claims that he did not engage in outside sales activities. On cross-examination, the employer’s witnesses are subject to the question that the plaintiff sought to pose here: “Who knows better what Mr. Reyes spent his time doing — Mr. Reyes or you?”
The approach that the Eleventh Circuit took in the Reyes case makes such cases much more defensible. By permitting an employer to focus its defense on its expectations of how an employee would perform his job, this approach puts an employer in a position to build a case for the outside sales exemption without expending the substantial resources that might be required to document the employee’s day-to-day activities.